UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 000-24331
Raintree Resorts International, Inc.
CR Resorts Capital, S. de R.L. de C.V. *
(Exact name of Registrant as Specified in its Charter)
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Nevada 76-0549149
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10000 Memorial Drive, Suite 480
Houston, Texas 77024
(Address of principal executive offices, including zip code)
(713) 613-2800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of June 30, 1999, the Registrant had 10,766,300 shares of Common Stock
outstanding and Warrants to purchase 1,869,962 shares of Common Stock at $0.01
per share.
*CR Resorts Capital, S. de R.L. de C.V., a subsidiary of Raintree Resorts
International, Inc., is a co-registrant, formed under the laws of the United
Mexican States (Mexican tax identification number CRC 970811E5A).
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RAINTREE RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
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PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of
December 31, 1998 and June 30, 1999 (Unaudited) ................................................ 3
Consolidated Statements of Operations and Comprehensive Loss
for the Three and Six Months ended June 30, 1998 and 1999 (Unaudited) .......................... 4
Consolidated Statements of Cash Flows
for the Six Months ended June 30, 1998 and 1999 (Unaudited)..................................... 5
Notes to Consolidated Financial Statements (Unaudited) .............................................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................................ 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................... 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................................................................ 16
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS........................................................ 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................................................. 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................. 16
ITEM 5. OTHER INFORMATION ............................................................................... 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................. 16
SIGNATURES.................................................................................................... 17
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PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
RAINTREE RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
(Unaudited)
December 31, June 30,
1998 1999
-------------- --------------
<S> <C> <C>
Assets
Cash and cash equivalents ............................................... $ 2,960 $ 2,857
Vacation Interval receivables and other trade receivables, net........... 51,835 58,989
Inventories ............................................................. 775 1,023
Refundable Mexican taxes ................................................ 3,488 4,324
Office furniture and equipment .......................................... 3,046 3,297
Land held for vacation ownership development ............................ 22,170 22,654
Equity investments....................................................... 2,949 3,890
Cost of unsold vacation ownership intervals and related club memberships. 27,606 23,011
Retained interest in hotel cash flows ................................... 4,000 4,000
Deferred loan costs, net ................................................ 7,413 7,177
Goodwill, net .......................................................... 1,240 --
Prepaid and other assets ............................................... 2,185 2,779
-------- --------
Total assets ................................................................ $129,667 $134,001
======== ========
Liabilities and Shareholders' Investment
Liabilities
Accounts payable and accrued liabilities ............................... $ 11,850 $ 13,934
Notes payable .......................................................... 17,135 22,924
Senior Notes, due 2004, net of unamortized original issue
discount of $7,907 and $7,240, respectively .......................... 92,093 92,760
Taxes payable .......................................................... 1,618 1,679
Unearned services fees .................................................. 2,028 3,679
-------- --------
Total liabilities .......................................................... 124,724 134,976
Commitments and Contingencies
Shareholders' Investment
Preferred stock; par value $.001; 5,000,000 shares authorized, shares
issued and outstanding 37,500 at December 31, 1998
and June 30, 1999..................................................... -- --
Convertible preferred stock; $100 per share liquidation value;
20,775 and 15,775 shares issued and outstanding at December 31, 1998
and June 30, 1999, respectively....................................... 2,078 1,578
Common stock; par value $.001; 45,000,000 shares authorized, shares
Issued and outstanding 10,766,300 at December 31, 1998 and
June 30, 1999 ........................................................ 11 11
Additional paid-in capital .............................................. 7,371 7,371
Warrants to purchase 1,869,962 shares of common stock.................... 9,331 9,331
Accumulated deficit ..................................................... (13,737) (19,340)
Cumulative translation adjustment ....................................... (111) 74
-------- --------
Total shareholders' investment (deficit)..................................... 4,943 (975)
-------- --------
Total liabilities and shareholders' investment .............................. $129,667 $134,001
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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RAINTREE RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands except per share data)
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
------------------------------ ------------------------------
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Statement of Operations
Revenues
Vacation Interval sales ........................ $ 26,512 $ 32,300 $ 12,389 $ 15,258
Rental and service fee income .................. 4,440 5,022 1,947 2,527
Interest income on Vacation Interval receivables 2,869 3,715 1,305 1,638
Other income ................................... 1,424 1,382 541 649
-------- -------- -------- --------
Total revenues ............................... 35,245 42,419 16,182 20,072
Costs and Operating Expenses
Cost of Vacation Interval sales................. 5,851 8,609 2,704 4,272
Provision for doubtful accounts ................ 2,085 2,518 861 1,341
Advertising, sales and marketing ............... 10,572 14,743 5,289 7,300
Maintenance and energy ......................... 3,953 4,931 2,164 2,824
General and administrative ..................... 4,854 5,651 2,728 2,723
Depreciation ................................... 219 467 139 243
Amortization of goodwill ....................... -- 1,264 -- 168
-------- -------- -------- --------
Total costs and operating expenses ........... 27,534 38,183 13,885 18,871
-------- -------- -------- --------
Operating income .................................. 7,711 4,236 2,297 1,201
Interest expense, net .......................... 7,239 8,723 3,617 4,347
Equity in losses on equity investments ......... 12 192 12 96
Foreign currency exchange losses, net........... 1,927 198 1,098 727
-------- -------- -------- --------
Net loss before taxes ............................. (1,467) (4,877) (2,430) (3,969)
Foreign income and asset taxes.................. 600 726 303 470
-------- -------- -------- --------
Net loss before preferred dividends ............... (2,067) (5,603) (2,733) (4,439)
Preferred stock dividends ...................... 309 401 154 194
-------- -------- -------- --------
Net loss available to common shareholders ......... $ (2,376) $ (6,004) $ (2,887) $ (4,633)
======== ======== ======== ========
Net loss per share
(Basic and Diluted)............................ $ (.22) $ (.56) $ (.27) $ (.43)
Weighted average number of common shares
(Basic and Diluted)............................ 10,729 10,766 10,756 10,766
Comprehensive Loss
Net loss before preferred stock dividends ......... $ (2,067) $ (5,603) $ (2,733) $ (4,439)
Other comprehensive income:
Foreign currency translation adjustment ........ -- 185 -- 120
-------- -------- -------- --------
Comprehensive loss ................................ $ (2,067) $ (5,418) $ (2,733) $ (4,319)
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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RAINTREE RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended
June 30,
-----------------------------------
1998 1999
-------------- --------------
<S> <C> <C>
Operating activities
Net loss .................................................................... $ (2,067) $ (5,603)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ............................................. 1,866 3,056
Provision for doubtful accounts ........................................... 2,085 2,518
Equity in losses on equity investments .................................... 12 192
Changes in other operating assets and liabilities:
Vacation Interval receivables and other trade receivables ................. (9,187) (9,461)
Inventories ............................................................... -- (213)
Cost of unsold vacation ownership intervals and related club memberships .. 4,458 4,603
Prepaid and other assets .................................................. (2,598) (989)
Accounts payable and accrued liabilities .................................. 2,179 1,970
Taxes payable/refundable .................................................. 1,217 (805)
Unearned services fees .................................................... 629 1,650
-------- --------
Net cash used in operating activities........................................... (1,352) (3,082)
Investing activities
Purchase of land and other assets held for vacation ownership development ... (959) (1,617)
Additions to office furniture and equipment ................................. (1,667) (637)
-------- --------
Net cash used in investing activities .......................................... (2,626) (2,254)
Financing activities
Additional bank and other loans ............................................. 2,000 12,884
Repayment of bank loans...................................................... -- (7,247)
Redemption of convertible preferred stock ................................... -- (500)
Capital contributions ....................................................... 360 --
-------- --------
Net cash provided by financing activities ...................................... 2,360 5,137
Decrease in cash and cash equivalents .......................................... (1,618) (199)
Effect of exchange rate changes on cash ........................................ -- 96
Cash and cash equivalents, at beginning of the period .......................... 8,995 2,960
-------- --------
Cash and cash equivalents, at end of the period ................................ $ 7,377 $ 2,857
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for interest .................................... $ 6,402 $ 7,674
Cash paid during the period for income and asset taxes ...................... 772 1,042
The accompanying notes are an integral part of these financial statements.
</TABLE>
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RAINTREE RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1999
NOTE 1. GENERAL INFORMATION
General
The financial statements include the accounts of Raintree Resorts
International, Inc., a Nevada corporation, (the "Ultimate Parent") and all of
its wholly owned subsidiaries (the "Company"). The Company develops, markets,
and operates vacation ownership resorts in North America with resorts in Mexico,
Canada and the United States. The Company's headquarters are located in Houston,
Texas with administrative offices in Mexico City, Mexico and Whistler, British
Columbia, Canada.
Organizational Structure
On August 18, 1997, Raintree Resorts International, Inc. (formerly Club
Regina Resorts, Inc.) purchased all of the stock of Desarrollos Turisticos
Regina S. de R.L. de C.V. and its subsidiaries (the "Predecessor Business")
representing net vacation ownership assets of approximately $86.8 million.
Concurrent with the purchase, the real property of the Predecessor Business, the
Regina Resorts and Westin Hotels, was segregated such that each would be able to
be owned by separate companies. The Westin Hotels were then sold by the Company
to an affiliate of Starwood Lodging Trust and Starwood Lodging Corporation
(collectively "Starwood"). These transactions are referred to as the "Purchase
Transactions." As a result of these Purchase Transactions, the Company owns and
operates three luxury Mexican vacation ownership resorts in Cancun, Puerto
Vallarta and Cabo San Lucas, Mexico. The Company's principal operations consist
of (1) acquiring and developing vacation ownership resorts, (2) marketing and
selling vacation ownership intervals ("Vacation Intervals"), (3) providing
consumer financing for the purchase of vacation ownership intervals at its
resorts, and (4) managing the operations of its resorts. Prior to August 18,
1997 the Company did not have significant operations or revenues.
On July 24, 1998, the Company acquired the assets and assumed certain
liabilities of Whiski Jack Resorts Ltd. ("Whiski Jack") for approximately $6.6
million. The acquisition was accounted for as a purchase and, accordingly, the
results of operations are included in the financial statements only for the
periods subsequent to the date of acquisition. The purchase price has been
allocated to the assets and liabilities assumed based upon the fair values at
the date of acquisition. The excess purchase price over the fair values of the
net assets acquired has been recorded as goodwill, totaling approximately $4.2
million, to be amortized pro rata as the individual weeks acquired in the
acquisition are sold. Amortization expense was $1.3 million for the six months
ended June 30, 1999, and $0.2 million for the three months ended June 30, 1999.
In connection with the Purchase Transactions, the Company borrowed
approximately $83 million and replaced such borrowing with its Senior Notes. The
Company is, and will continue to be, highly leveraged, with substantial debt
service requirements. The Company has incurred losses since its inception and
expects to incur a net loss for fiscal 1999. To achieve profitable operations
the Company is dependent upon a number of factors, including its ability to
increase its Vacation Interval inventory on an economical basis through
development projects or through the acquisition of existing resort properties.
The Company expects, although no assurance can be made, that its credit
capacity, and its ability to obtain capital financing, as well as the Company's
anticipated results of operations, will be sufficient to fund its capital
requirements during the next twelve months.
Basis of Presentation
The information contained in the following notes to the accompanying
consolidated financial statements is condensed from that which would appear in
the annual audited financial statements. Accordingly, the consolidated financial
statements included herein should be reviewed in conjunction with the
consolidated financial statements and related notes thereto contained in the
Form 10-K Annual Report for the year ended December 31, 1998, filed by the
Company with the Securities and Exchange Commission.
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The condensed consolidated financial statements included herein have been
prepared by the Company, pursuant to the rules and regulations of the Securities
and Exchange Commission (the "SEC"). Pursuant to such regulations, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The Company believes the presentation and disclosures
herein are adequate to make the information not misleading. The financial
statements reflect all elimination entries and normal adjustments that are
necessary for a fair presentation of the results for the three and six-month
periods ended June 30, 1998 and 1999.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Certain items in the December 31, 1998 financial statements have been
reclassified to conform with the June 30, 1999 presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign Currency Fluctuations
The Company maintains its Mexican accounting records and prepares its
financial statements for its Mexican subsidiaries in Mexican pesos. The Mexican
pesos are translated to U.S. dollars for financial reporting purposes using the
U.S. dollar as the functional currency and exchange gains and losses as well as
translation gains and losses are reported in income and expense. The net gains
and losses are primarily related to the increases or declines in the value of
the peso to the U.S. dollar during such periods. The resulting net exchange and
translation losses for the six months ended June 30, 1998 and 1999 were $1.9
million and $0.2 million, respectively.
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Exchange rates Pesos US Dollar
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<S> <C> <C> <C>
December 31, 1997...................................................... 8.083 = $1.00
March 31, 1998......................................................... 8.517 = $1.00
June 30, 1998 ......................................................... 9.041 = $1.00
September 30, 1998 .................................................... 10.112 = $1.00
December 31, 1998...................................................... 9.865 = $1.00
March 31, 1999......................................................... 9.516 = $1.00
June 30, 1999.......................................................... 9.488 = $1.00
</TABLE>
The future valuation of the Mexican peso related to the U.S. dollar cannot
be determined, estimated or projected.
Cash and Cash Equivalents
The Company considers demand accounts and short-term investments with
maturities of three months or less when purchased to be cash equivalents. Cash
and cash equivalents include $1.4 million in restricted funds at June 30, 1999.
Land Held for Vacation Ownership Development
The Company owns a parcel of undeveloped beachfront property located in
Cozumel, Mexico and a parcel of land adjacent to its Regina Resort located in
Cabo San Lucas, Mexico. The Company plans to construct additional vacation
ownership facilities on these parcels of land. Although preliminary
architectural and engineering planning has commenced, no commitments have been
made regarding these planned expansion projects. While preliminary architectural
and engineering planning continues on the Cabo San Lucas property, further work
on the Cozumel property will likely occur in late 2000 or later.
Land held for vacation ownership development includes the cost of land, and
additionally, development costs and capitalized interest. Interest related to
these developmental properties of $0.5 million and $1.0 million was capitalized
for the three and six months ended June 30, 1998, and $0.2 million and $0.3
million for the three and six months ended June 30, 1999.
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Earnings (Loss) Per Share
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share also includes the assumed conversion of all
securities, such as options, warrants, convertible debt and convertible
preferred stock, if dilutive. Since the Company has a net loss for the three and
six months ended June 30, 1998 and June 30, 1999, no conversion is assumed
during these periods as conversion of the Company's warrants and stock options
would be anti-dilutive. Additionally, the preferred stock and convertible
preferred stock are convertible only upon the consummation of an initial public
offering and are, therefore, not included in weighted average number of common
shares.
Proforma Financial Information
The following unaudited pro forma consolidated results of operations for
the six months and three months ended June 30, 1998 assume the Whiski Jack
acquisition occurred as of January 1, 1998 (in thousands, except per share
data):
<TABLE>
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Six Months Three Months
Ended June 30, Ended June 30,
1998 1998
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<S> <C> <C>
Net revenues ........................................ $ 40,317 $ 18,781
Net loss ............................................ (3,739) (2,239)
Net loss available to common shareholders ........... (4,049) (2,703)
Basic and diluted loss per common share ............. (.38) (.25)
</TABLE>
The pro forma adjustments include the pre-acquisition results of Whiski
Jack for the period from January 1, 1998 to June 30, 1998. The adjustments
include the amortization of goodwill generated from the acquisition, interest
expense on the debt assumed to be issued to finance the purchase, and the effect
of the acquisition on income taxes. The pro forma amounts are based upon certain
assumptions and estimates and do not reflect any benefit from economies that
might have been achieved from combined operations. The pro forma results do not
necessarily represent results, which would have occurred if the acquisition had
taken place at the beginning of the period presented, nor are they indicative of
the results that will be obtained in the future.
NOTE 3. VACATION INTERVAL RECEIVABLES AND OTHER TRADE RECEIVABLES
Vacation Interval receivables and other trade receivables were as follows
(in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
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Vacation Interval receivables ....................................... $ 53,563 $ 58,917
Service fee receivables ............................................. 1,047 1,484
Other trade receivables ............................................. 4,787 6,604
Less - allowances for uncollectible accounts ........................ (7,562) (8,016)
-------- --------
Total ....................................................... $ 51,835 $ 58,989
======== ========
</TABLE>
Allowances for uncollectible accounts increased by $2.5 million for
additional estimated reserves, and decreased by $2.0 million for cancellation of
contracts and receivable write-offs during the first six months of 1999.
The Company estimates that at December 31, 1998 and at June 30, 1999,
approximately 57% and 53%, respectively, of all of the Vacation Interval
receivables were U.S. dollar denominated, 28% and 30%, respectively, of Vacation
Interval receivables were denominated in UDIs, an obligation denominated in
pesos which is adjusted for Mexican inflation ("UDI"), 10% during both periods
of Vacation Interval receivables were denominated in Mexican pesos, and 5% and
7%, respectively, of Vacation Interval receivables were denominated in Canadian
dollars.
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NOTE 4. NOTES PAYABLE
Notes Payable were as follows (in thousands):
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December 31, June 30,
1998 1999
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Notes Payable to a Bank ............................................. $ 276 $ 741
Cabos West Notes Payable ........................................... 5,000 2,500
Credit Agreement Notes .............................................. 9,086 16,473
Mortgages Payable ................................................... 2,773 3,210
-------- --------
$ 17,135 $ 22,924
======== ========
</TABLE>
Credit Agreement Notes - The November 1998 FINOVA Capital Corporation
("FINOVA") credit agreement provides a receivables based credit facility of $20
million. In May 1999, the Company and FINOVA finalized the non-revolving $13.5
million inventory based portion of the facility. Together, the receivable and
the inventory portions of the facility provide for an aggregate borrowing limit
of $32 million and limits the use of proceeds to acquisitions, development,
working capital, and repayment of existing obligations, and requires that the
Company maintain certain minimum financial ratios. The outstanding loan balance
of the receivables based credit facility bears interest at a fluctuating base
rate plus 175 points, which at June 30, 1999, was 9.5% per annum. The inventory
loan bears interest at a fluctuating base rate plus 225 points which at June 30,
1999, was 10% per annum. The fluctuating base rate is the "Corporate Base" rate
of Citibank, N.A., New York, which the bank publicly announces from time to
time, and is a rate charged by the bank to it's most creditworthy commercial
borrowers. The inventory loan provides for borrowings in two installments that
are collateralized and secured by Company-owned rights representing ownership of
unsold weekly intervals. Amounts of the two advances and the monthly repayments
are based on formulas involving the number of unsold timeshare interests, the
average number of timeshare interests sold per month and average sales price per
interval sold. The inventory loan will mature on the earlier of April 30, 2001,
or 24 months from the date of the first advance.
NOTE 5. OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA
The Company has only one line of business, which develops, markets and
operates luxury vacation ownership resorts. The Company has operations in three
geographic areas. The following is a breakdown of revenues and assets by
geographic area (in thousands):
<TABLE>
<CAPTION>
Three Months Three Months
Ended June 30, 1998 Ended June 30, 1999
-------------------------------- -------------------------------------------
Mexico U.S. Total Mexico Canada U.S. Total
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues from external customers .... $ 15,636 546 $ 16,182 $ 15,664 $ 4,404 $ 4 $ 20,072
Operating income (loss) ............. 2,511 (214) 2,297 1,291 865 (955) 1,201
Capital expenditures ................ 1,150 81 1,231 578 91 435 1,104
Six Months Six Months
Ended June 30, 1998 Ended June 30, 1999
-------------------------------- -------------------------------------------
Mexico U.S. Total Mexico Canada U.S. Total
---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenues from external customers..... $ 34,124 $ 1,121 $ 35,245 $ 34,731 $ 7,680 $ 8 $ 42,419
Operating income (loss) ............. 8,357 (646) 7,711 5,918 142 (1,824) 4,236
Capital expenditures ................ 2,425 201 2,626 963 156 1,135 2,254
Total assets (at end of period) ..... 114,137 10,226 124,363 119,943 10,671 3,387 134,001
</TABLE>
Revenues are attributed to countries based on the location of the vacation
ownership resorts.
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NOTE 6. SHAREHOLDERS' INVESTMENT
Preferred Stock
The Class A Preferred Stock provides for preferential annual dividends at
16.5%. Cumulative unpaid dividends totaled approximately $1.2 million at June
30, 1999. As of July 1, 1999 all Class A Preferred Stock was exchanged for a new
class of Senior Preferred Stock which provides for annual dividends at 9%. No
cash dividends are required to be paid on the new class of preferred prior to
the earlier of (i) December 1, 2004 or (ii) an initial public offering of the
Company's common stock or the sale of the Company. Upon an initial public
offering or stock merger by the Company, the Company may redeem, based on a
formula, all cumulative dividends in exchange for either cash or stock of the
Company. The number of shares of the new Senior Preferred Stock to be issued is
50,000 (or $5,000,000). As part of the exchange, the holders also received
500,000 five-year warrants to purchase the Company's common stock at $5.00 per
share.
Convertible Preferred Stock
In connection with the purchase of Whiski Jack, the Company issued 20,775
shares of redeemable convertible preferred stock (Convertible Preferred) through
its wholly owned subsidiary, Raintree Resorts International Canada, Ltd.
(Raintree Canada). As of June 30, 1999, 15,775 shares were outstanding. The
shares accrue dividends at the rate of 10% per annum and cumulative unpaid
dividends totaled $0.2 million at June 30, 1999. As a condition of the
Convertible Preferred, the Company redeemed 5,000 shares ($0.5 million) on April
1, 1999. The Company will redeem $0.5 million on July 31, 1999, October 31, 1999
and January 31, 2000 and will redeem the balance on April 30, 2000.
NOTE 7. CONTINGENCIES AND COMMITMENTS
General
The Company is subject to various claims arising in the ordinary course of
business, and is a party to various legal proceedings, which constitute ordinary
routine litigation incidental to the Company's business. In the opinion of
management, all such matters are either adequately covered by insurance or are
not expected to have a material adverse effect on the Company.
Villa Vera Acquisitions
The Company has executed a letter of intent and has made an advance payment
of $0.5 million to acquire the land and facilities of the Villa Vera Hotel &
Racquet Club (the "Villa Vera") in Acapulco, Mexico. The purchase price,
estimated at $6.7 million, includes the cost of renovation and conversion that
will enable the Company to use the facilities for its intended purpose. Closing
of this acquisition is expected in late 1999.
Canadian Condominium Acquisitions
The Company has committed to purchase 21 condominium units in Whistler,
British Columbia at an aggregate purchase price of $4.0 million. Deposits of
$0.6 million have been paid as of June 30, 1999, with the balance to be paid
during 1999, or thereafter, based on completion of construction and transfer of
ownership.
NOTE 8. SUBSEQUENT EVENT
The Teton Club, LLC ("Teton Club"), a joint venture between the Company and
JHSC Properties, Inc., finalized during July, 1999 the financing for the
construction of the Teton Club's 37 condominium units. The financing between
FINOVA and the Teton Club consists of $33.3 million for construction financing,
$7.5 million for pre-sale working capital requirements and $20 million for
receivables financing. The receivable financing is a hypothecation
line-of-credit and will be used to repay the construction and pre-sale loans and
fund operating expenses. As part of the financing arrangement, the Company is
directly obligated for $8.3 million of the construction loan, $1.9 million of
the pre-sale working capital loan and $5 million of the receivables loan.
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
the Company's expectations and beliefs concerning future events that involve
risks and uncertainties, including those associated with the effects of (i)
international, national and regional economic conditions and conditions in the
international tourism and vacation ownership markets, (ii) the Company's
capacity to integrate acquisitions that it has made, and (iii) the availability
of capital resources necessary for the Company to execute its business strategy.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. Discussions containing such forward-looking statements may be found
in the material set forth under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" as well as elsewhere herein.
Actual results may differ materially from those projected in the forward-looking
statements. Although the company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this report will prove to be
accurate. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in this report. Considering the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved. The following discussion should be read in
conjunction with the financial statements of Raintree Resorts International,
Inc. and related notes thereto, the management's discussion and analysis related
thereto, all of which are included in the Form 10-K Annual Report for the year
ended December 31, 1998, filed by the Company with the Securities and Exchange
Commission and the financial statements and notes thereto contained herein.
COMPARISONS OF THE SIX MONTHS ENDED JUNE 30, 1998 TO THE SIX MONTHS ENDED JUNE
30, 1999.
Vacation Interval sales increased by approximately $5.8 million, or 21.8%,
from approximately $26.5 million for the six months ended June 30, 1998 to
approximately $32.3 million for the six months ended June 30, 1999. The
acquisition of Whiski Jack contributed approximately $6.2 million of this
increase. In Mexico vacation interval sales decreased slightly by approximately
$0.4 million, or 1.5%, from approximately $26.5 million for the six months ended
June 30, 1998 to approximately $26.1 million for the six months ended June 30,
1999.
The number of intervals sold in Mexico increased from 2,162 for the six
months ended June 30, 1998, to 2,318 for the six months ended June 30, 1999. The
average price per interval sold in Mexico decreased $254 per interval, or 2.2%,
from $11,574 for the six months ended June 30, 1998, to $11,320 for the six
months ended June 30, 1999. The decreases in the average price per interval sold
is a result of a decrease in the number of higher priced prime and holiday
season intervals owned by the Company for sale. In Mexico, substantially all
prime season intervals have been sold, and only 36% of the one-bedroom and 12%
of the two-bedroom holiday interval inventory remains unsold.
Rental and service fee income increased approximately $0.6 million, or
13.1%, from approximately $4.4 million for the six months ended June 30, 1998 to
approximately $5.0 million for the six months ended June 30, 1999. The
acquisition of Whiski Jack provided additional rental and service fee income of
approximately $1.1 million. In Mexico, rental and service fee income decreased
by approximately $0.5 million, or 11.5%. The decrease was due to the rental of
units to Westin at an average rate lower than that experienced by the Company
during the first six months of 1998. This lower rate resulted from a one-time
fee program available during the first quarter of 1998, but not available in
1999. Also, a higher rate of occupancy by members during the first six months of
1999 compared to the comparable prior year period resulted in fewer rooms
available for rent.
Interest income on Vacation Interval receivables increased by approximately
$0.8 million, or 29.5%, from approximately $2.9 million for the six months ended
June 30, 1998, to approximately $3.7 million for the six months ended June 30,
1999. This increase in interest income is due to the corresponding increase in
the Mexican Vacation Interval receivables of approximately $4.5 million from
approximately $43.2 million at June 30, 1998, to approximately $47.7 million at
June 30, 1999, and additional interest income of $0.2 million associated with
the additional Vacation Interval receivables acquired in the acquisition of
Whiski Jack.
11
<PAGE>
Cost of Vacation Interval sales increased by approximately $2.7 million, or
47.1%, from approximately $5.9 million for the six months ended June 30, 1998,
to approximately $8.6 million for the six months ended June 30, 1999. The
acquisition of Whiski Jack accounted for approximately $2.1 million of this
increase. In Mexico, cost of vacation interval sales increased approximately
$0.6 million, or 10.6%, from approximately $5.9 million for the six months ended
June 30, 1998, to approximately $6.5 million for the six months ended June 30,
1999.
Provision for doubtful accounts increased by approximately 0.4 million, or
20.8%, from approximately $2.1 million for the six months ended June 30, 1998,
to approximately $2.5 million for the six months ended June 30, 1999. The
Company provides a provision for doubtful accounts to achieve a balance sheet
reserve of around 12% of Vacation Interval receivables. The Company believes
that this reserve provides adequate coverage of default risk under current
market conditions.
Advertising, sales and marketing expense increased approximately $4.1
million, or 39.5%, from approximately $10.6 million for the six months ended
June 30, 1998, to approximately $14.7 million for the six months ended June 30,
1999. The acquisition of Whiski Jack contributed approximately $2.3 million of
this increase. In Mexico, the advertising, sales and marketing expenses
increased approximately $1.6 million, as a result of overall greater selling and
marketing efforts during the first six months of 1999. The increased sales and
marketing efforts are primarily due to the relative low level in availability of
higher, and therefore higher priced, prime and holiday season interval inventory
as compared to the level of unsold inventory represented by lower demand time
periods.
Maintenance and energy expenses increased approximately $1.0 million, or
24.7%, from approximately $4.0 million for the six months ended June 30, 1998,
to approximately $5.0 million for the six months ended June 30, 1999. The
acquisition of Whiski Jack increased maintenance and energy expenses by
approximately $0.8 million.
General and administrative expenses increased approximately $0.8 million,
or 16.4%, from approximately $4.9 million for the six months ended June 30,
1998, to approximately $5.7 million for the six months ended June 30, 1999. The
acquisition of Whiski Jack increased general and administrative expenses
approximately $0.9 million.
The first six months of 1999 amortization of goodwill relates to the
goodwill resulting from the acquisition of Whiski Jack, which is being amortized
in proportion to sales of units acquired in the acquisition.
Interest expense was approximately $1.5 million more in the first six
months of 1999 as compared to the first six months of 1998 due primarily to a
higher level of debt outstanding between the periods, which increased from
$103.0 million at June 30, 1998 to $122.9 million at June 30, 1999, and also due
to a decrease in interest capitalized.
Foreign currency exchange losses totaled approximately $0.2 million during
the first six months of 1999 compared to a loss of approximately $1.9 million
during the first six months of 1998. The decrease in loss between periods
occurred due to a stronger peso against the U.S. dollar during the first six
months of 1999. The Company maintains a portfolio of UDI receivables
(receivables denominated in an alternate Mexican currency that is adjusted for
inflation on a daily basis) to partially offset peso devaluation. The UDI
inflation adjustments are expected to offset the long-term effect of peso
devaluation on UDI receivables but may not offset losses in the near term. The
amount of UDI inflation adjustments, which is included under interest income on
vacation interval receivables, was approximately $1.0 million during the first
six months of 1998 and approximately $1.1 million during the first six months of
1999.
COMPARISONS OF THE THREE MONTHS ENDED JUNE 30, 1998 TO THE THREE MONTHS ENDED
JUNE 30, 1999.
Vacation Interval sales increased by approximately $2.9 million or 23.2%,
from approximately $12.4 million for the three months ended June 30, 1998 to
approximately $15.3 million for the three months ended June 30, 1999. The
acquisition of Whiski Jack added approximately $3.6 million of Vacation Interval
sales. In Mexico vacation interval sales decreased by approximately $0.7
million, or 5.9%, from approximately $12.4 million for the three months ended
June 30, 1998 to approximately $11.7 million for the three months ended June 30,
1999.
12
<PAGE>
The number of intervals sold in Mexico increased from 947 for the three
months ended June 30, 1998, to 1,067 for the three months ended June 30, 1999.
The average price per interval sold in Mexico decreased $380 per interval, or
3.2%, from $11,729 for the three months ended June 30, 1998, to $11,349 for the
three months ended June 30, 1999. See the discussion of the decrease in the
average price per interval above under the comparison for the six months.
Rental and service fee income increased approximately $0.6 million, or
29.8%, from approximately $1.9 million for the three months ended June 30, 1998
to approximately $2.5 million for the three months ended June 30, 1999. This
increase was due to the acquisition of Whiski Jack.
Interest income on Vacation Interval receivables increased by approximately
$0.3 million, or 25.5%, from approximately $1.3 million for the three months
ended June 30, 1998, to approximately $1.6 million for the three months ended
June 30, 1999. This increase in interest income is associated with the Mexican
Vacation Interval receivables increasing by approximately $4.5 million from
approximately $43.2 million at June 30, 1998, to approximately $47.7 million at
June 30, 1999, and additional interest income of $0.1 million associated with
the additional Vacation Interval receivables acquired in the acquisition of
Whiski Jack.
Cost of Vacation Interval sales increased by approximately $1.6 million, or
58.0%, from approximately $2.7 million for the three months ended June 30, 1998,
to approximately $4.3 million for the three months ended June 30, 1999. This
increase results primarily from the acquisition of Whiski Jack.
Provision for doubtful accounts increased by approximately $0.5 million, or
55.7%, from approximately $0.8 million for the three months ended June 30, 1998
to approximately $1.3 million for the three months ended June 30, 1999. The
Company provides a provision for doubtful accounts to achieve a balance sheet
reserve of around 12% of Vacation Interval receivables. This reserve level
provides adequate coverage of default risk given current market conditions.
Advertising, sales and marketing expense increased approximately $2.0
million, or 38.0%, from approximately $5.3 million for the three months ended
June 30, 1998, to approximately $7.3 million for the three months ended June 30,
1999. The acquisition of Whiski Jack contributed approximately $1.2 million of
this increase. In Mexico, the advertising, sales and marketing expenses
increased approximately $0.6 million, as a result of overall greater selling and
marketing efforts during the second quarter of 1999. The increased sales and
marketing efforts are primarily due to the reduction in availability of higher
demand prime and holiday season interval inventory.
Maintenance and energy expenses increased approximately $0.7 million, or
30.5%, from approximately $2.2 million for the three months ended June 30, 1998,
to approximately $2.8 million for the three months ended June 30, 1999. The
acquisition of Whiski Jack increased maintenance and energy expenses by
approximately $0.4 million.
General and administrative expenses were unchanged from prior year second
quarter. The additional general and administrative expenses from the acquisition
of Whiski Jack of approximately $0.5 million were offset by decreases in
third-party professional services.
The second quarter 1999 amortization of goodwill relates to the goodwill
resulting from the acquisition of Whiski Jack. Goodwill is being amortized in
proportion to sales of units acquired in the acquisition.
Interest expense was approximately $0.7 million more during the three
months ended June 30, 1999 as compared to the similar three months of 1998 due
primarily to a higher level of debt outstanding, up $19.9 million between the
periods, and due to a marginal decrease in interest capitalized.
Foreign currency exchange loss totaled approximately $0.7 million for the
three months ended June 30, 1999, compared to a loss of approximately $1.1
million during the three months ended June 30, 1998. The decrease in loss
between periods occurred due to a stronger peso against the U.S. dollar during
the second quarter of 1999. The amount of UDI inflation adjustments, which is
included in interest income on vacation interval receivables, was approximately
$0.3 million during the three months ended June 30, 1998 and 1999.
13
<PAGE>
COMPARISONS OF JUNE 30, 1999 BALANCE SHEET AMOUNTS TO DECEMBER 31, 1998 BALANCE
SHEET AMOUNTS
Vacation Interval receivables and other trade receivables increased
approximately $7.2 million from approximately $51.8 million as of December 31,
1998 to approximately $59.0 million as of June 30, 1999. The increase was
attributable to an increase in the level of sales financing with approximately
500 new loans, UDI inflation adjustments of $1.1 million and the annual service
fee billing issued during the first quarter.
Equity investments increased $1.0 million from approximately $2.9 million
as of December 31, 1998 to approximately $3.9 million as of June 30, 1999. The
increase was primarily attributable to the Company's investment in the Teton
Club. The Company and its joint venture partner contributed cash for operations
prior to the Teton Club's closing on its construction and working capital
financing.
Cost of unsold vacation ownership intervals and related club memberships
(unit inventory) decreased approximately $4.6 million from approximately $23.0
million as of December 31, 1998 to approximately $27.6 million as of June 30,
1999. The sale of units reduced unit inventory by approximately $8.6 million,
which was offset by purchases in Canada of approximately $2.4 million and the
remainder primarily for reinstatement of inventory previously sold in Mexico.
Accounts payable and accrued liabilities increased approximately $2.0
million from approximately $11.9 million as of December 31, 1998 to
approximately $13.9 million as of June 30, 1999. The variance is caused by an
increase in the refurbishment reserve of $0.8 million and an increase in amounts
owed to an affiliate.
Unearned service fees increased approximately $1.7 million from
approximately $2.0 million as of December 31, 1998 to approximately $3.7 million
as of June 30, 1999. This balance was higher at the end of June, 1999 as
compared to December, 1998 because a majority of the related fees are typically
invoiced at the beginning of each year and then earned during the remainder of
that year.
LIQUIDITY AND CAPITAL RESOURCES
The Company generates cash for operations primarily from the sale of
Vacation Intervals, receipt of payments on the Vacation Interval receivables,
and the receipt of service fees charged to members. With respect to the sale of
Vacation Intervals, the Company generates cash from all-cash purchases and from
receipt of down payments on financed Vacation Intervals. The Company also
generates cash from financing Vacation Interval sales and receiving principal
and interest payments. Additionally, the Company uses Vacation Interval
receivables as collateral in order to obtain loans.
At June 30, 1999, the Company has $122.9 million of debt outstanding, an
increase of $5.8 million as compared to year end 1998. Debt outstanding
consisted primarily of $100 million in Senior Notes payable, $16.5 million drawn
on the FINOVA credit facility, $2.5 million Cabos West note payable, and $3.9
million mortgage notes payable to a bank. In addition to such debt, the Company
has outstanding $1.6 million in redeemable convertible preferred stock, $0.5
million of which the Company redeemed on April 1, 1999. Furthermore, the Company
will redeem $0.5 million each on July 31, 1999, October 31, 1999 and January 31,
2000 and will redeem the balance on April 30, 2000.
The Company's borrowing capacity under the FINOVA credit facility was
expanded with the finalization of the inventory based non-revolving line of
credit. This, along with the existing $20 million accounts receivable based
credit facility, will complete the FINOVA credit agreement, and will provide an
aggregate borrowing limit of $32 million.
At June 30, 1999, the Company had an inventory of approximately 4,700 weeks
in Mexico and over 400 weeks in Canada. The Company believes its existing
inventory will provide it with approximately one year of product available for
sale under existing or planned marketing programs and its' sales organization.
The Company plans to increase its Vacation Interval inventory through
development of additional properties and by making acquisitions in the short
term, by purchasing the Villa Vera, by acquiring condominiums in Whistler,
British Columbia, by
14
<PAGE>
developing the Teton Club joint venture, its land in Los Cabos, and its land in
Cozumel, and by making acquisitions in Mexico, the United States and Canada.
To finance its growth, in addition to accessing the lines of credit with
FINOVA, the Company may from time to time consider issuing debt, equity or other
securities, entering into traditional construction financing or credit
agreements, entering into joint venture or development agreements with respect
to its undeveloped property, or factoring additional Vacation Interval
receivables. The Company is highly leveraged and, under the Indenture, there are
limitations on the Company's ability to borrow funds and to make certain equity
investments. Additionally, the FINOVA credit agreement requires the Company to
maintain certain financial covenants, including minimum equity levels.
Accordingly, there can be no assurance that the Company will be able to use debt
to finance any expansion plans beyond its plans to finance its current
commitments.
At June 30, 1999, the Company is, and will continue to be, highly
leveraged, with substantial debt service requirements. The Company has incurred
losses since its inception and expects to incur a net loss for fiscal 1999. To
achieve profitable operations the Company is dependent upon a number of factors,
including its ability to increase its Vacation Interval inventory on an
economical basis through development projects or through the acquisition of
existing resort properties. The Company expects, although no assurance can be
made, that its credit capacity, and its ability to obtain capital financing, as
well as the Company's anticipated results of operations, will be sufficient to
fund its capital requirements during the next twelve months.
IMPACT OF YEAR 2000
In Mexico, the Company uses Resort Computer Corporation's ("RCC") software
to manage its vacation ownership operations, including marketing activities,
sales presentations, contract management, collections, member reservations and
hotel operations. In contrast with traditional software run on mainframe
systems, the RCC software was developed in the late 1980's, and has been Year
2000 compliant since 1994. The Company completed installing a new financial
system to be used in conjunction with the operating system. This system is also
Year 2000 compliant.
In Canada, the Company anticipates that the financial and operating systems
will be Year 2000 compliant by the end of the third quarter of 1999.
Additionally, the Company has initiated discussions with all significant
suppliers including the Westin Hotels in Mexico. No significant Year 2000 issues
have been identified. The Company believes that there are no significant Year
2000 issues, which conclusion is based on a comprehensive study of this issue.
Accordingly, management has concluded that no significant costs will be incurred
to address the issue.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following is a list of exhibits filed as part of this quarterly report.
Exhibit No. Description
10.1 First Amended and Restated Loan and Security Agreement for
$20,000,000 Receivables Loan and $13,500,000 Inventory Loan,
dated April 23, 1999, by and between FINOVA Capital
Corporation and CR Resorts Cancun, S. de R.L. de C.V.; CR
Resorts Los Cabos, S. de R.L. de C.V.; CR Resorts Puerto
Vallarta, S. de R.L. de C.V.; CR Resorts Cabos Timeshare
Trust, S. de R.L. de C.V. and CR Resorts Puerto Vallarta
Timeshare Trust, S. de R.L. de C.V.
10.2 Consent of Guarantor and Amendment No. 1 to Corporate
Guarantee and Subordination Agreement to the Loan and
Security Agreement for $20,000,000 with FINOVA, dated April
23, 1999, by and between FINOVA Capital Corporation and
Raintree Resorts International, Inc.
10.3 Loan and Security Agreement for $33,250,000 Construction
Loan, $7,500,000 Working Capital Loan and $20,000,000
Receivables Loan, dated June 29, 1999, by and between FINOVA
Capital Corporation and The Teton Club, L.L.C. and Raintree
Resorts International, Inc.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
None
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrants, Raintree Resorts International, Inc. and CR Resorts Capital, S. de
R.L. de C.V., have duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized.
RAINTREE RESORTS INTERNATIONAL, INC.
CR RESORTS CAPITAL, S. DE R.L. DE C.V.
Date: 8/12/99 By: /s/ GEORGE E. ALDRICH
----------------------------------------------
George E. Aldrich
Senior Vice President - Finance and Accounting
(Principal Accounting Officer)
17
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10.1 First Amended and Restated Loan and Security Agreement for
$20,000,000 Receivables Loan and $13,500,000 Inventory Loan,
dated April 23, 1999, by and between FINOVA Capital
Corporation and CR Resorts Cancun, S. de R.L. de C.V.; CR
Resorts Los Cabos, S. de R.L. de C.V.; CR Resorts Puerto
Vallarta, S. de R.L. de C.V.; CR Resorts Cabos Timeshare
Trust, S. de R.L. de C.V. and CR Resorts Puerto Vallarta
Timeshare Trust, S. de R.L. de C.V.
10.2 Consent of Guarantor and Amendment No. 1 to Corporate
Guarantee and Subordination Agreement to the Loan and
Security Agreement for $20,000,000 with FINOVA, dated April
23, 1999, by and between FINOVA Capital Corporation and
Raintree Resorts International, Inc.
10.3 Loan and Security Agreement for $33,250,000 Construction
Loan, $7,500,000 Working Capital Loan and $20,000,000
Receivables Loan, dated June 29, 1999, by and between FINOVA
Capital Corporation and The Teton Club, L.L.C. and Raintree
Resorts International, Inc.
27.1 Financial Data Schedule
18
<PAGE>
FIRST AMENDED
AND RESTATED
LOAN AND
SECURITY AGREEMENT
CR Resorts Cancun, S. de R.L. de C.V.
CR Resorts Los Cabos, S. de R.L. de C.V.
CR Resorts Puerto Vallarta, S. de R.L. de C.V.
Corporacion Mexitur S. de R.L. de C.V.
CR Resorts Cancun Timeshare Trust, S. de R.L. de C.V.
CR Resorts Cabos Timeshare Trust, S. de R.L. de C.V.
CR Resorts Puerto Vallarta Timeshare Trust, S. de R.L. de C.V.
Borrower
c/o Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Address
$20,000,000 Receivables Loan
$13,500,000 Inventory Loan
Date: April 23, 1999
INTERNATIONAL RESORT FINANCE
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
1. DEFINITIONS....................................................................................................1
2. LOAN COMMITMENT; USE OF PROCEEDS...............................................................................8
2.1 Loan Commitment; Determination of Advance Amounts.....................................................8
2.2 Loan Revolver.........................................................................................9
2.3 Continuation of Obligations Throughout Term...........................................................9
2.4 Use of Advances.......................................................................................9
2.5 Repayment of Receivables Loan.........................................................................9
2.6 Interest..............................................................................................9
2.7 Minimum Required Payments.............................................................................9
2.8 Prepayment...........................................................................................10
2.9 Receivables Loan Fee; Inventory Loan Fee; Custodial Fee; Availability Fee............................11
2.10 Application of Proceeds of Collateral and Payments...................................................11
2.11 Borrower's Unconditional Obligation to Make Payments.................................................12
3. SECURITY 12
3.1 Grant of Security Interest in Receivables Collateral.................................................12
3.2 Ineligible Instruments...............................................................................13
3.3 Lockbox Collections and Servicing....................................................................13
3.4 Replacement of Agents................................................................................14
3.5 Maintenance of Security..............................................................................14
3.6 Liability of Guarantors..............................................................................14
4. CONDITIONS PRECEDENT TO ADVANCES; MINIMUM AMOUNT AND MAXIMUM FREQUENCY OF ADVANCES; METHOD OF DISBURSEMENT....14
4.1 Delivery of Loan Documents and Due Diligence Items Prior to Initial Advance..........................14
4.2 Additional Conditions Precedent for Advances.........................................................17
4.3 General Conditions Precedent to All Advances.........................................................17
4.4 Conditions Satisfied at Borrower's Expense...........................................................18
4.5 Minimum Amount and Maximum Frequency of Advances of the Receivables Loan.............................18
4.6 Disbursement of Advances.............................................................................18
4.7 No Waiver............................................................................................18
5. BORROWER'S REPRESENTATIONS AND WARRANTIES.....................................................................18
5.1 Good Standing........................................................................................18
5.2 Power and Authority; Enforceability..................................................................19
5.3 Borrower's Principal Place of Business...............................................................19
5.4 No Litigation........................................................................................19
5.5 Compliance with Legal Requirements...................................................................20
5.6 No Misrepresentations................................................................................20
5.7 No Default for Third Party Obligations...............................................................20
5.8 Payment of Taxes and Other Impositions...............................................................20
5.9 Sales Activities.....................................................................................20
5.10 Time-Share Interest Not a Security...................................................................20
5.11 Zoning Compliance....................................................................................20
5.12 Eligible Instruments.................................................................................20
5.13 Assessments and Reserves.............................................................................20
5.14 Title to and Maintenance of Common Areas and Amenities; Other Title Matters..........................20
5.15 Receivables Trusts...................................................................................21
5.16 Year 2000............................................................................................21
5.17 Survival and Additional Representations and Warranties...............................................21
6. BORROWER'S COVENANTS..........................................................................................21
6.1 Borrower's Affirmative Covenants.....................................................................21
6.2 Borrower's Negative Covenants........................................................................26
6.3 Additional Covenants re Real Estate..................................................................28
6.4 Survival of Covenants................................................................................32
7. DEFAULT 32
7.1 Events of Default....................................................................................32
7.2 Remedies.............................................................................................34
7.3 Application of Proceeds During an Event of Default...................................................34
7.4 Uniform Commercial Remedies; Sale; Assembly of Receivables Collateral................................34
7.5 Application of Proceeds..............................................................................35
7.6 Lender's Right to Perform............................................................................35
7.7 Non-Exclusive Remedies...............................................................................35
7.8 Waiver of Marshalling................................................................................35
7.9 Attorney-in-Fact.....................................................................................36
8. COSTS AND EXPENSES; INDEMNIFICATION...........................................................................36
8.1 Costs and Expenses...................................................................................36
8.2 Indemnification......................................................................................37
9. CONSTRUCTION AND GENERAL TERMS................................................................................37
9.1 Special Provisions Relating to Receivables Trusts....................................................37
9.2 Payment Location.....................................................................................39
9.3 Entire Agreement.....................................................................................39
9.4 Powers Coupled with an Interest......................................................................39
9.5 Counterparts; Facsimile Signatures...................................................................39
9.6 Notices..............................................................................................39
9.7 Successors and Assigns...............................................................................40
9.8 Severability.........................................................................................40
9.9 Time of Essence......................................................................................40
9.10 Miscellaneous........................................................................................40
9.11 CHOICE OF LAW........................................................................................41
9.12 CHOICE OF JURISDICTION; WAIVER OF VENUE..............................................................41
9.13 WAIVER OF JURY TRIAL.................................................................................41
9.14 INDUCEMENT TO LENDER.................................................................................41
9.15 Compliance With Applicable Usury Law.................................................................42
9.16 NO RELATIONSHIP WITH PURCHASERS......................................................................42
9.17 NO JOINT VENTURE.....................................................................................42
9.18 Standards Applied to Lender's Actions................................................................42
9.19 Meaning of Subordination.............................................................................42
9.20 Scope of Reimbursable Attorney's Fees................................................................42
9.21 Publicity............................................................................................42
9.22 Joint and Several....................................................................................42
9.23 Reliance.............................................................................................43
9.24 Currency.............................................................................................43
9.25 Consideration........................................................................................43
9.26 Judgment Currency....................................................................................44
Schedule .........Schedule of Additional Terms
Exhibit A......... Conditions of Eligible Instrument
Exhibit B......... Permitted Encumbrances
Exhibit C......... Borrower's Certificate
Exhibit C-1....... Receivables Re-Assignment
Exhibit D......... FINOVA Wiring Information
Exhibit E......... Additional Conditions to Receivables Loan Advances
Exhibit E-1....... Request for Receivables Loan Advance and Certification
Exhibit E-2....... Receivables Assignment
Exhibit F......... Request for Inventory Loan Advance and Certification
</TABLE>
This FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into for
good and valuable consideration, by and between FINOVA CAPITAL CORPORATION, a
Delaware corporation ("Lender"), and CR Resorts Cancun, S. de R.L. de C.V. ("CR
Cancun"); CR Resorts Los Cabos, S. de R.L. de C.V. ("CR Cabos"); CR Resorts
Puerto Vallarta, S. de R.L. de C.V. ("CR Puerto Vallarta"); Corporacion Mexitur,
S. de R.L. de C.V. ("Corporacion Mexitur"); CR Resorts Cancun Timeshare Trust,
S. de R.L. de C.V. ("Cancun Sub"); CR Resorts Cabos Timeshare Trust, S. de R.L.
de C.V. ("Cabos Sub"), and CR Resorts Puerto Vallarta Timeshare Trust, S. de
R.L. de C.V. ("Puerto Vallarta Sub"), individually and collectively, jointly and
severally, "Borrower". This Agreement amends, supersedes in its entirety and
replaces that certain Loan and Security Agreement dated as of November 23, 1998
by and among Lender and Borrower (the "Original Agreement"). This Agreement
extends and renews but does not extinguish the liens granted pursuant to the
Original Agreement.
1. DEFINITIONS
As used in this Agreement and the other Loan Documents unless otherwise
expressly indicated in this Agreement or the other Loan Documents, the following
terms shall have the following meanings (such meanings to be applicable equally
both to the singular and plural terms defined).
"Advance": as the context requires, an advance of the proceeds of the
Receivables Loan or the Inventory Loan by Lender to, or on behalf of, Borrower
in accordance with the terms and conditions of this Agreement.
"Affiliate": with respect to any individual or entity, any other individual
or entity that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such individual
or entity.
"Agents": the Servicing Agent and the Lockbox Agent.
"Agreement": this First Amended and Restated Loan and Security Agreement,
as it may be from time to time renewed, amended, restated or replaced.
"Applicable Usury Law": the usury law chosen by the parties pursuant to the
terms of paragraph 9.11 or such other usury law which is applicable if such
usury law is not.
"Articles of Organization": the charter, articles, operating agreement,
joint venture agreement, partnership agreement, by-laws and any other written
documents evidencing the formation, organization, governance and continuing
existence of an entity.
"Availability Advance": an Advance of the Receivables Loan which is made
against an Eligible Instrument after the first Advance of the Receivables Loan
made against such Instrument and is based upon the difference at such time
between the Borrowing Base of such Instrument and the unpaid principal balance
of the Receivables Loan attributable to such Instrument; provided that the
substitution of an Eligible Instrument for an ineligible Instrument pursuant to
paragraph 3.2 shall not be deemed to be an Availability Advance for purposes of
this paragraph, but the first and every subsequent Advance of the Receivables
Loan against such substituted Eligible Instrument shall be deemed to be an
Availability Advance.
"Availability Fee": the meaning given to it in paragraph 2.9(c).
"Base Rate": the publicly announced "Corporate Base" rate of Citibank,
N.A., as initially determined on the closing of the Receivables Loan and as the
same may thereafter change from time to time. As used above, the "Corporate
Base" rate of Citibank shall mean the rate of interest publicly announced from
time to time by Citibank, N.A., New York, New York, as the base rate of interest
charged by Citibank to its most creditworthy commercial borrowers,
notwithstanding the fact that some borrowers of Citibank may borrow from
Citibank at rates less than such announced base rate.
"Basic Interest": the Basic Interest Rate (Inventory) or the Basic Interest
Rate (Receivables), as the context requires.
"Basic Interest Rate (Inventory)": the per annum rate of interest described
in the Schedule as the Basic Interest Rate (Inventory).
"Basic Interest Rate (Receivables)": the per annum rate of interest
described in the Schedule as the Basic Interest Rate (Receivables).
"Borrower": individually and collectively, jointly and severally, the
individuals or business organizations signing below and identified above as
"Borrower"; and, subject to the restrictions on assignment and transfer
contained in this Agreement, their respective successors and assigns.
"Borrower's Knowledge": the actual, current knowledge of the chief
executive officers of Borrower.
"Business Day": any day other than a Saturday, a Sunday, a national holiday
in the United States of
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America or Mexico or a day on which banks in Phoenix, Arizona or Mexico City are
required to be closed.
"CILP Assignment": a written assignment to be executed and delivered to
Lender by Borrower and creating in favor of Lender a perfected, direct, first
and exclusive assignment of the Contracts, Intangibles, Licenses and Permits in
order to facilitate Performance of the Obligations, as it may be from time to
time renewed, amended, restated or replaced.
"Collateral": the Receivables Loan Collateral and the collateral pledged to
Lender pursuant to the Security Documents and all products and proceeds thereof.
"Commitment Letter": that certain Commitment Letter from Borrower to Lender
dated November 13, 1998 concerning the Receivables Loan and the Inventory Loan.
"Contracts, Intangibles, Licenses, Permits": all contracts, licenses,
permits, plans and other intangibles in which Borrower now or hereafter has
rights and are now or hereafter used in connection with the marketing and sale
of Time-Share Interests and the management and/or operation of the Time-Share
Project.
"Custodial Fee": the meaning given to it in paragraph 2.9(b).
"Default Rate": the per annum rate of interest identified in the Schedule
as the Default Rate.
"Dollars" or "$": shall mean United States Dollars.
"Eligible Instrument": an Instrument which conforms to the standards set
forth in Exhibit A. An Instrument that has qualified as an Eligible Instrument
shall cease to be an Eligible Instrument upon the date of the first occurrence
of any of the following: (a) any installment due with respect to that Instrument
becomes more than sixty (60) days past due or (b) that Instrument otherwise
fails to continue to conform to the standards set forth in Exhibit A.
"Environmental Certificate": an environmental certificate executed and
delivered to Lender by Borrower and such other persons as Lender may require and
containing representations, warranties and covenants regarding the environmental
condition of the Time-Share Project, as it may be from time to time renewed,
amended, restated or replaced.
"Event of Default": the meaning set forth in paragraph 7.1.
"FPSI": FINOVA Portfolio Services, Inc., an Arizona corporation, and its
successors and assigns.
"GAAP": shall mean generally accepted accounting principles as in effect
from time to time in the United States of America, consistently applied,
throughout the period involved and with the prior periods, which shall include
the official interpretations thereof by the Financial Accounting Standards Board
or any successor thereto.
"Guarantor": at any time, a person or entity then required under the terms
of this Agreement to guarantee all or any part of the Obligations.
"Guaranty": a primary, joint and several guaranty or guarantee agreement
made by a Guarantor with respect to all or any part of the Obligations, as it
may be from time to time renewed, amended, restated or replaced.
"Guaranty Trusts": collectively (i) with respect to the Club Regina Resort
at Los Cabos, that certain Irrevocable Trust Agreement, dated as of August 18,
1997, by and between Desarrollos Turisticos Integrales, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital
(predecessor-in-interest to CR Cabos) both as trustor and beneficiary with
respect to the Trust Use Rights, the Land Trustee, as trustee, and Residual
Beneficiary, as beneficiary with respect to the Trust Residual Interest, as
evidenced by Public Instrument No. 55,929, as amended by that certain Amendment
to Irrevocable Trust Agreement, dated as of November 28, 1997, by and between CR
Cabos, Land Trustee and Residual Beneficiary, as evidenced by Public Instrument
No. 51,158, as further amended by that certain Amendment to Irrevocable Trust
Agreement dated as of March 3, 1998 by and between CR Cabos, Land Trustee and
Residual Beneficiary, as evidenced by Public Instrument No. 51,403, and as
further amended by that certain Amendment to Irrevocable Trust Agreement
(Convenio Modificatorio del Contracto de Fideicomiso Irrevocable) dated as of
April 26, 1999 evidenced by Public Instrument No. 67,620 of Notary Public Number
103 for the Federal District of Mexico, executed by Land Trustee, as Trustee, CR
Cabos, as beneficiary with respect to the Trust Use Rights, Lender, as
beneficiary in guaranty with respect to the Trust Use Rights and Residual
Beneficiary, as beneficiary with respect to the Trust Residual Interest, as it
may be from time to time renewed, amended, restated or replaced, (ii) with
respect to the Club Regina Resort at Cancun, that certain Irrevocable Trust
Agreement, dated as of August 18, 1997, by and between Promotora Turistica
Nizuc, S. de R.L. de C.V. a Mexican limited
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responsibility corporation with variable capital (predecessor-in-interest to CR
Cancun) both as trustor and beneficiary with respect to the Trust Use Rights,
the Land Trustee, as trustee, and Residual Beneficiary as beneficiary with
respect to the Trust Residual Interest, as evidenced by Public Instrument No.
55,928, as amended by that certain Amendment to Irrevocable Trust Agreement,
dated as of November 28, 1997, by and between CR Cancun, Land Trustee and
Residual Beneficiary, as evidenced by Public Instrument No. 51,162, as further
amended by that certain Amendment to Irrevocable Trust Agreement dated as of
March 3, 1998 by and between CR Cancun, Land Trustee and Residual Beneficiary,
as evidenced by Public Instrument No. 51,404, and as further amended by that
certain Amendment to Irrevocable Trust Agreement (Convenio Modificatorio del
Contracto de Fideicomiso Irrevocable) dated as of April 26, 1999 evidenced by
Public Instrument No. 67619 of Notary Public Number 103 for the Federal District
of Mexico, executed by Land Trustee, as Trustee, CR Cancun, as beneficiary with
respect to the Trust Use Rights, Lender, as beneficiary in guaranty with respect
to the Trust Use Rights and Residual Beneficiary, as beneficiary with respect to
the Trust Residual Interest, as it may be from time to time renewed, amended,
restated or replaced, and (iii) with respect to the Club Regina Resort at Puerto
Vallarta, that certain Irrevocable Trust Agreement, dated as of August 18, 1997,
by and between Promotora y Desarrolladora Pacifico, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital
(predecessor-in-interest to CR Puerto Vallarta), both as trustor and beneficiary
with respect to the Trust Use Rights, the Land Trustee, as trustee, and Residual
Beneficiary, as beneficiary with respect to the Trust Residual Interest, as
evidenced by Public Instrument No. 55,927, as amended by that certain Amendment
to Irrevocable Trust Agreement, dated as of November 28, 1997, by and between CR
Puerto Vallarta, Land Trustee and Residual Beneficiary as evidenced by Public
Instrument No. 51,159, as further amended by that certain Amendment to
Irrevocable Trust Agreement dated as of March 3, 1998 by and between CR Puerto
Vallarta, Land Trustee and Residual Beneficiary, as evidenced by Public
Instrument No. 51,405, and as further amended by Amendment to Irrevocable Trust
Agreement (Convenio Modificatorio del Contracto de Fideicomiso Irrevocable)
dated as of April 26, 1999 evidenced by Public Instrument No. 67,618 of Notary
Public Number 103 for the Federal District of Mexico, executed Land Trustee, as
Trustee, CR Puerto Vallarta, as beneficiary with respect to the Trust Use
Rights, Lender, as beneficiary in guaranty with respect to the Trust Use Rights,
and Residual Beneficiary, as beneficiary with respect to the Trust Residual
Interest, as it may be from time to time renewed, amended, restated or replaced.
The term Guaranty Trust shall mean any of the Guaranty Trusts.
"Impositions": all real estate, personal property, excise, privilege,
transaction, documentary stamp and other taxes, charges, assessments and levies
(including non-governmental assessments and levies such as maintenance charges,
association dues and assessments under private covenants, conditions and
restrictions) and any interest, costs, fines or penalties with respect thereto,
general and special, ordinary and extraordinary, foreseen and unforeseen, of any
kind and nature whatsoever which at any time prior to or after the execution
hereof may be assessed, levied or imposed. Impositions shall include any and all
taxes, withholding obligations, deduction, license fees, assessments, charges,
fines, penalties, or any property, privilege, excise, real estate or other
taxes, charges or assessments currently or hereafter levied or imposed by any
state, local or federal authority of Mexico upon or in connection with or
measured by the Loan Documents, the Collateral or the principal, interest or
other amounts payable by Borrower to Lender under the Loan Documents, together
with any amounts which must be withheld from the proceeds of the Collateral
pursuant to, without limitation, Sections 871, 881 and 1442 of the IRC.
Imposition shall not include taxes payable to the United States of America or to
any state or political subdivision thereof measured by the net income payable by
Lender.
"Improvements": any of the Units or any amenities, improvements, common
areas, buildings or other structures which are located on any of Club Regina
Resort at Cancun, Club Regina Resort at Puerto Vallarta or Club Regina Resort at
Los Cabos or that constitute either Trust Residual Interest or the Trust Use
Rights.
"Incipient Default": an event which after notice and/or lapse of time would
constitute an Event of Default.
"Indenture": the Indenture dated December 5, 1997, pursuant to which the
Redeemable Senior Notes were issued.
"Ineligibility Event": the meaning given to it in paragraph 3.2.
"Interval Sales Payments": the meaning set forth in Section S.4 of the
Schedule.
"Installment Date": the date upon which an installment of principal or
interest is due under the Inventory Loan Note or the Receivables Loan Note, as
the context requires.
"Instrument": a purchase money promissory note which has arisen out of a
sale of a Time-Share
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Interest by Borrower to a Purchaser, and is made payable by such Purchaser in
favor of one of CR Cabos, CR Cancun or CR Puerto Vallarta or a predecessor in
interest thereto.
"Insurance Policies": the insurance policies that Borrower is required to
maintain and deliver pursuant to paragraph 6.1(c).
"Inventory Collateral": the Trust Use Rights and all other property and
property rights of a Borrower which have been conveyed to Land Trustee for the
benefit of Lender as a beneficiary in guaranty under the Guaranty Trusts.
"Inventory Loan": the loan made pursuant to paragraph 2.1(b).
"Inventory Loan Borrowing Term": the period commencing on the date of this
Agreement and ending on the close of the Business Day (or if not a Business Day,
the first Business Day thereafter) on the date identified in the Schedule as the
Inventory Loan Borrowing Term Expiration Date.
"Inventory Loan Fee": the amount identified in the Schedule as the
Inventory Loan Fee.
"Inventory Loan Maturity Date": the date (or if not a Business Day, the
first Business Day thereafter) which is identified in the Schedule as the
Inventory Loan Maturity Date.
"Inventory Loan Note": the promissory note to be made and delivered by
Borrower to Lender pursuant to paragraph 4.1, having a face amount equal to the
Maximum Inventory Loan Amount, dated as of even date herewith, and made payable
to Lender to evidence the Inventory Loan, as it may be from time to time
renewed, amended, restated or replaced.
"Inventory Loan Opening Prepayment Date": the date identified in the
Schedule as the Inventory Loan Opening Prepayment Date.
"Inventory Loan Prepayment Premium": an amount to be paid pursuant to
paragraph 2.8 upon a prepayment of the Inventory Loan, determined by multiplying
the amount of the prepayment by the percentage identified in the Schedule as the
Inventory Loan Prepayment Premium and determined in accordance with provisions
of the Schedule.
"IRC": The United States Internal Revenue Code, as amended.
"Land Trustee": Bancomer, S.A., Institucion de Banca Multiple, Grupo
Financiero, Direccion Fiduciaria.
"Legal Requirements": (a) all present and future judicial decisions,
statutes, regulations, permits, licenses or certificates of any governmental
authority in any way applicable to Borrower directly or by virtue of its trust
beneficial interest on the Time Share Project; and (b) all contracts or
agreements (written or oral) by which Borrower directly or by virtue of its
trust beneficial interest on the Time Share Project, is bound or, if compliance
therewith would otherwise be in conflict with any of the Loan Documents, by
which Borrower directly or by virtue of its trust beneficial interest on the
Time Share Project, becomes bound with Lender's prior written consent.
"Lender": FINOVA Capital Corporation, a Delaware corporation, and its
successors and assigns.
"Loan Documents": this Agreement, the Receivables Loan Note, the Inventory
Loan Note, any and all Guaranties, any and all Subordination Agreements, the
Lockbox Agreement, the Servicing Agreement, the Oversight Agreement, the
Environmental Certificate, the Security Documents, and all other documents now
or hereafter executed in connection with the Receivables Loan or the Inventory
Loan, as they may be from time to time renewed, amended, restated or replaced.
"Lockbox Agent": business organization identified in the Schedule as the
Lockbox Agent, or its successor as lockbox agent under the Lockbox Agreement.
"Lockbox Agreement": an agreement to be made among Lender, Borrower,
Receivables Trustee and Lockbox Agent, which provides for Lockbox Agent to
collect through a lockbox payments under Instruments constituting part of the
Receivables Collateral and to remit them to Lender, as it may be from time to
time renewed, amended, restated or replaced.
"Maximum Inventory Loan Amount": the amount identified in the Schedule as
the Maximum Inventory Loan Amount.
"Maximum Loan Amount": the amount identified in the Schedule as the Maximum
Loan Amount.
"Maximum Receivables Loan Amount": the amount identified in the Schedule as
the Maximum Receivables Loan Amount.
"Mexican GAAP": generally accepted accounting principals in Mexico in
accordance with the provisions established by the Mexican Accountants Institute.
"Minimum Opinion Matters": (a) a favorable legal opinion of counsel for
Borrower and Guarantor,
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which counsel must be acceptable to Lender, dated as of the day of Required
Closing Date, covering the due authorization, execution and delivery of the Loan
Documents; the enforceability, validity and binding effect of the Loan Documents
and of all legal charges, liens and security interests granted thereby, under
law of the state of Arizona and the laws of Mexico; the enforceability under the
laws of Mexico of the Arizona choice of law, venue and jurisdiction provisions
contained in the Loan Documents; compliance under the laws of Mexico of
applicable usury laws; the procedures and requirements which must be satisfied
by the Borrower in connection with the making of withholding payments to the
Mexican taxing authorities; and such other matters as Lender may require,
including without limitation, Lender's satisfaction that under Mexican law, it
can achieve the practical realization of the remedies set forth in the Loan
Documents. In connection with such usury opinion, counsel shall be required to
opine that the Inventory Loan is not usurious under the law of Mexico (without
reliance on any usury savings clause).
(b) A favorable opinion from a tax attorney, acceptable to Lender,
providing that Borrower will be exempt from the payment of United States
withholding taxes associated with the collection of amounts due and payable
pursuant to the Instruments due to the Borrower's foreign jurisdiction of
organization, or to the nationality of the purchasers of use rights and
memberships and further providing that Lender will not be considered a
withholding agent as a result of the making of the Inventory Loan or the
Receivables Loan.
"Minimum Required Time-Share Approvals": official communications issued by
the Mexican Consumer Protection Agency (Procuraduria Federal del Consumidor)
evidencing that the Purchase Contract and Time-Share Program Consumer Documents
were approved and registered by such government agency.
"Mirror Notes": those notes totaling, in the aggregate, Eighty-Three
Million Three Hundred Forty Six Thousand Three Hundred Seventy-Two and 70/100
Dollars ($83,346,372.70) issued by CR Cancun, CR Cabos and CR Puerto Vallarta in
favor of CR Resorts Capital S. de R.L. de C.V.
"Obligations": all obligations, agreements, duties, covenants and
conditions of Borrower to Lender which Borrower is now or hereafter required to
Perform under the Loan Documents.
"Operating Agreements": each of the following: (a) that certain Contrato de
Operacion, dated as of March 18, 1998, by and between Starwood Cancun, S. de
R.L. de C.V., CR Cancun, CR Resorts Remainder Company, S. de R.L. de C.V., and
Bancomer, S.A., Institucion de Banca Multiple, Grupo Financiero Bancomer,
Division Fiduciaria, (b) that certain Contrato de Operacion, dated as of March
18, 1998, by and between Starwood Los Cabos, S. de R.L. de C.V., CR Cabos, CR
Resorts Remainder Company, S. de R.L. de C.V., and Bancomer, S.A., Institucion
de Banca Multiple, Grupo Financiero Bancomer, Division Fiduciaria, and (c) that
certain Contrato de Operacion, dated as of March 18, 1998, by and between
Starwood Puerto Vallarta, S. de R.L. de C.V., CR Puerto Vallarta, CR Resorts
Remainder Company, S. de R.L. de C.V., and Bancomer, S.A., Institucion de Banca
Multiple, Grupo Financiero Bancomer, Division Fiduciaria.
"Oversight Agreement": an agreement between Borrower Lender, FPSI and
Servicing Agent, in form and substance satisfactory to Lender, allowing FPSI to
oversee and monitor the collection and servicing functions of the Servicing
Agent, as it may be from time to time renewed, amended, restated or replaced.
"Pass-Through Certificates": each of the following: (a) the Club Regina
Trust I Trust Certificate Nos. 1 and 2, each of which has been issued, signed,
registered and authenticated by Receivables Trustee, together with all
replacements and substitutions therefor, each representing an undivided fifty
percent (50%) of the beneficial interest in said Receivables Trust, (b) the Club
Regina Trust II Trust Certificate Nos. 1 and 2, each of which has been issued,
signed, registered and authenticated by Receivables Trustee, together with all
replacements and substitutions therefor, each representing an undivided fifty
percent (50%) of the beneficial interest in said Receivables Trust and (c) the
Club Regina Trust III Trust Certificate Nos. 1 and 2, each of which has been
issued, signed, registered and authenticated by Receivables Trustee, together
with all replacements and substitutions therefor, each representing an undivided
fifty percent (50%) of the beneficial interest in said Receivables Trust.
"Performance" or "Perform": full, timely and faithful performance of the
Obligations by Borrower.
"Permitted Debt": the meaning given to it in paragraph 6.2(b).
"Permitted Encumbrances": the rights, restrictions, reservations,
encumbrances, easements and liens of record which Lender has agreed to accept as
set forth in Exhibit B.
"Pledge Agreement": individually and collectively, (a) that certain
Security Agreement dated as of November 23, 1998, between Receivables Trustee
and Lender, pursuant to which Receivables Trustee has
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granted to Lender a security interest in the Receivables Collateral owned by
Receivables Trustee under the Club Regina Trust I as security for Borrower's
payment and Performance of the Obligations and as security for Receivables
Trustee's Performance of Receivables Trustee's obligations under such Pledge
Agreement, in form and substance acceptable to Lender in its discretion, as it
may be from time to time renewed, amended, restated or replaced, (b) that
certain Security Agreement dated as of November 23, 1998, between Receivables
Trustee and Lender, pursuant to which Receivables Trustee has granted to Lender
a security interest in the Receivables Collateral owned by Receivables Trustee
under the Club Regina Trust II as security for Borrower's payment and
Performance of the Obligations and as security for Receivables Trustee's
Performance of Receivables Trustee's obligations under such Pledge Agreement, in
form and substance acceptable to Lender in its discretion, as it may be from
time to time renewed, amended, restated or replaced, and (c) that certain
Security Agreement dated of even date herewith between Receivables Trustee and
Lender, pursuant to which Receivables Trustee has granted to Lender a security
interest in the Receivables Collateral owned by Receivables Trustee under the
Club Regina Trust III as security for Borrower's payment and Performance of the
Obligations and as security for Receivables Trustee's Performance of Receivables
Trustee's obligations under such Pledge Agreement, in form and substance
acceptable to Lender in its discretion, as it may be from time to time renewed,
amended, restated or replaced.
"Prepayment Premium": either an Inventory Loan Prepayment Premium or a
Receivables Loan Prepayment Premium.
"Purchase Contract": a purchase contract pursuant to which Borrower has
agreed to sell and a third party has agreed to purchase a Time-Share Interest.
"Purchaser": a purchaser who has executed a Purchase Contract.
"Quiet Enjoyment Rights": the meaning given to it in paragraph 4.1(b).
"Real Property": the real property on which the Improvements are located.
"Receivables": membership, use rights and other consumer receivables
arising from the sale of Time-Share Interests in the Time-Share Project.
"Receivables Assignment": a written assignment of specific Instruments and
their proceeds, executed by Borrower and Receivables Trustee substantially in
form and substance identical to Exhibit E-2.
"Receivables Collateral": (a) the Instruments which are now or hereafter
assigned, endorsed or delivered to Lender pursuant to this Agreement or against
which an Advance of the Receivables Loan has been made; (b) all rights under all
documents evidencing, securing or otherwise pertaining to such Instruments,
including, without limitation, Purchase Contracts and escrow agreements; (c) all
collateral and other security interests given to secure an Instrument; (d) all
Borrower's rights under all escrow agreements and accounts pertaining to any of
the foregoing; (e) all reservation systems pertaining to the use of Time-Share
Interests; (f) the Receivables Trust Collateral; (g) all computer software,
files, books and records of Borrower pertaining to any of the foregoing; and (h)
the cash and non-cash proceeds of all of the foregoing, including, without
limitation (whether or not acquired with cash proceeds), all accounts, chattel
paper, contract rights, documents, general intangibles, instruments, fixtures,
equipment, inventory and other goods.
"Receivables Loan": the revolving line of credit loan made pursuant to
paragraph 2.1(a).
"Receivables Loan Borrowing Base": with respect to an Eligible Instrument,
an amount equal to the percentage of the unpaid principal balance of such
Eligible Instrument identified in the Schedule as the RLBB Principal Balance
Percentage.
"Receivables Loan Borrowing Base Shortfall": at any time, the amount by
which the unpaid principal balance of the Receivables Loan exceeds the aggregate
Receivables Loan Borrowing Base of all Eligible Instruments.
"Receivables Loan Borrowing Term": the period commencing on the date of
this Agreement and ending on the close of the Business Day (or if not a Business
Day, the first Business Day thereafter) on the date identified in the Schedule
as the Receivables Loan Borrowing Term Expiration Date.
"Receivables Loan Collateral": the Receivables Collateral, the Insurance
Policies, and any and all other property now or hereafter serving as security
for the Performance of the Obligations, and all products and proceeds thereof.
"Receivables Loan Fee": the amount identified in the Schedule as the
Receivables Loan Fee.
"Receivables Loan Maturity Date": the date (or if not a Business Day, the
first Business Day thereafter) which is identified in the Schedule as the
Receivables Loan Maturity Date.
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"Receivables Loan Note": a promissory note to be made and delivered by
Borrower to Lender pursuant to paragraph 4.1, having a face amount equal to the
Maximum Receivables Loan Amount, dated as of November 23, 1998, and made payable
to Lender to evidence the Receivables Loan, as it may be from time to time
renewed, amended, restated or replaced.
"Receivables Loan Opening Prepayment Date": the date identified in the
Schedule as the Receivables Loan Opening Prepayment Date.
"Receivables Loan Prepayment Premium": an amount to be paid pursuant to
paragraph 2.8 upon a prepayment of the Receivables Loan, determined by
multiplying the amount of the prepayment by the percentage identified in the
Schedule as the Receivables Loan Prepayment Premium and determined in accordance
with provisions of the Schedule.
"Receivables Trusts": each of: (a) the Club Regina Trust I, established
pursuant to that certain Receivables Trust Agreement, dated as of
November 23, 1998, by and between Cabos Sub and Puerto Vallarta Sub,
collectively as depositor, and Receivables Trustee, as trustee, together with
any and all amendments, substitutions and modifications thereof, (b) the Club
Regina Trust II, established pursuant to that certain Receivables Trust
Agreement, dated as of November 23, 1998, by and between Cabos Sub and Puerto
Vallarta Sub, collectively as depositor, and Receivables Trustee, as trustee,
together with any and all amendments, substitutions and modifications thereof,
and (c) the Club Regina Trust III, established pursuant to that certain
Receivables Trust Agreement, dated as of February 20, 1999, by and between Cabos
Sub and Puerto Vallarta Sub, collectively as depositor, and Receivables Trustee,
as trustee, together with any and all amendments, substitutions and
modifications thereof.
"Receivables Trust Collateral": the Pass-Through Certificates, all the
beneficial interest in the Receivables Trusts and all proceeds of the foregoing.
"Receivables Trustee": U.S. Trust Company, National Association, a national
banking association organized and existing under the laws of the United States
of America, as Trustee under the Receivables Trusts, and any successor trustees
thereunder.
"Redeemable Senior Notes": those Series A and Series B thirteen percent
(13%) senior notes due December 1, 2004 in the aggregate principal amount of One
Hundred Million Dollars ($100,000,000) issued by Guarantor and CR Resorts
Capital, S. de R.L. de C.V. and held by IBJ Schroder Bank and Trust Company, as
trustee.
"Residual Beneficiary": CR Resorts Remainder Company, S. de R.L. de C.V.
"Resolution": a resolution of a corporation certified as true and correct
by an authorized officer of such corporation, a certificate signed by the
manager of a limited liability company and such members whose approval is
required, or a partnership certificate signed by all of the general partners of
such partnership and such other partners whose approval is required.
"Resort Property": as the context requires, either the Club Regina Resort
at Cancun, the Club Regina Resort at Los Cabos or the Club Regina Resort at
Puerto Vallarta.
"Required Closing Date": the date identified in the Schedule as the
Required Closing Date.
"Required Guarantors": the individuals identified in the Schedule as the
Required Guarantors.
"Schedule": the Schedule of Additional Terms which follows the signature
pages of the parties.
"Security Documents": the CILP Assignment, the Pledge Agreement, the
Receivables Assignments, this Agreement, the Guaranty Trusts and all other
documents now or hereafter securing the Obligations, as they may be from time to
time renewed, amended, restated or replaced.
"Servicing Agent": the business organization identified in the Schedule as
the Servicing Agent, or its successor as Servicing Agent under the Servicing
Agreement.
"Servicing Agreement": the agreements to be made among Lender, Borrower,
Receivables Trustee and Servicing Agent, which provides for Servicing Agent to
perform for the benefit of Lender accounting, reporting and other servicing
functions with respect to the Receivables Collateral, as it may be from time to
time renewed, amended, restated or replaced.
"Subordination Agreement": a subordination agreement made by a Subordinator
subordinating indebtedness owed to it by Borrower to all or a part of the
Obligations, as it may be from time to time renewed, amended, restated or
replaced.
"Subordinator": at any time, a person or entity then required under the
terms of paragraph 6.1(e) to subordinate indebtedness owed to it by Borrower to
all or any part of the Obligations.
"Term": the duration of this Agreement, commencing on the date as of which
this Agreement is entered into and ending when all of the Obligations have
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been
Performed and Lender has no further obligation to extend credit in connection
with the Receivables Loan or the Inventory Loan.
"Third Party Consents": those consents which Lender requires Borrower to
obtain, or which Borrower is contractually or legally obligated to obtain, from
others in connection with the transaction contemplated by the Loan Documents.
"Time-Share Interest": a personal right to occupy and use a variable Unit
in the Time-Share Project at any time during the season to which it relates for
a period of at least seven (7) consecutive days every calendar year or every
other calendar year.
"Time-Share Program": the program under which Purchasers may own Time-Share
Interests, enjoy their respective Time-Share Interests on a recurring basis, and
share the expenses associated with the operation and management of such program.
"Time-Share Program Consumer Documents": the Purchase Contract, Instrument,
deed of conveyance, credit application, credit disclosures (if applicable),
rescission right notices, final subdivision public reports/prospectuses/public
offering statements (if applicable), receipt for public report, exchange
affiliation agreement and other documents used or to be used by Borrower in
connection with the sale of Time-Share Interests.
"Time-Share Program Governing Documents": the Guaranty Trusts; the Purchase
Contracts; the Instruments, the rules and regulations of the Borrower; the
regulations for Club Regina's Multi-Resort System; any and all rules and
regulations from time to time adopted by the Borrower; the Operating Agreements;
and any subsidy agreement by which Borrower is obligated to subsidize shortfalls
in the budget of the Time-Share Program in lieu of paying assessments.
"Time-Share Project": individually and collectively, those time-share
projects identified in the Schedule as the Time-Share Project.
"Title Insurer": Fidelity National Title Insurance Company, a California
corporation.
"Title Policy": a Lender's policy or policies of title insurance in the
amount of Thirteen Million Five Hundred Thousand Dollars ($13,500,000) issued by
the Title Insurer and in form and substance and accompanied by such endorsements
(including without limitation, a "concurrent policy endorsement" and a
"last-dollar-out endorsement") satisfactory to Lender wherein the insured
instrument shall be the Guaranty Trusts, which Title Policy shall assure Lender
that the Trust Use Rights are contained within the applicable Guaranty Trust
subject only to the Permitted Encumbrances and which Title Policy shall further
assure the Lender that it is a beneficiary in guaranty with respect to the Trust
Use Rights under each of the Guaranty Trusts.
"Trust Residual Interest": The "derechos fideicomisarios residuales," as
defined in each of the Guaranty Trusts.
"Trust Use Rights": The "derechos fideicomisarios de uso," as defined in
each of the Guaranty Trusts.
"Unit": a dwelling unit in the Time-Share Project.
2. LOAN COMMITMENT; USE OF PROCEEDS
2.1 Loan Commitment; Determination of Advance Amounts.
(a) Receivables Loan. Lender hereby agrees, if Borrower has Performed all
of the Obligations then due, to make Advances of the Receivables Loan to
Borrower in accordance with the terms and conditions of this Agreement for the
purposes specified in paragraph 2.4. The maximum amount of an Advance of the
Receivables Loan shall be equal to (a) the aggregate Receivables Loan Borrowing
Base for all Eligible Instruments less (b) the then unpaid principal balance of
the Receivables Loan.
(b) Inventory Loan. Lender further agrees, if Borrower has Performed all of
the Obligations then due, to make two (2) Advances of the Inventory Loan to
Borrower in accordance with the terms and conditions of this Agreement for the
purposes specified in paragraph 2.4.
(c) Maximum Amount. At no time shall the unpaid principal balance of the
Receivables Loan exceed the Maximum Receivables Loan Amount. At no time shall
the unpaid principal balance of the Inventory Loan exceed the Maximum Inventory
Loan Amount. Furthermore, at no time shall the unpaid principal balance of the
Receivables Loan and the Inventory Loan exceed the Maximum Loan Amount. In the
event at any time (a) the unpaid principal balance of the Receivables Loan
exceeds the Maximum Receivables Loan Amount, (b) the unpaid principal balance of
the Inventory Loan exceeds the Maximum Inventory Loan Amount or (c) the unpaid
principal balance of the Receivables Loan and the Inventory Loan exceeds the
Maximum Loan Amount, Borrower shall make an immediate payment to Lender in the
amount equal to such excess, provided, however, that
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such payment shall not require the payment of a Prepayment Premium.
2.2 Loan Revolver. The Receivables Loan is a revolving line of credit; however,
all Advances of the Receivables Loan shall be viewed as a single loan. Borrower
shall not be entitled to obtain Advances of the Receivables Loan after the
expiration of the Receivables Loan Borrowing Term unless Lender, in its
discretion, agrees in writing with Borrower to make such Advances thereafter on
terms and conditions satisfactory to Lender. Subject to the provisions set forth
in this paragraph, the Inventory Loan is a non-revolving line of credit and
Borrower shall not have the right to obtain Advances of the Inventory Loan as to
any portion of the Inventory Loan that had previously been repaid. Furthermore,
Borrower shall not be entitled to obtain Advances of the Inventory Loan after
the expiration of the Inventory Loan Borrowing Term unless Lender, in its
discretion, agrees in writing with Borrower to make such Advances thereafter on
terms and conditions satisfactory to Lender. Lender will consider making the
proceeds of the Receivables Loan and Inventory Loan available to Borrower or its
Affiliates to finance time-share receivables or time-share inventory arising
from other real estate projects in which Borrower or Borrower's Affiliates have
an interest, subject to underwriting criteria deemed appropriate by Lender,
provided that the proposed transaction is approved by Lender's credit committee
and in certain circumstances by Lender's executive committee or board of
directors, the Lender is satisfied with the creditworthiness and financial
strength of Borrower and its Affiliates and with the economic viability of the
projects from which such time-share receivables or time-share inventory is
derived, there has not occurred any Event of Default prior to the closing of
such financing, Lender is satisfied with the relationship between the Borrower
and such Affiliates, the Loan Documents are modified in a manner deemed
appropriate by Lender, and such Affiliates shall become parties to the Loan
Documents. Lender is not making a commitment to Borrower to make such financing
available to Borrower or to Borrower's Affiliates and Lender has no obligation
to issue such a commitment.
2.3 Continuation of Obligations Throughout Term. Whether or not Borrower's right
to obtain Advances has terminated, this Agreement and Borrower's liability for
Performance of the Obligations shall continue until the end of the Term.
2.4 Use of Advances. The first and second Advance of the Inventory Loan shall be
calculated based upon the Inventory Advance Formula set forth in the Schedule.
Borrower will use the proceeds of the Receivables Loan and the Inventory Loan
only for the following purposes: acquisitions, development, working capital and
repayment of existing obligations. In order to accomplish the foregoing
purposes, Borrower shall be permitted to make intercompany loans to its
Affiliates. Seven and one-half percent (7.5%) of the proceeds of the first
Advance of the Inventory Loan and seven and one-half percent (7.5%) of the
proceeds of the second Advance of the Inventory Loan shall be withheld by the
Lender as an interest reserve. Such reserves shall be used by Lender to pay
interest on the Inventory Loan, as and when payable, and shall not accrue
interest until such reserves are drawn upon. Following exhaustion of such
interest reserve, interest on the Inventory Loan shall be paid by Borrower from
Borrower's internally generated cash or from other sources.
2.5 Repayment of Receivables Loan. The Receivables Loan shall be evidenced by
the Receivables Loan Note and shall be repaid in immediately available funds
according to the terms of the Receivables Loan Note and this Agreement. The
Inventory Loan shall be evidenced by the Inventory Loan Note and shall be repaid
in immediately available funds according to the terms of the Inventory Loan Note
and this Agreement.
2.6 Interest. Except as otherwise provided in the Receivables Loan Note, the
Inventory Loan Note or this Agreement, interest shall accrue on the unpaid
principal balance of the Receivables Loan from time to time outstanding at the
Basic Interest Rate (Receivables) and on the unpaid principal balance of the
Inventory Loan from time to time outstanding at the Basic Interest Rate
(Inventory). Basic Interest shall be calculated on the basis of the actual
number of days elapsed during the period for which interest is being charged
predicated on a year consisting of three hundred sixty (360) days. Payments of
principal, Basic Interest and any other amounts due and payable under the Loan
Documents shall earn interest after the date on which they are due at the
Default Rate. At the option of Lender, while an Event of Default exists, Basic
Interest shall accrue at the Default Rate.
2.7 Minimum Required Payments.
(a) Receivables Loan.
(i) Monthly Payments. Commencing on the last Business Day of the
calendar month in which the initial Advance is made and on the last
Business Day of each succeeding month thereafter until the Receivables Loan
Maturity Date or the date on which the Receivables Loan is paid in full,
whichever date first occurs, Borrower will pay to
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Lender an installment payment of principal and interest on the Receivables
Loan equal to one hundred percent (100%) of all proceeds (except servicing
fee payments made by consumers whose principal and interest payments then
due have been paid in full and payments which are identified by such
consumers as tax and insurance impounds or maintenance and other assessment
payments and are required to be so treated by Lender) of the Receivables
Collateral collected during the month in which the payment is required to
be made plus all such proceeds collected during any preceding month during
the Term and not previously paid to Lender, including, without limitation,
all payments collected under the Instruments which constitute part of the
Receivables Collateral. Regardless of whether the proceeds of the
Receivables Collateral are sufficient for that purpose, interest on the
principal balance hereof from time to time outstanding shall be due and
payable monthly in arrears on each Installment Date.
(b) Borrowing Base Maintenance. If there exists a Receivables Loan
Borrowing Base Shortfall for any reason other than an Ineligibility Event
which is subject to the provisions of paragraph 3.2 and Borrower knows of
the occurrence of such condition or should have known of its occurrence by
virtue of reports required to be delivered to Lender, Borrower, without
notice or demand, will immediately (a) make to Lender a principal payment
in an amount equal to the Receivables Loan Borrowing Base Shortfall plus
accrued and unpaid interest on such principal payment or (b) deliver to
Lender or cause the Receivables Trustee to deliver to Lender one or more
Eligible Instruments having an aggregate Receivables Loan Borrowing Base
not less than the Receivables Loan Borrowing Base Shortfall. Simultaneously
with the delivery of Eligible Instruments to correct a Receivables Loan
Borrowing Base Shortfall, Borrower will deliver to Lender or cause
Receivables Trustee to deliver to Lender all of the items (except for a
"Request for Receivables Advance and Certification") required to be
delivered by Borrower (or Receivables Trustee) to Lender pursuant to
paragraph 4.2, together with a "Borrower's Certificate" in form and
substance identical to Exhibit C.
(b) Inventory Loan. The principal balance of the Inventory Loan shall be
repaid through the application of Interval Sales Payments and through the making
of additional principal payments on each Measuring Date as defined and under the
terms and conditions set forth in the Inventory Loan Note.
2.8 Prepayment.
(a) Prohibitions on Prepayment; Prepayment Premium.
(i) Receivables Loan. Without the prior written consent of Lender,
Borrower shall not be entitled to prepay the Receivables Loan except in
accordance with the terms of this Agreement. Commencing on the Receivables
Loan Opening Prepayment Date, Borrower shall have the option to prepay the
Receivables Loan on any Installment Date, upon thirty (30) days' prior
written notice, accompanied by the simultaneous payment of the applicable
Receivables Loan Prepayment Premium. No more than fifty percent (50%) of
the then outstanding principal balance of the Receivables Loan may be
prepaid within the twelve (12) month period beginning on the Receivables
Loan Opening Prepayment Date or during any successive twelve (12) month
period thereafter, provided, however, that at such time as the unpaid
principal balance of the Receivables Loan is no greater than Two Million
Dollars ($2,000,000), Borrower shall have the right to prepay the
Receivables Loan in full during any successive twelve (12) month period
thereafter, under the conditions set forth above. Any prepayment in full of
the Receivables Loan shall be accompanied by prepayment in full of the
Inventory Loan.
(ii) Inventory Loan. Without the prior written consent of the Lender,
Borrower shall not be entitled to prepay the Inventory Loan except in
accordance with the terms of this Agreement. Commencing on the Inventory
Loan Opening Prepayment Date, Borrower shall have the option to prepay the
Inventory Loan in full or in part on any Installment Date of the Inventory
Loan, upon thirty (30) days' prior written notice accompanied by the
appropriate Inventory Loan Prepayment Premium. The Inventory Loan may be
prepaid in full or in part without a concurrent prepayment of the
Receivables Loan.
(b) Exceptions to Prepayment Prohibitions. Notwithstanding anything in
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<PAGE>
paragraph 2.8(a) or 2.8(c) to the contrary, the following shall not be
prepayments prohibited pursuant to paragraph 2.8(a) or require the payment of
the Receivables Loan Prepayment Premium or the Inventory Loan Prepayment
Premium: (i) principal payments scheduled under the Receivables Loan Note and
the Inventory Loan Note, including, without limitation, those payments required
pursuant to paragraphs 2.7 and 3.2 unless due to an intentional
misrepresentation or breach of warranty by Borrower or Guarantor concerning the
Receivables Collateral qualifying as Eligible Instruments; (ii) prepayments of
the Receivables Loan resulting from prepayments of the Receivables Collateral by
Purchasers which have not been solicited by Borrower in breach of the terms and
conditions of paragraph 6.2(e), (iii) prepayments of the Inventory Loan through
the application of Interval Sales Payments, or (iv) prepayments required
pursuant to paragraph 2.1(c).
(c) Prepayment Premium Payable for Involuntary Prepayments. Except as set
forth in paragraph 2.8(b), (i) the Receivables Loan Prepayment Premium shall be
payable regardless of whether the prepayment of the Receivables Loan is
voluntary or is required because repayment of the Receivables Loan has been
accelerated pursuant to any of Lender's rights under the Loan Documents
(including, without limitation, any right to accelerate following casualty or
condemnation or when an Event of Default exists), and (ii) the Inventory Loan
Prepayment Premium shall be payable regardless of whether the prepayment of the
Inventory Loan is voluntary or is required because repayment of the Inventory
Loan has been accelerated pursuant to any of Lender's rights under the Loan
Documents (including, without limitation, any right to accelerate following
casualty or condemnation or when an Event of Default exists).
2.9 Receivables Loan Fee; Inventory Loan Fee; Custodial Fee; Availability Fee.
(a) Loan Fee. Borrower will pay to Lender the Receivables Loan Fee and the
Inventory Loan Fee in accordance with the requirements set forth in the
Schedule. The Receivables Loan Fee and the Inventory Loan Fee have been earned
and shall be non-refundable. An application fee in the amount of Ten Thousand
Dollars ($10,000) has been received by Lender, is non-refundable and shall not
be applied against the Receivables Loan Fee or the Inventory Loan Fee or any
other costs and expenses due to Lender.
(b) Custodial Fee. In addition to all other fees required to be paid in
connection with the Receivables Loan, Borrower shall pay to Lender the fee
("Custodial Fee") identified in the Schedule as the Custodial Fee per each
Instrument which is delivered to Lender in connection with the Receivables Loan
and is in the physical custody of Lender. The Custodial Fee for an Instrument
shall be paid by Borrower to Lender at the time the Instrument is assigned to
Lender. After the Custodial Fee is paid for an Instrument, no fee shall be
payable to Lender for any Instrument which is delivered to Lender pursuant to
paragraph 3.2 in replacement for an Instrument for which Borrower has paid the
Custodial Fee. Once a Custodial Fee has been paid to Lender, Borrower shall not
be entitled to any reimbursement of any portion hereof.
(c) Availability Fee. Borrower will pay to Lender, at the time of any
Advance of the Receivables Loan, a fee ("Availability Fee") equal to the product
of the percentage identified in the Schedule as the Availability Fee Percentage
times the portion of such Advance which constitutes an Availability Advance.
2.10 Application of Proceeds of Collateral and Payments.
(a) Notwithstanding anything in the Loan Documents to the contrary, the
amount of all payments or amounts received by Lender with respect to the
Receivables Loan shall be applied to the extent applicable under the Loan
Documents: (a) first, to any past due payments of interest on the Receivables
Loan and to accrued interest on the Receivables Loan through the date of such
payment, including any default interest; (b) then, to any late fees, examination
fees and expenses, collection fees and expenses and any other fees and expenses
due to Lender under the Loan Documents in connection with the Receivables Loan;
and (c) last, the remaining balance, if any, to the unpaid principal balance of
the Receivables Loan; provided, however, while an Event of Default or Incipient
Default exists, each payment received with respect to the Receivables Loan shall
be applied to such amounts owed to Lender by
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Borrower as Lender in its discretion may determine. In calculating interest and
applying payments as set forth above: (a) interest on the Receivables Loan shall
be calculated and collected through the date payment is actually received by
Lender; (b) interest on the outstanding principal balance of the Receivables
Loan shall be charged during any grace period permitted under the Loan
Documents; (c) at the end of each month, all past due interest and other past
due charges provided for under the Loan Documents with respect to the
Receivables Loan shall be added to the principal balance of the Receivables Loan
in accordance with the provisions of Article 363 of the Mexican Commercial Code;
and (d) to the extent that Borrower makes a payment or Lender receives any
payment or proceeds of the Collateral for Borrower's benefit that is applied as
a payment under the Receivables Loan that is subsequently invalidated, set aside
or required to be repaid to any other person or entity, then, to such extent,
the Obligations in connection with the Receivables Loan intended to be satisfied
shall be revived and continue as if such payment or proceeds had not been
received by Lender and Lender may adjust the Receivables Loan balance as Lender,
in its discretion, deems appropriate under the circumstances. The provisions of
this paragraph 2.10 are also subject to the parties rights and obligations under
the Loan Documents as to the application of proceeds of the Collateral following
an Event of Default.
(b) Notwithstanding anything in the Loan Documents (with the exception of
Section S.4 of the Schedule hereof) to the contrary, the amount of all payments
or amounts received by Lender with respect to the Inventory Loan shall be
applied to the extent applicable under the Loan Documents: (a) first, to any
past due amounts of interest on the Inventory Loan and to accrued interest on
the Inventory Loan through the date of such payment, including any default
interest; (b) then, to any late fees, examination fees and expenses, collection
fees and expenses and any other fees and expenses due to Lender under the Loan
Documents in connection with the Inventory Loan; and (c) last, the remaining
balance, if any, to the unpaid principal balance of the Inventory Loan;
provided, however, while an Event of Default or Incipient Default exists, each
payment received with respect to the Inventory Loan shall be applied to such
amounts owed to Lender by Borrower as Lender in its discretion may determine. In
calculating interest and applying payments as set forth above: (a) interest on
the Inventory Loan shall be calculated and collected through the date payment is
actually received by Lender; (b) interest on the outstanding balance of the
Inventory Loan shall be charged during any grace period permitted under the Loan
Documents; (c) at the end of each month, all past due interest and other past
due charges provided with respect to the Inventory Loan shall be added to the
principal balance of the Inventory Loan in accordance with the provisions of
Article 363 of the Mexican Commercial Code; and (d) to the extent that Borrower
makes a payment or Lender receives any payments or proceeds of the Collateral
for Borrower's benefit that is applied as a payment under the Inventory Loan
that is subsequently invalidated, set aside or required to be repaid to any
other person or entity, then, to such extent, the Obligations in connection with
the Inventory Loan intended to be satisfied shall be revived and continue as if
such payment or proceeds had not been received by Lender and Lender may adjust
the Inventory Loan balance as Lender, in its discretion, deems appropriate under
the circumstances.
2.11 Borrower's Unconditional Obligation to Make Payments. Whether or not the
proceeds from the Collateral shall be sufficient for that purpose, Borrower will
pay when due all payments required to be made pursuant to any of the Loan
Documents, Borrower's obligation to make such payments being absolute and
unconditional.
3. SECURITY
3.1 Grant of Security Interest in Receivables Collateral. To secure the
Performance of all of the Obligations and to secure Receivables Trustee's
Performance of all of its obligations under the Pledge Agreement, Borrower
hereby grants to Lender a security interest in and assigns to Lender (i) the
Receivables Trust Collateral and (ii) all other items of Receivables Collateral
(other than the Receivables Trust Collateral). Such security interest shall be
absolute, continuing, perfected, direct, first, exclusive and applicable to all
existing and future Advances and to all of the Obligations and to all of the
obligations of the Receivables Trustee under the Pledge Agreement. Borrower will
unconditionally assign, endorse and deliver to Lender, with full recourse, all
Instruments which are part of the Receivables Collateral. To the extent that the
Receivables
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Trustee is the owner of the Receivables Collateral, Borrower hereby irrevocably
instructs the Receivables Trustee to grant to Lender, pursuant to the Pledge
Agreement, a security interest in the Receivables Collateral owned by the
Receivables Trustee and furthermore instructs the Receivables Trustee to
unconditionally assign, endorse and deliver to Lender, with full recourse, all
of the Instruments owned by the Receivables Trustee and which are part of the
Receivables Collateral. Borrower further warrants and guarantees the
enforceability of the Receivables Collateral. Lender is hereby appointed
Borrower's attorney-in-fact to take any and all actions in Borrower's name
and/or on Borrower's behalf deemed necessary or appropriate by Lender with
respect to the collection and remittance of payments (including the endorsement
of payment items) received on account of the Receivables Collateral; provided,
however, that Lender shall not take any action which is described in paragraph
7.2(d) unless an Event of Default exists. Lender may notify persons bound
thereby of the existence of Lender's interest as assignee in the Receivables
Collateral and request from any person bound by the Receivables Collateral any
information relating to such person.
3.2 Ineligible Instruments. If an Instrument which is part of the Receivables
Collateral ceases to be an Eligible Instrument or is determined not to be an
Eligible Instrument ("Ineligibility Event") and as a result of the occurrence of
such Ineligibility Event, the unpaid principal balance of the Receivables Loan
is in excess of the Receivables Loan Borrowing Base, (such excess, hereinafter
the "Borrowing Base Shortfall"), then within thirty (30) days thereafter
Borrower will either (a) make to Lender a principal payment in an amount equal
to the Borrowing Base Shortfall plus accrued and unpaid interest on such payment
or (b) replace or cause the Receivables Trustee to replace such ineligible
Instruments with one or more Eligible Instruments having an aggregate
Receivables Loan Borrowing Base not less than the Borrowing Base Shortfall.
Simultaneously with the delivery of the replacement Eligible Instrument to
Lender for an ineligible Instrument, Borrower will deliver to Lender and cause
the Receivables Trustee to deliver all of the items (except for a "Request for
Receivables Loan Advance and Certification") required to be delivered by
Borrower (or Receivables Trustee) to Lender pursuant to paragraph 4.2, together
with a "Borrower's Certificate" in form and substance identical to Exhibit C.
Lender will reassign and/or endorse to Receivables Trustee or Borrower, as
appropriate, without recourse or warranty of any kind, the ineligible Instrument
if: (a) no Event of Default or Incipient Default exists; (b) Borrower has made
any principal payment and Performed any replacement obligations as required
above in connection with any Ineligibility Event caused by such ineligible
Instrument; and (c) Borrower has requested Lender in writing to release the
ineligible Instrument. Borrower will prepare the reassignment document which
shall be in form and substance identical to Exhibit C-1 and will deliver it to
Lender for execution, and Lender will send Borrower and Receivables Trustee the
re-assignment document and send to Borrower or Receivables Trustee, as the case
may be, the Instrument being reassigned within thirty (30) days after
satisfaction of the conditions precedent specified in the foregoing sentence.
3.3 Lockbox Collections and Servicing. Lockbox Agent shall be instructed and
required to collect payments on the Instruments constituting part of the
Receivables Collateral and remit collected payments to Lender on the last day
(or if such day is not a Business Day, on the preceding Business Day) of each
and every month after the date of the first Advance of the Receivables Loan,
according to the terms of the Lockbox Agreement. Payments shall not be deemed
received by Lender until Lender actually receives such payments from Lockbox
Agent. Pursuant to the Servicing Agreement, Servicing Agent shall be instructed
and required to furnish to Lender at Borrower's sole cost and expense, no later
than the tenth (10th) day of each month commencing with the first full calendar
month following the date of this Agreement, a report, in a format satisfactory
to Lender, which: (a) shows as of the end of the prior month with respect to
each Instrument which constitutes part of the Receivables Collateral (i) all
payments received, allocated between principal, interest, late charges and
taxes, (ii) the opening and closing balances, (iii) present value calculated at
the Discount Rate (when and if Servicing Agent possesses such capability), (iv)
average consumer interest rates; and (v) extensions, refinances, prepayments and
other similar adjustments; and (b) indicates delinquencies of thirty (30), sixty
(60), ninety (90) days and in excess of ninety (90) days. Borrower will pay
without notice or demand any amount which was due and payable by Borrower on the
last Business Day of the preceding month covered by such reports within five (5)
Business Days of Borrower's Knowledge of such amounts. If such reports are not
timely received, Lender may estimate the amount which was due and payable.
Borrower will pay upon demand the amount determined by Lender in good faith to
be due and payable. If payment is made on the basis of Lender's estimate and
thereafter reports required by this paragraph are received by Lender, the
estimated payment amount shall be adjusted by an additional payment or a refund
to the correct amount, as the reports may indicate; such additional amount to be
paid by Borrower upon demand
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and such refund to be made by Lender within five (5) Business Days after the
receipt by Lender of the aforementioned reports, in accordance with the
provisions of Section 9.6 hereof. At the end of each calendar quarter, Borrower
will deliver or cause the Servicing Agent to deliver to Lender a current list of
the names, addresses and phone numbers of the obligors on each of the
Instruments constituting part of the Receivables Collateral. Borrower will also
deliver or cause Servicing Agent to deliver to Lender, promptly after receipt of
a written request for them, such other reports with respect to Instruments
constituting part of the Receivables Collateral as Lender may from time to time
reasonably require.
3.4 Replacement of Agents. If a default on the part of an Agent exists and
continues under the agreement to which it is a party or an Event of Default
exists and continues, Lender, subject to any additional restriction thereon
contained in the Lockbox Agreement or the Servicing Agreement, as applicable,
may at any time and from time to time, substitute a successor or successors to
any Agent acting under the Servicing Agreement or Lockbox Agreement. In any
event, if, at any time during the term of the Receivables Loan, Lender is not
satisfied with the servicing and collection abilities of Resort Communications,
Inc., Lender shall have the right to require that such servicing and collection
functions be performed by another servicing and collection company satisfactory
to Lender pursuant to a servicing agreement satisfactory in form and content to
Lender.
3.5 Maintenance of Security. Borrower will deliver or cause to be delivered to
Lender and will maintain or cause to be maintained in full force and effect
throughout the Term (except as otherwise expressly provided in such Loan
Document), as security for the Performance of the Obligations, the Security
Documents and all other security required to be given to Lender pursuant to the
terms of this Agreement.
3.6 Liability of Guarantors. The payment and Performance of the Obligations
shall be jointly, severally, primarily and unconditionally guaranteed by the
Required Guarantors.
4. CONDITIONS PRECEDENT TO ADVANCES; MINIMUM AMOUNT AND MAXIMUM FREQUENCY OF
ADVANCES; METHOD OF DISBURSEMENT
4.1 Delivery of Loan Documents and Due Diligence Items Prior to Initial Advance.
Lender's obligation to make the initial Advance of the Inventory Loan shall be
subject to and conditioned upon the terms and conditions set forth in the
following subparagraphs and elsewhere in this Agreement:
(a) Loan Documents. Borrower shall have delivered to Lender or caused to be
delivered to Lender the following duly executed, delivered (where appropriate)
and in form and substance satisfactory to Lender, not later than the Required
Closing Date:
(i) the Loan Documents;
(ii) UCC financing statements for filing and/or recording, as appropriate,
where necessary to perfect the security interests in the Collateral;
(iii) a favorable opinion or opinions from each of Akin, Gump, Strauss,
Hauer & Feld; Battle Fowler LLP; Lewis and Roca LLP; Santamarina y Steta
and Creel, Garcia-Cuellar y Muggenburg, which opinions shall cover such
matters as Lender may require, including, without limitation, the Minimum
Opinion Matters pertaining to Borrower and the Time-Share Project;
(iv) a favorable comfort letter from Gallastegui y Lozano;
(v) the Third Party Consents;
(vi) such other documents as Lender may reasonably require to effect the
intent and purposes of this Agreement.
(b) Organizational, Time-Share Project and Other Due Diligence Documents.
Borrower shall have delivered to Lender prior to the earlier of (a) the date of
the initial Advance of the Inventory Loan or (b) the Required Closing Date:
(i) the Articles of Organization of Borrower, any and all Required
Guarantors and (if any) other sureties for the Obligations;
(ii) the Resolutions of Borrower (or valid effective powers of attorney),
of any and all Required Guarantors and (if any), of other sureties for the
Obligations and, if applicable, of their respective managers, members and
partners, to the extent any such entity is not a natural person,
authorizing the execution and delivery of the Loan Documents, the
transactions contemplated thereby and such other matters as Lender may
require;
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(iii) evidence of good standing for all Required Guarantors and (if any)
other sureties for the Performance of the Obligations and, if applicable,
their respective managers, members and partners, to the extent any such
entity is not a natural person, from the state of its organization and
evidence that Borrower and Guarantor have obtained all approvals, consents
and business licenses which are necessary to enable each of them, as
applicable, to execute the Loan Documents, consummate the Inventory Loan
and operate within Mexico;
(iv) [Intentionally omitted];
(v) evidence that all taxes and assessments on the Time-Share Project have
been paid;
(vi) a condominium map of the Time-Share Project;
(vii) all permits, licenses, approvals and certificates for the occupancy,
use and operation of the Time-Share Project for time-share and other
intended uses and for the sale of Time-Share Interests, including any
necessary architectural committee approvals;
(viii) evidence that the Time-Share Project is zoned for time-share and
other intended uses and that all approvals required for such uses under any
covenants, conditions and restrictions have been obtained. In addition,
evidence satisfactory to Lender that the present use of the Time-Share
Project will not violate any existing bylaws, restrictions, covenants or
regulations affecting the Time-Share Project;
(ix) the Insurance Policies;
(x) evidence that the Time-Share Project is not located within a flood
prone area or, if within a flood zone, evidence that flood insurance has
been obtained;
(xi) evidence of the current and continued availability of utilities
necessary to serve the Time-Share Project for time-share and other intended
uses;
(xii) evidence of access to and parking for the Time-Share Project adequate
for time-share and hotel uses;
(xiii) a copy of all marketing contracts, management contracts, service
contracts, operating agreements, equipment leases, space leases and other
agreements pertaining to the Time-Share Project and which are necessary for
the sale, operation and intended time-share use of the Time-Share Project
and are not otherwise required pursuant to another item in this paragraph;
(xiv) evidence that each owner of a Time-Share Interest will have available
to it the quiet and peaceful enjoyment of the Time-Share Interest
(including promised amenities and necessary easements) owned by it which
cannot be disturbed so long as such owner is not in default of its
obligations to pay the purchase price of its Time-Share Interest, to pay
assessments to the Borrower, and to comply with reasonable rules and
regulations pertaining to the use of the Time-Share Interest ("Quiet
Enjoyment Rights");
(xv) satisfactory evidence that upon the initial Advance of the Inventory
Loan, Borrower shall have good and marketable title to the Collateral. In
addition, satisfactory evidence that the security interests to be granted
to Lender have been duly perfected as first and prior charges and security
interests (subject only to the filing of the Guaranty Trusts with the
appropriate public registries) and that there are no other legal charges or
security interests filed against the Collateral; and
(xvi) fully executed copy of the Club Regina Trust III in a form approved
by Lender, certified correct by Borrower and Trustee;
(xvii) original Pass Through Certificates with respect to the Club Regina
Trust III, with the assignment section thereof executed by Borrower "in
blank";
(xviii) copy of the notification, as contemplated under paragraph 9.1(c)
hereof, given by Borrower to Trustee of the Club Regina Trust III, the
contents of which shall be acceptable to Lender, together with an
acknowledgment from Trustee indicating receipt thereof;
(xix) copy of the notification, as contemplated under paragraph 9.1(d)
hereof, given by Borrower to Trustee of the Club Regina Trust III, the
contents
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of which shall be acceptable to Lender, together with an acknowledgment
from Trustee indicating receipt of such notification and receipt of the
agreements relating to the Obligations;
(xx) such other items as Lender requests which are reasonably necessary to
evaluate the request for the Advance of the Inventory Loan and the
satisfaction of the conditions precedent to the Advance.
(c) Local Issues. Lender shall be satisfied with Mexican laws governing all
matters relating to the Inventory Loan, including without limitation, the
creation and perfection of security on real estate, the creation and perfection
of the assignment of purchaser contracts, the creation, marketing and sale of
unsold use rights and memberships, and other related matters.
(d) Transfer Fees. Lender shall have received in form and substance
satisfactory to Lender, evidence of payment of transfer fees and taxes (if
applicable) assessed by applicable governmental authorities in connection with
the Inventory Loan.
(e) Financials. Borrower shall deliver to Lender proforma consolidated
unaudited financial statements prepared on the assumption that the full amount
of the Receivables Loan and the Inventory Loan have been advanced to the
Borrower and reflecting that the Borrowers, on a consolidated basis, have a
positive net worth and are solvent, together with current financial statements
for the Borrower and for the Guarantor (with respect to the financial reporting
period ending no earlier than sixty (60) days prior to the Required Closing
Date) in the form required by paragraph 6.1(d)(i) together with a compliance
certificate in the form required by paragraph 6.1(d)(i).
(f) Operating Agreements. Lender shall have received and approved the
Operating Agreements and shall have received evidence satisfactory to Lender
that the Operating Agreements are appurtenant to and run with the land and that
as a beneficiary in guaranty with respect to the Trust Use Rights under the
Guaranty Trusts, Lender would have the benefits of the Operating Agreements.
(g) Credit Reports; Search Reports; Site Inspections. Lender shall have
received, in form and substance satisfactory to Lender, the results of UCC
searches (or its equivalent under Mexican law) with respect to Borrower, lien,
litigation, judgment and bankruptcy searches (or its equivalent under Mexican
law) for Borrower, any and all Required Guarantors and conducted in such
jurisdictions as Lender deems appropriate and having a currency meeting Lender's
requirements.
(h) Organizational Structure. Lender shall be satisfied with the
organizational structure of Borrower and Guarantor.
(i) Broker. If the services of a broker have been utilized by Borrower to
arrange the Receivables Loan or the Inventory Loan, evidence that any fee due
such broker or brokers has been paid or shall be paid. In any event, such fees
are to be borne solely by Borrower.
(j) Additional Reporting Requirements. Lender and Borrower shall have
reached a satisfactory agreement concerning the nature and scope of any reports
that Borrower must deliver to Lender in connection with any borrowing
limitations imposed against Borrower and Guarantor under the Indenture, together
with the frequency within which such reports must be rendered to Lender.
(k) Existing Debt. Lender shall have reviewed and approved the terms and
conditions of the Redeemable Senior Notes, the Mirror Notes and any other
indebtedness owed by Borrower or Guarantor. There shall exist no default, events
of default or incipient defaults under the Redeemable Senior Notes, the Mirror
Notes or such other indebtedness. Lender acknowledges that it has approved the
Redeemable Senior Notes and the Mirror Notes.
(l) Affiliation. Lender has received evidence satisfactory to it that the
Time-Share Projects are affiliated with either Resort Condominium International
or Interval International and are in good standing with such exchange companies.
(m) Title Policy. Lender shall have received the Title Policy or an
irrevocable commitment from the Title Insurer to issue the same, which
commitment shall include binding commitment from the Title Insurer to insure
Lender against any liens which may arise
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between the first Advance of the Inventory Loan and the registration of the
Guaranty Trusts.
(n) Inventory Audit. Lender shall have received and approved a current
unsold inventory report prepared by Arthur Anderson or another third party
acceptable to Lender at Borrower's expense showing the then amount of unsold
Time-Share Interests at each of the Time-Share Projects.
(o) Marketing Agreements. Lender shall have received and approved all
marketing agreements pertinent to the Time-Share Projects (which shall be
collaterally assigned to Lender pursuant to the Time-Share Marketing Agreement
Assignment) and which agreements shall be terminable at Lender's option upon an
Event of Default.
4.2 Additional Conditions Precedent for Advances.
(a) Receivables Advances. For each Advance of the Receivables Loan, other
than an Availability Advance, Lender's obligation to make such Advance shall be
subject to the terms and conditions set forth in Exhibit E, including delivery
of the items called for therein, and at least five (5) Business Days prior to
the date of an Advance of the Receivables Loan.
(b) Inventory Advances. For each advance of the Inventory Loan, Borrower
shall deliver to Lender a Request for Inventory Loan Advance and Certification
in the form attached hereto as Exhibit F at least five (5) Business Days prior
to the date of such Advance. Lender's obligation to make the second Advance of
the Inventory Loan shall be subject to and conditioned upon the terms and
conditions set forth in the following subparagraphs: (i) Lender shall have
received any endorsements to the Title Policy which Lender deems necessary or
appropriate in order to account for the making of the second Advance, (ii)
Lender shall have received and approved a current unsold inventory report of the
nature described in clause 6.1(d)(i)(c) and (iii) Lender shall have received
evidence satisfactory to it that the Required Guarantor has made the interest
only payment due on June 1, 1999 under the Redeemable Senior Notes within any
applicable grace periods.
4.3 General Conditions Precedent to All Advances. Lender's obligation to fund
any Advance is subject to and conditioned upon the additional terms and
conditions set forth in the following subparagraphs being satisfied at the time
of such Advance:
(a) No material adverse change shall have occurred in the Time-Share
Project, the Collateral, the business or financial condition of Borrower or any
Required Guarantor (since the date of the latest financial and operating
statements given to Lender by or on behalf of Borrower or any such Guarantor),
or the ability of Borrower to Perform the Obligations.
(b) There shall have been no material, adverse change in the warranties and
representations made in the Loan Documents by Borrower, any Required Guarantor
and/or any surety for the Performance of the Obligations.
(c) Neither an Event of Default nor Incipient Default shall have occurred
and be continuing.
(d) The interest rate applicable to the Advance (before giving effect to
any savings clause) will not exceed the maximum rate permitted by the Applicable
Usury Law.
(e) Subject to the conditions for payment of the Receivables Loan Fee set
forth at Section S.3(y) of the Schedule, Borrower shall have paid to Lender the
Receivables Loan Fee, the Inventory Loan Fee and all other fees which are
required to be paid at the time of the Advance.
(f) Lender is satisfied, in its discretion, that Lender will incur no
adverse foreign tax consequences as a result of the making of the Advance and
the performance of its obligations under the Loan Documents. Lender shall be
further satisfied, in its discretion, that the principal and interest payments
being made to Lender with respect to the Receivables Loan, the Inventory Loan
and any other monies payable to Lender under the Loan Documents will not be
subject to withholding or subject Lender to a withholding requirement except for
that certain withholding tax, currently in the amount of four and nine-tenths
percent (4.9%), payable to the Government of the United Mexican States with
respect to each payment of interest made by Borrower to Lender under the loans
and with respect to the payment of the Receivables Loan Fee, the Inventory Loan
Fee,
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the Custodial Fee, the Availability Fee and the prepayment premiums made by
Borrower to Lender under the loans (which withholding tax is the Borrower's
responsibility pursuant to paragraph 6.1(g) hereof).
(g) In the event the Instrument against which the Advance of the
Receivables Loan is to be made is from a United States resident, such Instrument
is held in one of the Receivables Trusts.
(h) The Pass-Through Certificates are "in registered form".
4.4 Conditions Satisfied at Borrower's Expense. The conditions to Advances shall
be satisfied by Borrower at its expense.
4.5 Minimum Amount and Maximum Frequency of Advances of the Receivables Loan.
Advances of the Receivables Loan shall be made in amounts not less than the
amounts identified in the Schedule as the Minimum Advance Amount. Advances of
the Receivables Loan shall be made no more frequently in any calendar month than
the frequency identified in the Schedule as the Maximum Advance Frequency.
4.6 Disbursement of Advances. Advances may be payable to Borrower; or if
requested by Borrower and approved in writing by Lender, to others, either
severally or jointly with Borrower, for the credit or benefit of Borrower.
Advances shall be disbursed in Dollars by wire transfer or, at Borrower's option
exercised by written request to Lender, by check or drafts. Borrower will pay
Lender's reasonable charge in connection with any wire transfer, and Lender's
current charge is identified in the Schedule as the Wire Transfer Fee. Lender
may, at its option, withhold from any Advance any sum (including costs and
expenses) then due to it under the terms of the Loan Documents or which Borrower
would be obligated to reimburse Lender pursuant to the Loan Documents if first
paid directly by Lender.
4.7 No Waiver. Although Lender shall have no obligation to make an Advance
unless and until all of the conditions precedent to the Advance have been
satisfied, Lender may, at its discretion, make Advances prior to that time
without waiving or releasing any of the Obligations.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES
5.1 Good Standing. Borrower hereby jointly and severally represent and warrant
to Lender that:
5.1.1 Corporate Existence. CR Cancun is a duly organized and validly
existing business organization of the type identified in the Schedule as
Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where CR Cancun is at any time selling
Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. CR Cancun has
full power and authority to carry on its business and own its property.
5.1.2 Corporate Existence. CR Cabos is a duly organized and validly
existing business organization of the type identified in the Schedule as
Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where CR Cabos is at any time selling
Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. CR Cabos has full
power and authority to carry on its business and own its property.
5.1.3 Corporate Existence. CR Puerto Vallarta is a duly organized and
validly existing business organization of the type identified in the Schedule as
Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where CR Puerto Vallarta is at any time selling
Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. CR Puerto
Vallarta has full power and authority to carry on its business and own its
property.
5.1.4 Corporate Existence. Corporacion Mexitur is a duly organized and
validly existing business organization of the type identified in the Schedule as
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Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where Corporacion Mexitur is at any time
selling Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. Corporacion
Mexitur has full power and authority to carry on its business and own its
property.
5.1.5 Corporate Existence. Cancun Sub is a duly organized and validly
existing business organization of the type identified in the Schedule as
Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where Cancun Sub is at any time selling
Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. Cancun Sub has
full power and authority to carry on its business and own its property.
5.1.6 Corporate Existence. Cabos Sub is a duly organized and validly
existing business organization of the type identified in the Schedule as
Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where Cabos Sub is at any time selling
Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. Cabos Sub has
full power and authority to carry on its business and own its property.
5.1.7 Corporate Existence. Puerto Vallarta Sub is a duly organized and
validly existing business organization of the type identified in the Schedule as
Borrower's Type of Business Organization under the laws of the jurisdiction
identified in the Schedule as Borrower's Jurisdiction of Organization and is
authorized to do business in the jurisdiction where the Time-Share Project is
located and in each jurisdiction where Puerto Vallarta Sub is at any time
selling Time-Share Interests or where at any time the location or nature of its
properties or its business makes such qualification necessary. Puerto Vallarta
Sub has full power and authority to carry on its business and own its property.
5.2 Power and Authority; Enforceability. Borrower has full power and authority
to execute and deliver the Loan Documents and to Perform the Obligations. All
action necessary and required by Borrower's Articles of Organization and all
other Legal Requirements for Borrower to obtain the Receivables Loan and the
Inventory Loan, to execute and deliver the Loan Documents which have been or
will be executed and delivered in connection with the Loan Documents and to
Perform the Obligations has been duly and effectively taken. The Loan Documents
are and, to Borrower's Knowledge, shall be, legal, valid, binding and
enforceable against Borrower; and do not violate the Applicable Usury Law or
constitute a default or result in the imposition of a lien under the terms or
provisions of any agreement to which Borrower is a party. Except for the Third
Party Consents delivered pursuant to paragraph 4.1(a) and the consents evidenced
by the Resolutions or powers of attorney delivered pursuant to paragraph 4.1(b),
no consent of any governmental agency or any other person not a party to this
Agreement is or will be required as a condition to the execution, delivery or
enforceability of the Loan Documents.
5.3 Borrower's Principal Place of Business. Each Borrower's principal place of
business and chief executive office are located at the addresses identified in
the Schedule as Borrower's Principal Place of Business and Borrower's Chief
Executive Office.
5.4 No Litigation. There is no action, litigation or other proceeding pending
or, to Borrower's Knowledge, threatened before any arbitration tribunal, court,
governmental agency or administrative body against Borrower, which might
materially adversely affect the Time-Share Project, the Collateral, the business
or financial condition of Borrower, or the ability of Borrower to Perform the
Obligations. Borrower will promptly notify Lender if any such action, litigation
or proceeding is commenced or threatened. Borrower is not subject to
governmental liens, levies or garnishments for liabilities unrelated to the
taxation of the income from the Receivables Trusts.
5.5 Compliance with Legal Requirements. To Borrower's Knowledge, Borrower has
complied with all Legal Requirements in all material respects, including,
without limitation, with respect to each Time-Share Project, all Legal
Requirements of the state in which such Time-Share Project is located (if
applicable) and all other
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governmental jurisdictions in which Time-Share Interests will be sold or offered
for sale by Borrower.
5.6 No Misrepresentations. The Loan Documents and all certificates, financial
statements and written materials furnished to Lender by or on behalf of Borrower
in connection with the Receivables Loan and the Inventory Loan do not contain as
of the date furnished to Lender any untrue statement of a material fact or omit
to state a fact which materially adversely affects or in the future may
materially adversely affect the Time-Share Project, the Collateral, the business
or financial condition of Borrower or any Guarantor, or the ability of Borrower
to Perform the Obligations.
5.7 No Default for Third Party Obligations. Borrower is not in default under any
other agreement evidencing, guaranteeing or securing borrowed money or a
receivables purchase financing or in violation of or in default under any
material term in any other material agreement, instrument, order, decree or
judgment of any court, arbitration or governmental authority to which it is a
party or by which it is bound.
5.8 Payment of Taxes and Other Impositions. Each Borrower has filed all tax
returns and has paid all Impositions, if any, required to be filed by it or paid
by it, including real estate taxes and assessments relating to the Time-Share
Project or the Collateral.
5.9 Sales Activities. Prior to the date of this Agreement, CR Cabos, CR Cancun
or CR Puerto Vallarta, as appropriate, have sold Time-Share Interests and
offered Time-Share Interests for sale only in the jurisdictions identified in
the Schedule as the Jurisdictions Where Sales And/or Offers to Sell Have
Occurred. None of the other entities constituting Borrower have sold Time-Share
Interests or offered Time-Share Interests for sale.
5.10 Time-Share Interest Not a Security. Borrower has not sold or offered for
sale any Time-Share Interest as an investment. Except for the sale to Purchasers
of Series B Shares of variable capital stock in and to any of CR Cancun, CR
Cabos and/or CR Puerto Vallarta (in connection with Borrower's Club Regina B
Shares sales program), neither the sale nor the offering for sale of any
Time-Share Interest will constitute the sale or the offering for sale of a
security under any applicable law.
5.11 Zoning Compliance. Neither time-share use nor other transient use and
occupancy of the Time-Share Project violates or constitutes or will violate or
constitute a non-conforming use or require a variance under any private covenant
or restriction or any zoning, use or similar law, ordinance or regulation
affecting the use or occupancy of the Time-Share Project.
5.12 Eligible Instruments. Each Instrument which is assigned to Lender pursuant
to this Agreement and against which an Advance of the Receivables Loan is
requested or which is assigned in satisfaction of Borrower's obligations under
paragraph 2.7 or 3.2 shall be an Eligible Instrument at the time of assignment.
Borrower has Performed all of its obligations to Purchasers, and there are no
executory obligations to Purchasers to be Performed by Borrower, except for
non-delinquent and executory obligations disclosed to Purchasers in their
Purchase Contracts.
5.13 Assessments and Reserves. (a) CR Cabos, CR Cancun or CR Puerto Vallarta, as
appropriate, has authority to levy annual assessments to cover the costs of
maintaining and operating the Time-Share Project with respect to the Time-Share
Project to which it holds the Trust Use Rights under the corresponding Guaranty
Trust; (b) to Borrower's Knowledge, levied assessments will be adequate to cover
the current costs of maintaining and operating the Time-Share Project and to
establish and maintain a reasonable reserve for capital improvements to the
extent and as required under the Operating Agreements and Time-Share Program
Consumer Documents; and (c) to Borrower's Knowledge, there will be no events
(other than inflation) which could give rise to a material increase in such
costs, except for additions of subsequent phases of the Time-Share Project that
will not materially increase assessments.
5.14 Title to and Maintenance of Common Areas and Amenities; Other Title
Matters. (a) The Land Trustee will at all times own, under the applicable
Guaranty Trust, the furnishings in the Units and all the common areas in the
Time-Share Project and other amenities which have been promised or represented
as being available to Purchasers, free and clear of liens and security interests
except for the Permitted Encumbrances; (b) no part of the Time-Share Project is
or will be subject to partition by the owners of Time-Share Interests; and (c)
all access roads and utilities and off-site improvements necessary to the use of
the Time-Share Project will have been dedicated to and/or accepted by the
responsible governmental authority or utility company or are owned by an
association of owners of property in a larger planned development or
developments of which the Time-Share Project is a part. CR Cancun is lawfully
seized of a good and marketable title to the Inventory Collateral located at the
Club Regina Resort at Cancun. CR Puerto Vallarta is lawfully seized of a good
and marketable title to the Inventory Collateral located at Club Regina Resort
at Puerto Vallarta. CR Cabos is
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lawfully seized of a good and marketable title to the Inventory Collateral
located at the Club Regina Resort at Los Cabos. CR Cancun is lawfully seized of
a good and marketable title to any insurance policies constituting Receivables
Collateral located at the Club Regina Resort at Cancun. CR Puerto Vallarta is
lawfully seized of a good and marketable title to any insurance policies
constituting Receivables Collateral located at the Club Regina Resort at Puerto
Vallarta. CR Cabos is lawfully seized of a good and marketable title to any
insurance policies constituting Receivables Collateral located at the Club
Regina Resort at Los Cabos. Cabos Sub and Puerto Vallarta Sub are lawfully
seized of a good and marketable title to the Receivables Trust Collateral.
Puerto Vallarta Sub, Cabos Sub and Cancun Sub are lawfully seized of a good and
marketable title to the balance of the Receivables Collateral. Borrower is
lawfully seized of a good and marketable title to the balance of the Collateral.
The Collateral is free from liens, claims, restrictions or encumbrances, except
the Permitted Encumbrances. Borrower does hereby warrant and shall forever
defend the Collateral against the claims of all persons whatsoever, subject
however to the Permitted Encumbrances.
5.15 Receivables Trusts. Each of Cabos Sub and Puerto Vallarta Sub have good
right and power to execute the Receivables Trusts and perform their respective
obligations thereunder. All action necessary and required by Cabos Sub's and
Puerto Vallarta Sub's Articles of Organization and all applicable laws for the
execution and delivery of the Receivables Trusts and all other documents
executed and delivered in connection therewith have been duly and effectively
taken and the Receivables Trusts are and shall be legal, valid, binding and
enforceable against each of Cabos Sub and Puerto Vallarta Sub in accordance with
their terms. The execution, delivery and performance of the Receivables Trusts
and all other documents executed and delivered in connection therewith will not
violate, constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance (other than in favor of Lender) upon any of the
properties or assets of Cabos Sub or Puerto Vallarta Sub pursuant to the
provisions of any law, regulation, judgment, decree, order, franchise or permit
applicable to Cabos Sub or Puerto Vallarta Sub; Cabos Sub's and Puerto Vallarta
Sub's Articles of Organization; or any other contract or other agreement or
instrument which Cabos Sub or Puerto Vallarta Sub is a party or by which Cabos
Sub or Puerto Vallarta Sub or Cabos Sub's or Puerto Vallarta Sub's properties or
assets are bound. No consent of any government or agency thereof, or any other
person, firm or entity not a party thereto, is or will be required as a
condition to the execution, delivery, performance or enforceability of the
Receivables Trusts.
5.16 Year 2000. Borrower has taken all action necessary to assure that there
will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999.
5.17 Survival and Additional Representations and Warranties. The representations
and warranties contained in this Article 5 are in addition to, and not in
derogation of, the representations and warranties contained elsewhere in the
Loan Documents and shall be deemed to be made and reaffirmed prior to the making
of each Advance.
6. BORROWER'S COVENANTS
6.1 Borrower's Affirmative Covenants.
(a) Corporate Existence. Borrower will maintain its existence as a business
organization of the type described below when it has signed this Agreement, duly
organized and validly existing as the type of organization identified in the
Schedule as Borrower's Type of Business Organization under the laws of the
jurisdiction identified in the Schedule as Borrower's Jurisdiction of
Organization and remain authorized to do business in the jurisdiction where the
Time-Share Project is located and in each jurisdiction where Borrower is then
selling Time-Share Interests or where at any time the location or nature of its
properties or its business then makes such qualification necessary. Borrower
will maintain full authority to Perform the Obligations and to carry on its
business and own its property.
(b) Compliance with Legal Requirements. Borrower will comply with and
maintain in full force and effect all Legal Requirements in all material
respects, including, without limitation, all Legal Requirements of the
jurisdiction in which the Time-Share Project is located and all other
governmental jurisdictions in which the Time-Share Project is located or in
which Time-Share Interests will be sold or offered for sale by Borrower.
Borrower shall at all times cause the Time-Share Project to be affiliated and in
good standing with Resort Condominium International or Interval International.
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(c) Insurance. Borrower will provide and maintain at Borrower's sole cost
and expense, and deliver to Lender, such insurance as is from time to time
required by the Lender, written by such insurers, in such amounts and forms and
with such limits, deductibles and retentions as are reasonably satisfactory to
Lender, provided, however, that Lender shall not alter, amend or modify said
insurance requirements more than once during any calendar year.
(d) Reports.
(i) Financial Information. During the Term, Borrower shall be required to
furnish or cause to be furnished to Lender the following financial
statements prepared in reasonable detail, and certified as correct by the
principal financial officer of the subject of such statement: (a) within
forty-five (45) days after the end of each fiscal quarter, a statement of
profit and loss, a balance sheet, and a cash flow statement as of the end
of such quarter, as to each entity constituting Borrower (prepared on a
consolidated basis and translated into English) and as to Guarantor,
showing operating results for such quarter for the period from the
beginning of the relevant fiscal year through the end of such quarter and
for the comparable period of the preceding fiscal year, if any; (b) within
one hundred twenty (120) days after the end of each fiscal year, a
statement of profit and loss, a balance sheet and a cash flow statement as
of the end of such year, as to each entity constituting Borrower, as to
Guarantor, and as to any time-share association (if any such time-share
associations exist); (c) within thirty (30) days after end of each fiscal
quarter, an audit report of Borrower's existing Time-Share Interests
inventory levels as of the end of such quarter year, in a form and scope
acceptable to Lender, reconciling the Time-Share Interests inventory levels
and the sales thereof prepared by Arthur Anderson or another third party
acceptable to Lender. Such report shall demonstrate to Lender that (A)
accurate inventory levels are being maintained by Borrower and reported to
Lender, (B) accurate inventory systems and controls are being maintained by
Borrower, (C) Lender has received any required interval sales payments, and
(D) Borrower has not sold more Unit types than are available during a
particular season. The annual financial statements of the Borrower shall be
prepared on a consolidated basis and shall be statutory audited by a
certified public accounting firm acceptable to Lender in accordance with
Mexican GAAP. The annual financial statements of Guarantor shall be audited
by a certified public accounting firm acceptable to Lender in accordance
with GAAP. The annual financial statements for the Time-Share Association
(if any such time-share associations exist) shall be in the form typically
prepared by such association. Borrower's and Guarantor's annual financial
statements shall be accompanied by a management letter from the accountants
detailing any deficiencies in accounting practices and commenting on any
other accounting-related matters. Together with Borrower's and Guarantor's
quarterly financial statements, Borrower and Guarantor will deliver to
Lender a certificate signed by Borrower's and Guarantor's chief executive
officer and chief financial officer stating that there exists no Event of
Default or Incipient Default or, if any such Event of Default or Incipient
Default exists, specifying the nature and period of its existence and what
action Borrower and Guarantor propose to take with respect to it. Such
certificate shall state specifically that Borrower is in compliance with
paragraphs 6.1(c), 6.1(e), 6.2(b) and 6.2(c), shall demonstrate the extent
to which Borrower is in compliance with Sections S.5(a), S.5(b) and S.5(c)
of the Schedule and shall demonstrate the extent to which Guarantor is in
compliance with the financial covenants required of Guarantor under the
Guaranty. Borrower shall require that Guarantor supply to Lender copies of
any compliance certificates submitted by Guarantor to the holder of the
Redeemable Senior Notes concurrently with the submission of such
certificate to such holder(s) and any notices (other than notices of a
routine nature) given by the holder of the Redeemable Senior Notes to
Guarantor or given by Guarantor to the holder of the Redeemable Senior
Notes, concurrently with such giving or receipt. For purposes of this
paragraph, in the case of a partnership or limited liability company,
"chief executive officer" of an entity shall mean the general partner,
member or manager having primary responsibility for the operations of such
entity; and "chief financial officer" of such an entity shall mean the
general partner, member or manager having primary responsibility for the
finances of such entity.
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(ii) Litigation. Borrower will promptly notify Lender if any action,
litigation or other proceeding becomes pending or, to Borrower's Knowledge,
threatened before any arbitration tribunal, court, governmental agency or
administrative body against Borrower, which might materially adversely
affect the Time-Share Project, the Collateral, the business or financial
condition of Borrower, or the ability of Borrower to Perform the
Obligations.
(iii) Sales Reports. On or before the tenth (10th) day after the end of
each month, Borrower will cause to be furnished to Lender a sales report
showing the following information prepared with respect to each Time-Share
Project and on a consolidated basis as to all Time-Share Projects: the
number of tours, the number of sales and closings of Time-Share Interests
and the aggregate dollar amount thereof, including average sales price and
down payments, during such month.
(iv) Time-Share Project and Sales Information. Borrower will deliver
current price lists for Time-Share Interests to Lender from to time to time
within ten (10) Business Days after receipt of a written request from
Lender to do so. Borrower will deliver to Lender from time to time, as
available and promptly upon amendment or effective date, sales literature,
registrations/consents to sell, and final subdivision public reports/public
offering statements/prospectuses. Borrower will deliver to Lender any
changes which Borrower proposes or any other person having the power to do
so proposes be made to the Time-Share Program Consumer Documents and/or the
Time-Share Program Governing Documents last delivered to Lender, together
with a description and explanation of the changes; and other items
requested by Lender which relate to the Time-Share Interests.
(v) Right to Inspect. Borrower will at its expense permit Lender and its
representatives at all reasonable times to inspect the Time-Share Project
and to inspect, audit and copy Borrower's books and records, provided,
however, that, so long as no Event of Default or Incipient Default has
occurred and is continuing, Lender shall provide to Borrower ten (10)
Business Days' prior written notice before conducting such inspections and
audits. In that regard, Lender shall likewise have the right to audit
Borrower's use right or membership inventory levels at such frequencies as
Lender shall deem appropriate, at Borrower's sole cost and expense.
Borrower will permit FPSI, Lender's wholly owned servicing subsidiary, to
monitor the collection and servicing function of Borrower with respect to
those Receivables collected and serviced by Borrower. Such monitoring shall
be performed at Lender's sole cost and expense except that Borrower shall
reimburse FPSI, on demand, for FPSI's travel expenses incurred in
connection with such monitoring. Provided there does not exist an Event of
Default, FPSI shall perform such monitoring no more frequently than once
per calendar year. During an Event of Default, there shall be no limit on
the frequency of such monitoring by FPSI and all such monitoring
performance during the pendency of an Event of Default shall be performed
at Borrower's sole cost and expense.
(vi) Time-Share Project Budgets. Within thirty (30) days after the end of
each fiscal year, Borrower will submit to Lender a proposed annual
maintenance and operating budgets of the Time-Share Project, certified to
be adequate by the Borrower and a statement of the annual assessment to be
levied upon the owners of Time-Share Interests.
(vii) Material Increases to Assessments. If Borrower has Knowledge or has
reason to believe that an event (other than general changes in the economy)
has occurred or could occur which could give rise to a material increase in
assessments to cover the then current costs of operating the Time-Share
Project and to establish and maintain a reasonable reserve for capital
improvements to the Time-Share Project, it will notify Lender of the
occurrence of such event.
(viii) Additional Information. Borrower will deliver to Lender the reports
and other information required pursuant to paragraph 3.3, and Borrower will
make available such further information as Lender may from time to time
reasonably request.
(e) Subordination of Indebtedness Owing to Affiliates. Borrower will cause
any and all indebtedness (other than the Mirror Notes) owing by it to its
shareholders, directors, officers, partners, members or managers, as the
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case may be, to Guarantors, or to the relatives or Affiliates of Borrower or any
of the foregoing, and all liens, security interests and other charges on the
assets of Borrower to be fully subordinated in all aspects to the Obligations
pursuant to written agreements satisfactory to Lender; provided, however, that
(A) if neither an Event of Default nor an Incipient Default then exists or will
exist after giving effect to such payment, such subordination shall not extend
to (i) reasonable bonuses, salaries, other compensation and fees at normal and
customary rates for services actually rendered so long as the payment of such
salaries and fees is not prohibited or otherwise limited pursuant to any
provision set forth in the Schedule and (ii) payments expressly permitted
pursuant to the terms of this Agreement and (B) any such subordination shall be
subject to section 4.08 of the Indenture.
(f) Payment of Taxes. Borrower will file all tax returns and will pay all
taxes, if any, required to be filed by it or paid by it, including real estate
taxes and assessments relating to the Time-Share Project or the Collateral.
Borrower will provide to Lender not more than thirty (30) days after such
Impositions required to be paid pursuant to the preceding sentence become
delinquent evidence that all taxes required to be paid pursuant to the preceding
sentence on the Units and Time-Share Project common areas and related amenities
have been paid in full.
(g) Impositions. All payments to be made by Borrower under the Loan
Documents shall be free of expense to Lender and to FPSI with respect to the
amount of any Impositions, all of which Impositions Borrower assumes and shall
pay when due pursuant to the laws of each of Mexico and the United States of
America, and in all events prior to the date on which penalties apply, in
addition to the other payments provided for in the Loan Documents to be made by
it. Borrower's Obligation to pay Impositions shall likewise include the
Obligation to pay any increase to Lender or FPSI in tax imposed by Mexico or the
United States of America (or any political subdivisions of either) as a result
of inclusion in income of Lender of any amount required by this paragraph 6.1(g)
to be paid to or for Lender or FPSI. In that regard, but without limiting the
generality of the foregoing, the Basic Interest, the Default Rate, the
Receivables Loan Fee, the Inventory Loan Fee, the Custodial Fee, the
Availability Fee, any prepayment premiums and any other amounts payable under
the Loan Documents on which Impositions may be imposed shall be "grossed up" by
any such Impositions which may be imposed, in the way of withholding payments or
otherwise, so that after taking into account the payment of such Impositions,
Lender and FPSI receive, at the times and frequencies required under the Loan
Documents, the same amount of interest and other amounts as it would receive had
such Impositions not been imposed. Borrower shall promptly make such withholding
payments to the Mexican and United States of America taxing authorities, shall
obtain receipts from such authorities as to the making of such withholding
payments, shall supply Lender with true and correct copies of such receipts
within five (5) Business Days following receipt thereof and shall in all other
respects comply with all applicable Mexican and United States of America tax
laws with respect to the making of such Imposition payments. FPSI is hereby
expressly made a third-party beneficiary of the provisions of this paragraph and
shall have the right to enforce this paragraph against Borrower in the same
manner as if FPSI were a party to this Agreement.
(h) Further Assurance. Borrower will execute or cause to be executed all
documents and do or cause to be done all acts necessary for Lender to perfect or
evidence and to continue the perfection of the liens and security interest of
Lender in the Collateral or otherwise to effect the intent and purposes of the
Loan Documents.
(i) Fulfillment of Obligations to Purchasers. Borrower will fulfill, and
will cause its Affiliates, agents and independent contractors at all times to
fulfill, all their respective material obligations to Purchasers. Borrower will
Perform all of its material obligations under the Time-Share Program Consumer
Documents and the Time-Share Program Governing Documents.
(j) Material Increases to Assessments. Borrower (i) will (A) discharge its
obligations under the Time-Share Program Governing Documents and (B) maintain a
reasonable reserve for capital improvements to the Time-Share Project to the
extent and as required under the Operating Agreements and
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Time-Share Program Consumer Documents; and (ii) will pay not less often than
once every twelve (12) months, the difference between (A) the cumulative total
amount of the maintenance and operating expenses incurred in the operation and
maintenance of the Time-Share Project, together with a reasonable reserve for
capital improvements to the extent and as required under the Operating
Agreements and Time-Share Program Consumer Documents; and the amount of any
installment of real property taxes currently due and payable with respect to the
Time-Share Project and related amenities, through the end of the calendar month
preceding the month in which such payment is made and (B) the cumulative total
amount of assessments payable to the Borrower, by owners (other than Borrower)
of Time-Share Interests therein through the end of the calendar month preceding
the month in which such payment is made.
(k) Maintenance of Time-Share Project and Other Property. Borrower will
maintain or cause to be maintained in good condition and repair all common areas
in the Time-Share Project and other on-site amenities which have been promised
or represented as being available to Purchasers and, to the extent owned by
Borrower or an Affiliate of Borrower, all portions of improvements in which
Units are located and are not part of the Time-Share Project. Borrower will
maintain a reasonable reserve to assure compliance with the terms of the
foregoing sentence. Borrower shall maintain the Operating Agreements in full
force and effect and shall make no material modifications to the same without
the prior written consent of Lender.
(l) Maintenance of Larger Tract. To the extent either the Time-Share
Project is part of a larger common ownership regime or planned development or
parts of buildings in which Units are located are not part of the Time-Share
Project, Borrower will pay its commercially reasonable share of common expenses
to be allocated to the Time-Share Project. Borrower will use commercially
reasonable efforts to cause all such property which is not part of the
Time-Share Project to be professionally managed in a first class manner.
(m) Collection of Receivables Collateral. Borrower will undertake the
diligent, timely and commercially reasonable collection of amounts delinquent
under each Instrument which constitutes part of the Receivables Collateral and
will bear the entire expense of such collection. Lender shall have no obligation
to undertake any action to collect under any Instrument.
(n) Notice of Lender's Interest. Borrower will deliver under its letterhead
notice of Lender's interest in the Receivables Collateral to persons bound
thereby, if requested, and will cause such notice to comply with applicable law.
(o) Year 2000. Borrower shall take all action necessary to assure that
there will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999. At Lender's request, Borrower
shall provide to Lender assurance reasonably acceptable to Lender that
Borrower's computer-based systems, embedded microchips and other processing
capabilities are year 2000 compatible.
(p) [Intentionally omitted].
(q) Withholding Tax. For so long as any of the Obligations remain
outstanding, Borrower agrees to take all steps now or hereafter required in
order to avoid the imposition of withholding taxes under Section 871, 881 and
1442 of the IRC or any successors statutes. Without limiting the generality of
the foregoing, Borrower hereby agrees, for so long as any of the Obligations are
made outstanding:
(i) to maintain the Receivables Trusts in full force and effect, provided,
however, that Borrower may dissolve any Receivables Trust at any time from
and after the date on which the corpus of said Receivables Trust no longer
contains any Instruments forming a part of the Receivables Collateral;
(ii) prior to such time as Borrower requests that Lender make an Advance of
the Receivables Loan against a particular Instrument, to transfer and
convey the Instrument to the applicable Receivables Trust and cause the
Instrument to remain within such Receivables Trust for so long as Lender
has a security interest in such Instrument;
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(iii) to perform all acts required of Borrower under the Receivables Trusts
including without limitation the delivery to the Receivables Trustee of an
IRS Form W-8-BEN within the time period required under the Receivables
Trusts and furnish Lender with a copy of such Form W-8-BEN concurrently
with the delivery of the same to the Receivables Trustee; and
(iv) not to engage in a United States trade or business, as that term is
interpreted under the IRC. In that regard, but without limiting the
generality of the foregoing, Borrower agrees to engage in no operational,
marketing, collection, administrative, servicing or other business within
the United States. To the extent that Borrower retains the services of an
Affiliate for purposes of performing operational, marketing, collection,
administrative, servicing or other business activities for the benefit of
Borrower, such business activities shall be conducted pursuant to
arms-length pricing and terms and be evidenced by a written agreement
approved by Lender. Borrower shall abide by all of its obligations under
such agreement in a timely fashion. Any such Affiliate retained to perform
such business activities on the part of Borrower shall perform similar
businesses and services with and on behalf of persons or entities other
than Borrower.
6.2 Borrower's Negative Covenants.
(a) Change in Borrower's Name or Principal Place of Business. Borrower will
not change its name or move its principal place of business or chief executive
office except upon not less than sixty (60) days' prior written notice to
Lender.
(b) Restrictions on Additional Indebtedness. Subject to the additional
restrictions set forth in paragraph 6.2(c) below, Borrower will not incur any
additional indebtedness, including, without limitation, any liability under any
capitalized lease or any liability as a guarantor or other contingent liability,
except for (i) short term accounts payable incurred in connection with the
operation of the Time-Share Project in the ordinary course of business, (ii) the
financing of time-share receivables denominated in Mexican Pesos or Unidades de
Inversion ("UDI's"), and (iii) the Mirror Notes ("Permitted Debt"). If Lender
consents to the incurring by Borrower of additional indebtedness, Lender shall
have the right of first refusal to provide such financing to Borrower. If,
during the Term, Borrower wishes to accept an offer from a third party for
financing Borrower shall give Lender written notice of its intent to do so
together with a copy of the written proposal for the financing from the
prospective third party lender. Lender shall have ten (10) Business Days from
receipt of the notice and any other items reasonably requested by Lender in
connection with such proposed financing to issue a financing proposal to extend
such financing upon terms substantially equivalent or better than those
contained in the proposal from the prospective third party lender and failure to
do so shall be deemed to be an election by Lender not to extend such financing.
Lender shall have forty-five (45) days following the receipt of the financing
proposal timely accepted by Borrower within which to issue a commitment;
provided, however, Lender shall have no obligation to issue such commitment. The
failure of Lender to issue a commitment within the foregoing period of time
shall be deemed to be an election by Lender not to extend such financing. In
such event, Borrower shall be free to accept the proposal from such third party
lender and close such transaction on terms that are in all material respects no
more favorable to the third party lender than those contained in its proposal.
Borrower shall not however, have the right to close such financing with such
third party lender on terms more favorable to the third party lender than those
contained in the proposal from the third party lender unless Lender has been
given the right to provide Borrower financing on terms substantially equivalent
to or better than those offered by such third party lender, as more fully
provided above.
(c) Restrictions on Liens or Transfers. Borrower, without the prior written
consent of Lender, will not: (i) sell, convey, lease, pledge, hypothecate,
encumber or otherwise transfer any security for the Performance of the
Obligations other than the sale of Inventory Collateral in the ordinary course
of business (provided that an Interval Sales Payment is paid to Lender) and
other than to the extent permitted by the Guaranty Trusts; (ii) permit or suffer
to exist any liens, security interests or other encumbrances on the Collateral,
except for (A) the Permitted
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Encumbrances, (B) the liens and security interests expressly granted to Lender,
and (C) liens against Purchasers and in favor of a Borrower for payment of
assessments or for amounts due under any executed Time-Share Project Consumer
Documents; (iii) sell, convey, lease, transfer or dispose of all or
substantially all of its assets to another entity provided, however, that this
section (iii) shall not be any more restrictive to the Borrower than is
permitted by section 4.08 of the Indenture; or (iv) if Borrower is an
organization, permit or suffer to exist any change in the legal or beneficial
ownership of Borrower or any person controlling Borrower (whether directly or
indirectly, through one (1) or more intermediaries) or any change in the power
to control it or any person controlling Borrower (whether directly or
indirectly, through one or more intermediaries). Without limiting Lender's right
to withhold its approval for other reasons, as a condition to approval of any
lien, security interest or other charge upon any of the Collateral, Lender may
require that the third party execute a subordination agreement satisfactory to
Lender and provide Quiet Enjoyment Rights to owners of Time-Share Interests.
Notwithstanding anything to the contrary in this Section 6.2(c), the Residual
Beneficiary or its successor shall be permitted to transfer the Trust Residual
Interest to an Affiliate of the Required Guarantor without the prior written
consent of Lender but with notice to Lender, subject to the terms and conditions
set forth in the Guaranty Trusts.
(d) No Sales Activities Prior to Approval. Borrower will not sell any
Time-Share Interest or offer any Time-Share Interest for sale in any
jurisdiction, unless: (i) Borrower has delivered to Lender true and complete
copies of the Minimum Required Time-Share Approvals required in such
jurisdiction for its proposed conduct and all other evidence required by Lender
that Borrower has complied with all Legal Requirements of such jurisdiction
governing its proposed conduct; and (ii) Borrower has delivered to Lender the
Time-Share Program Consumer Documents and the Time-Share Program Governing
Documents which Borrower will be using in connection with the Time-Share Project
and the sale or offering for sale of Time-Share Interests in such jurisdiction
and such documents have been approved by Lender, which approval shall not be
unreasonably withheld.
(e) No Modification of Receivables Collateral or Payments by Borrower.
Borrower will not cancel or materially modify, or consent to or acquiesce in any
material modification (including, without limitation, any change in the interest
rate or amount, frequency or number of payments) to, or solicit the prepayment
of, any Instrument which constitutes part of the Receivables Collateral (except
for solicitations by the Borrower which result in prepayment of a particular
Instrument in exchange for a discount not exceeding five percent (5%) of the
principal balance of such Instrument); or waive the timely performance of the
material obligations of the Purchaser under any such Instrument or its security;
or release the security for any such Instrument. Borrower will not pay or
advance directly or indirectly for the account of any Purchaser any sum required
to be deposited or owing by the Purchaser either under any Purchase Contract or
under any Instrument which constitutes part of the Receivables Collateral.
(f) No Modification of Time-Share Documents. Borrower will not cancel or
materially modify, or consent to or suffer to exist any cancellation or material
modification of any Time-Share Program Consumer Document or any Time-Share
Program Governing Document without the prior written consent of Lender, such
consent not to be unreasonably withheld or delayed.
(g) Maintenance of Larger Tract. To the extent either the Time-Share
Project is part of a larger common ownership regime or planned development or
parts of buildings in which Units are located are not part of the Time-Share
Project, Borrower will not permit common expenses to be allocated to the
Time-Share Project in an unreasonably disproportionate manner.
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6.3 Additional Covenants re Real Estate.
(a) Casualty.
(i) Borrower will promptly notify Lender of any damage to or destruction of
Improvements, whether or not the same is covered by insurance, and, if so
covered, will promptly make proof of loss relating thereto. Lender may make
proof of loss to the Improvements if not made promptly by Borrower.
Borrower hereby authorizes Lender, at Lender's option, to be named as the
loss-payee on any insurance policy, to adjust or compromise in the name of
Borrower, any loss covered by any insurance policy on the Improvements and
to collect and receive the proceeds from any such policy and use such
proceeds as set forth in subparagraph (c) below. Each insurance company
shall be directed to pay each insured loss directly to Lender instead of
Borrower or Borrower and Lender jointly.
(ii) The proceeds of all insurance shall, at the option of Lender, be
applied by Lender in reduction of the Obligations in such order as Lender
shall determine whether the same be then matured or unmatured (unless
otherwise elected by Lender, no such application shall be deemed to be an
advance payment of any subsequently accruing fixed sum), or paid over,
subject to such terms and conditions as Lender may in its sole discretion
then impose, wholly or in part to Borrower by Lender for the repair and
restoration of the Improvements or for any other purpose or object
satisfactory to Lender; provided, however, that any such proceeds shall be
paid over by Lender to Borrower for the repair and restoration of the
Improvements in the event and only in the event (A) the amount of insurance
proceeds available with respect to a particular loss at a particular Resort
Property does not exceed Three Million Dollars ($3,000,000) as to that
Resort Property and (B) the Additional Conditions (as defined below) are
satisfied. If the amount of insurance proceeds available with respect to a
particular loss at a particular Report Property exceeds Three Million
Dollars ($3,000,000) as to that Resort Property or if the Additional
Conditions are not satisfied, then the entire amount of insurance proceeds
shall be governed by the first sentence of this paragraph. If insurance
proceeds are paid over to Borrower for the purpose of repair and
restoration of the Improvements, Lender, without limitation of its right to
impose other terms and conditions, may require receipt and approval by
itself and its architect, in the reasonable discretion of both, of plans
and specifications for the work to be done; disbursement of proceeds not
more frequently than monthly for work done against invoices, lien waivers,
title insurance policy endorsements and architect's certifications;
retention of holdbacks until completion of construction and expiration of
mechanic's lien periods; and receipt of assurance adequate to Lender in its
sole judgment that the proceeds remaining after disbursement will be
sufficient to complete such repair and replacement. Borrower hereby assigns
to Lender for the uses and purposes aforesaid, all insurance required by
this Loan Agreement and, the proceeds thereof. Lender shall not be
responsible for such insurance, for the collection of any insurance moneys,
or for the insolvency of any insurer or any insurance underwriter.
Application of insurance proceeds by Lender, regardless of the manner or
order, shall not waive Performance of the Obligations, cure or waive any
default by Borrower in the Performance of the Obligations, or invalidate or
affect any act done hereunder because of any such default. Lender shall not
be obligated to see to the proper application of insurance proceeds paid
over to Borrower. The "Additional Conditions" are as follows:
(x) There does not then exist an Event of Default or Incipient
Default;
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(xi) The casualty occurs no later than two (2) years prior to the
later to occur of the Receivables Loan Maturity Date or the Inventory Loan
Maturity Date;
(xii) The repair and restoration of the Improvements that are damaged
can be completed within a one (1) year period of time in the opinion of an
architect or engineer acceptable to Lender;
(xiii) Borrower has business interruption insurance in place to
completely reimburse Borrower for any revenue of Borrower which is lost
because of such damage or destruction and the insurer under such insurance
policy is irrevocably committed to pay the proceeds of such insurance
policy to Borrower;
(xiv) Borrower has supplied to Lender a final fixed budget outlining
the total costs to be incurred in such repair and restoration and such
budget has been approved by the aforementioned architect or engineer; and
(xv) In the event the aforementioned budget indicates that the cost of
repair and restoration will exceed such insurance proceeds, Borrower has
advanced the entire amount of such shortfall in the payment of the costs of
such repair and restoration before any portion of the insurance proceeds
are made available to Borrower for such purposes.
(b) Restrictions on Transfer; No Additional Liens. To the extent not
prohibited by applicable law and except as may be expressly permitted herein,
Borrower will not, without the prior written consent of Lender: (i) sell,
convey, lease, sublease, assign, mortgage, pledge, encumber or otherwise
transfer the Inventory Collateral or any part thereof, other than in connection
with a sale of a particular Time-Share Interest to a Purchaser in the ordinary
course of business; or (ii) except for Permitted Debt, assign or hypothecate any
accounts, accounts receivable, rent, issues, profits or proceeds from the
Inventory Collateral. Any such act shall be expressly subject to the applicable
Guaranty Trust and the prior lien created hereby, and written consent of Lender
to any one such act shall not be construed to be a waiver of this provision with
respect to any subsequent act. If any prohibited lien shall arise, Borrower will
promptly discharge such lien; provided, however, that Borrower shall have the
right to contest in good faith, with due diligence and appropriate proceedings,
at no cost or expense to Lender, the validity, applicability, or amount of any
such lien, provided, however, that Borrower, prior to commencing such contest,
shall have furnished to Lender a bond or other security in such form, substance
and amount as is reasonably satisfactory to Lender.
(c) Taxes, Assessments.
(i) BORROWER WILL PAY WHEN DUE, AND INDEMNIFY AND HOLD HARMLESS Lender, its
successors, assigns and shareholders and the directors, officers,
employees, agents and servants of the foregoing from all taxes (including,
without limitation, revenue and documentary stamp taxes, intangible taxes,
ad valorem real estate taxes, personal property taxes, Mexican federal
income taxes, value added taxes and local transfer and lodging taxes),
assessments, water, sewer and other utility rates, rents and charges,
license and registration fees and excises, together with any penalties,
fines or interest thereon, in each case whether general or special,
ordinary or extraordinary, foreseen or unforeseen, of every character in
respect of or affecting in any way the Inventory Collateral which at any
time prior to Performance of the Obligations may be imposed on, become a
lien upon or affect in any way (i) Lender, (ii) the Inventory Collateral or
any part thereof or any rent or other income or proceeds therefrom, (iii)
the occupancy, operation, use, possession or disposition of the Inventory
Collateral (including, without limitation, any disposition in exercise of
the rights of Lender arising from an Event of Default), or (iv) any
activity conducted on or in connection with the Inventory Collateral or
part thereof, provided, however, that Lender explicitly acknowledges and
agrees that any Obligation of Borrower pursuant to this Section shall cease
and be of no further force or effect with respect to any taxes due and
payable for the period, if any, following the exercise by Lender,
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or by Land Trustee at the direction of Lender, of any remedy having the
effect of permanently divesting Borrower of its right, title and interest
in and to all or any portion of the Inventory Collateral but solely as to
the portion of such Inventory Collateral with respect to which Borrower's
right, title and interest has been divested.
(ii) Borrower will furnish to Lender receipts showing payment of the taxes
described above within thirty (30) days following the final due date of
such taxes and assessments.
(d) Impounds.
(i) Upon the occurrence of an Event of Default, and at all times
thereafter, Borrower, upon the prior written request of Lender, will make
monthly deposits with Lender of the following: (i) an installment of the
taxes and special assessments levied or to be levied against the Inventory
Collateral and (ii) an installment of the premium or premiums that will
become due and payable to renew the insurance on the Improvements. Such
installments are to be equal to the estimated taxes and assessments and
premium or premiums for such insurance next due (as reasonably estimated by
Lender giving due consideration to the previous year's tax and premiums),
less all installments already paid therefor, and divided by the number of
months that are to elapse before one (1) month prior to the date when such
taxes and assessments or premium or premiums shall become delinquent. If
amounts paid to Lender under the provisions of this paragraph are
insufficient to discharge the Obligations for taxes and assessments or
insurance premiums as the same become due, Borrower will pay to Lender upon
demand such additional sums as may be required to fully pay and discharge
this Obligation for taxes and assessments and premium or premiums.
(ii) Nothing in this paragraph shall release Borrower of its obligation to
pay taxes, assessments and insurance premiums as the same become due and
payable to the extent that provision is not made for such payment pursuant
to the terms of this paragraph. To the extent not prohibited by law,
deposits made under this paragraph shall be deemed to be held in trust and
may not be commingled with Lender's general funds; and Lender shall have no
liability to Borrower for any interest on such deposits.
(iii) If, by reason of any Event of Default, Lender declares all of the
Obligations to be due and payable, Lender, to the extent not prohibited by
applicable law, may, at its option and without notice, then apply any funds
in the impound accounts against the Obligations in such order as Lender may
in its discretion determine. Application of such funds to the Obligations
shall not cure or waive any default by Borrower in the Performance of the
Obligations or invalidate any act done hereunder because of any such
default. The enforceability of the Obligations herein relating to taxes,
assessments and insurance premiums shall not be affected except insofar as
those Obligations have been met by compliance with this paragraph.
(iv) Lender may from time to time, at its option, waive, and after any such
waiver reinstate, any or all provisions hereof requiring such deposits, by
notice to Borrower. While any such waiver is in effect, Borrower will pay
Impositions and insurance premiums as herein elsewhere provided.
(e) Compliance with Insurance Terms, Laws, etc. Borrower has complied, and
will comply and will not knowingly or voluntarily suffer or permit any violation
thereof with: (a) all terms of any insurance policy covering or applicable to
the Improvements or any part thereof, all requirements of the issuer of any such
policy, and all orders, rules, regulations and other requirements applicable to
or affecting the Improvements or any use or condition of the Improvements; and
(b) all laws, ordinances, regulations, covenants, conditions and restrictions
affecting Borrower or the Improvements.
(f) Alterations, Maintenance, Inspection, Repair. Borrower (i) will not,
without the prior written consent of Lender, make any material alteration to the
Improvements or remove, demolish, or alter the design or structural character of
any Improvements, unless otherwise permitted herein or required by law; (ii)
will not, without the prior written consent of Lender, remove or knowingly or
voluntarily permit the removal of any fixtures, equipment, machinery,
appliances, fixtures, furniture, furnishings or other items of personal property
contained within the Improvements,
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except in the ordinary course of business or unless otherwise permitted herein;
(iii) will promptly repair any portions of the Improvements that may be damaged
or destroyed (regardless of the sufficiency of insurance and condemnation
proceeds) and will not knowingly or voluntarily commit or suffer waste upon the
Improvements, but will at all times make or cause to be made such repairs,
maintenance and renewals and replacements, or otherwise, as may be necessary to
maintain the Improvements and condition thereof in good order and repair; (iv)
will keep the Improvements and the Real Property free of rubbish and other
unsightly conditions; (v) will use its best efforts to keep all Improvements
free of dry rot, fungus, termites and all other harmful or destructive pests;
(vi) will keep all ornamental plants, trees and shrubs on the Real Property
neatly pruned and in good condition; and (vii) will complete, subject to clauses
(i) and (iii) above, promptly, in a good and workmanlike manner and in
conformity with plans and specifications approved in writing by Lender any
improvements now or hereafter commenced.
(g) Use; Zoning.
(i) Borrower will use the Real Property as a vacation resort.
(ii) The use of the Real Property described in subparagraph (i) above does
not, as of the date hereof, violate any private covenant or restriction
affecting the Real Property. As of the date hereof, the Real Property is
zoned to permit the use described in subparagraph (a) above. Other than
with respect to the Club Regina Resort at Los Cabos, as of the date hereof,
the necessary rights-of-way for all roads necessary for the full
utilization of the Real Property for its intended purposes have been
acquired, and/or have been dedicated to public use and accepted by the
appropriate governmental authority. Prior to the first Advance of the
proceeds of the Inventory Loan, the necessary rights-of-way for all roads
necessary for the full utilization of the Club Regina Resort at Los Cabos
for its intended purposes will be acquired and dedicated to public use and
accepted by the appropriate governmental authorities or, in the
alternative, the Title Policy will insure Lender against any loss that
Lender may sustain as a result of the failure of such rights of way to be
acquired and dedicated to public use and accepted by appropriate
governmental authorities.
(iii) Borrower will not, without the Lender's prior written consent, seek,
join in or consent to any change in any private covenant, zoning law or
other public or private restriction, which change would limit the use of
the Real Property or any part thereof or reduce its fair market value.
(h) Right of Lender to Act. If there be commenced any action or proceedings
affecting the Inventory Collateral or the title thereto or if Lender be made a
party to any action or proceeding because of its status hereunder, then Lender,
without obligation to do so, may procure such abstracts or other evidence of
title as it deems necessary; may appear in any such action as Lender deems
advisable; perform such Obligations and for such purposes may enter upon the
Real Property; and shall become subrogated to the lien and rights of all persons
to whom payments have been made in performing the Obligations. For any of such
purposes, including court costs, attorneys' fees and expenses, Lender may
advance such sums of money as it deems necessary. Such sums advanced, with
interest from the date of advance at the Default Rate until paid, shall, without
notice or demand, immediately be due from Borrower to Lender and be secured by
the Loan Documents. Lender shall be the sole judge of the legality, validity and
priority of any claim, lien, encumbrance, tax, assessment and premium it
discharges pursuant hereto and of the amount necessary to be paid in
satisfaction thereof. Any action taken by Lender pursuant to this paragraph
shall not waive Performance of any Obligation, cure or waive any default by
Borrower in the Performance of the Obligations, or invalidate or affect any act
done hereunder because of such a default.
(i) Risk of Loss; Indemnity. As between the Borrower and the Lender,
Borrower assumes the entire risk of loss of the Real Property from any cause
whatsoever. As between the Borrower and the Lender, Borrower assumes all risks
and liability for the Real Property, and the use and operation thereof, and for
injuries or deaths of persons and damage to property, however arising from or
incident to such use or operation, whether such injury or death to persons be of
agents or employees of
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Borrower or of third parties and such damage to property be of Borrower or of
others. BORROWER WILL SAVE AND HOLD HARMLESS and defend Lender, its successors,
assignees and shareholders (including corporate shareholders) and the directors,
officers, employees, agents and servants of the foregoing, from any and all
losses, costs, expenses (including court costs, attorneys' fees and expert
witness fees), damages, demands, claims, suits, proceedings (whether civil or
criminal), orders and judgments, penalties, fines and other sanctions arising or
incurred because of or incident to the Real Property or the actual or alleged
management, control, condition, destruction, disposition, use or operation
thereof. On written request by a person or other entity covered by the above
agreement of indemnity, Borrower will undertake, at its own cost and expense, on
behalf of such indemnitee, using counsel satisfactory to the indemnitee, the
defense of any legal action or proceeding to which such indemnitee shall be a
party, provided that such action or proceeding shall result from, or grow or
arise out of any of the events set forth in this paragraph. Notwithstanding
anything to the contrary set forth in this Section, the indemnities set forth in
the Section to be provided by Borrower to Lender shall not extend to any costs,
claims, demands, liability, actions or judgments arising, directly or
indirectly, with respect to any act or omission occurring on or after such date,
if any, as Lender has exercised, or has directed Land Trustee to exercise, any
right or remedy accruing to it following the occurrence of an Event of Default
if as a result thereof Borrower is prevented from exercising control over the
operation of the Real Property.
6.4 Survival of Covenants. The covenants contained in this Article 6 are in
addition to, and not in derogation of, the covenants contained elsewhere in the
Loan Documents and shall be deemed to be made and reaffirmed prior to the making
of each Advance.
7. DEFAULT
7.1 Events of Default. The occurrence of any of the following events or
conditions shall constitute an Event of Default by Borrower under the Loan
Documents:
(a) failure of Lender to receive from Borrower within five (5) Business
Days of the date when due and payable (i) any amount payable under the
Receivables Loan Note or the Inventory Loan Note or (ii) any other payment due
under the Loan Documents, except for the payment due at the Receivables Loan
Maturity Date and the Inventory Loan Maturity Date, for which no grace period is
allowed;
(b) any representation or warranty which is made by Borrower or Guarantor
and is contained in the Loan Documents or in any certificate furnished to Lender
under the Loan Documents by or on behalf of Borrower proves to be, in any
material adverse respect, false or misleading as of the date deemed made;
(c) a default in the Performance of the Obligations set forth in paragraph
3.2, 6.1(c), 6.1(e), 6.2(b), 6.2(c)(i), 6.2(c)(iii) or 6.2(c)(iv) hereof or in
Sections S.5(a), S.5(b) or S.5(c) of the Schedule;
(d) a default in the Performance of the Obligations or a violation of any
term, covenant or provision of the Loan Documents (other than a default or
violation referred to elsewhere in this paragraph 7.1) which continues
unremedied (i) for a period of thirty (30) days after notice of such default or
violation to Borrower in the case of a default under or violation of paragraph
6.2(c)(ii) or any default or violation which can be cured by the payment of
money alone or (ii) for a period of thirty (30) days after notice to Borrower in
the case of any other default or violation;
(e) an "Event of Default," as defined in any of the other Loan Documents;
(f) any default, which default continues beyond any applicable cure period,
by any Borrower under (i) the Mirror Notes or under the documents and
instruments executed in connection therewith or (ii) any other agreement
evidencing, guaranteeing or securing borrowed money or a receivables purchase
financing involving an obligation in excess of Fifty Thousand Dollars ($50,000)
to make a payment of principal or interest or to repurchase receivables; or any
other material default by any Borrower permitting the acceleration of any of the
payment or repurchase obligations of such Borrower which, if accelerated, will
be in excess of Fifty Thousand Dollars ($50,000) in the aggregate;
(g) any final, non-appealable judgment or decree for money damages or for a
fine or penalty against any Borrower which is
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not paid and discharged or stayed within thirty (30) days thereafter and, when
aggregated with all other judgment(s) or decree(s) that have remained unpaid and
undischarged or are not stayed for such period, such amount is in excess of
Fifty Thousand Dollars ($50,000) as to any individual Borrower or Two Hundred
Thousand Dollars ($200,000) in the aggregate as to all such Borrowers.
(h) any party holding a lien on or security interest in any Collateral,
other than a lien created by a Purchaser solely with respect to the Time-Share
Interest(s) owned by it, commences foreclosure or similar sale thereof;
(i) a material adverse change in the Time-Share Project, the Collateral or
the business or financial condition of any Borrower, which change is not
enumerated in this paragraph 7.1, as the result of which Lender in good faith
deems the prospect of Performance of the Obligations impaired or the Collateral
imperiled;
(j) Any Borrower shall (i) generally not be paying its debts as they become
due, (ii) file, or consent by answer or otherwise to the filing against it of, a
petition for relief or reorganization, arrangement or liquidation or any other
petition in bankruptcy or insolvency under the laws of any jurisdiction
including, without limitation, the commencement of a bankruptcy (quiebra),
insolvency (suspension de pagos) or similar proceedings in accordance with the
Mexican Bankruptcy Insolvency Law (Ley de Quiebras y Suspension de Pagos), (iii)
make an assignment for the benefit of its creditors, (iv) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers for itself or any substantial part of its property, (v) be adjudicated
insolvent, (vi) dissolve or commence to wind-up its affairs or (vii) take any
action for purposes of the foregoing; or a petition for relief or
reorganization, arrangement or liquidation or any other petition in bankruptcy
or insolvency or the appointment of a custodian under the laws of any
jurisdiction is filed against any Borrower or a custodian is appointed for any
Borrower, the Collateral or any material part of any Borrower's property and
such proceeding is not dismissed and appointment vacated within ninety (90) days
thereafter;
(k) any of the events enumerated in paragraphs 7.1(b), (f), (g), (h), (i)
or (j) occurs with respect to any partner or manager of Borrower, if Borrower is
a partnership or limited liability company, Guarantor or other surety for the
Performance of the Obligations or Guarantor defaults in the Performance of any
of its obligations under the Guaranty executed by it;
(l) failure of Lender to receive from Borrower, within thirty (30) days of
the date Borrower knows of such event, notice of any event which renders any
representation or warranty by Borrower or Guarantor in any Loan Documents false
in any material, adverse respect were it made after the occurrence of such
condition;
(m) any default, which continues beyond any applicable cure period, by
Guarantor under (i) the Redeemable Senior Notes or under the document and
instruments executed in connection therewith or (ii) any other agreement
evidencing, guaranteeing or securing borrowed money or a receivables purchase
financing involving an obligation in excess of Fifty Thousand Dollars ($50,000)
to make a payment of principal or interest or to repurchase receivables; or any
other material default by Guarantor permitting the acceleration of any of the
payment or repurchase obligations of Guarantor which, if accelerated, will be in
excess of Fifty Thousand Dollars ($50,000) in the aggregate;
(n) Receivables Trustee defaults in the performance of its Secured
Obligations under and as defined in the Pledge Agreement, if such default
continues unremedied for (i) a period of fifteen (15) days after notice thereof
to Receivables Trustee and Borrower in the case of a default which can be cured
by the payment of money only or (ii) a period of thirty (30) days after notice
thereof to Receivables Trustee and Borrower in the case of any other default;
(o) any representation or warranty of Receivables Trustee contained in the
Pledge Agreement proves to be, in any material respect, false or misleading as
of the date deemed made and such misleading representation or warranty has a
material adverse effect on Lender, provided, however, that no Event of Default
hereunder shall occur if the Depositors under the Receivables Trusts replace the
Receivables Trustee within fifteen (15) days following
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written notice from Lender of such false or misleading representation or
warranty on the part of the Receivables Trustee;
(p) if by or under the authority of any governmental authority the
management of any Borrower or its business is curtailed to the point of making
it effectively inoperative by any seizure or intervention or proceedings of any
nature;
(q) if any of the Time-Share Projects are appropriated or possession
thereof is lost by the Borrower;
(r) if for any reason any Mexican authorities close the Time-Share Project
or enjoin the further sale of Time-Share Interests therein and such condition
continues for a period of thirty (30) days; or
(s) if caused by the acts of Borrower or the Receivables Trustee, the zero
balance accounts maintained in the name of the Receivables Trustee under the
Lockbox Agreement are not swept into an account of which Lender is the sole
owner, as required under the Lockbox Agreement and such condition continues for
a period of five (5) Business Days.
7.2 Remedies. At any time after an Event of Default has occurred and while it is
continuing, Lender may but without obligation, in addition to the rights and
powers granted elsewhere in the Loan Documents and not in limitation thereof, do
any one or more of the following:
(a) cease to make further Advances;
(b) declare the Receivables Loan Note, together with any applicable
Receivables Loan Prepayment Premium and all other sums owing by Borrower to
Lender in connection with the Receivables Loan, immediately due and payable
without notice, presentment, demand or protest, which are hereby waived by
Borrower;
(c) declare the Inventory Loan Note, together with any applicable Inventory
Loan Prepayment Premium and all other sums owing by Borrower to Lender in
connection with the Inventory Loan, immediately due and payable without notice,
presentment, demand or protest, which are hereby waived by Borrower;
(d) with respect to the Receivables Collateral, (i) after any applicable
delinquency on a Purchase Contract, institute collection, foreclosure and other
enforcement actions against Purchasers and other persons obligated on the
Receivables Collateral, (ii) enter into modification agreements and make
extension agreements with respect to payments and other performances, (iii)
release persons liable for performance, (iv) settle and compromise disputes with
respect to payments and performances claimed due, all without notice to
Borrower, without being called to account therefor by Borrower and without
relieving Borrower from Performance of the Obligations, and (v) receive,
collect, open and read all mail of Borrower for the purpose of obtaining all
items pertaining to the Receivables Collateral;
(e) proceed to protect and enforce its rights and remedies under the Loan
Documents and to foreclose or otherwise realize upon its security for the
Performance of the Obligations, or to exercise any other rights and remedies
available to it at law, in equity or by statute;
(f) without notice to Borrower, have a receiver appointed for Borrower
and/or its property;
(g) exercise any and all remedies of a secured party under the Arizona
Uniform Commercial Code and under Mexican law with respect to the Collateral;
(h) following the realization by Lender of its security interest in the
Receivables Trust Collateral, terminate or revoke the Receivables Trusts or
either of them;
(i) without limiting any other rights or remedies of Lender, exercise all
rights and remedies under the Pledge Agreement; and
(j) without limiting any other rights or remedies of Lender, exercise all
rights and remedies under the Guaranty Trusts or any of them.
7.3 Application of Proceeds During an Event of Default. Notwithstanding anything
in the Loan Documents to the contrary, while an Event of Default exists, any
cash received and retained by Lender in connection with the Collateral may be
applied to payment of the Obligations in the manner provided in paragraph 7.5.
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7.4 Uniform Commercial Remedies; Sale; Assembly of Receivables Collateral.
(a) UCC Remedies; Sale of Receivables Collateral. Lender shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code of
the State of Arizona and all other rights and remedies accorded to a Secured
Party at equity or law. Any notice of sale or other disposition of the
Receivables Collateral given not less than ten (10) Business Days prior to such
proposed action in connection with the exercise of Lender's rights and remedies
shall constitute reasonable and fair notice of such action. Lender may postpone
or adjourn any such sale from time to time by announcement at the time and place
of sale stated on the notice of sale or by announcement of any adjourned sale,
without being required to give a further notice of sale. Any such sale may be
for cash or, unless prohibited by applicable law, upon such credit or
installment as Lender may determine. Borrower shall be credited with the net
proceeds of such sale only when such proceeds are actually received by Lender in
good current funds. Despite the consummation of any such sale, Borrower shall
remain liable for any deficiency on the Obligations which remains outstanding
following such sale. All net proceeds recovered pursuant to a sale shall be
applied in accordance with the provisions of paragraph 7.5.
(b) Lender's Right to Execute Conveyances. Lender may, in the name of
Borrower or in its own name, make and execute all conveyances, assignments and
transfers of the Receivables Collateral sold in connection with the exercise of
Lender's rights and remedies; and Lender is hereby appointed Borrower's
attorney-in-fact for this purpose.
(c) Obligation to Assemble Receivables Collateral. Upon request of Lender
when an Event of Default exists, Borrower shall assemble the Receivables
Collateral and make it available to Lender at a time and place designated by
Lender, if it is not already in Lender's possession.
7.5 Application of Proceeds. The proceeds of any sale of all or any part of the
Collateral made in connection with the exercise of Lender's rights and remedies
shall be applied in the following order of priorities; first, to the payment of
all costs and expenses of such sale, including without limitation, reasonable
compensation to Lender and its agents, attorneys' fees, and all other expenses,
liabilities and advances incurred or made by Lender, its agents and attorneys,
in connection with such sale, and any other unreimbursed expenses for which
Lender may be reimbursed pursuant to the Loan Documents; second, to the payment
of all late charges required by the Loan Documents to be paid by Borrower, in
such order and manner as Lender shall in its discretion determine; third, to the
payment of the Obligations, in such order and manner as Lender shall in its
discretion determine, with no amounts applied to payment of principal until all
interest has been paid; fourth, to the other Obligations in such order and
manner as Lender may determine; and last, to the payment to Borrower, its
successors or assigns, or to whosoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
7.6 Lender's Right to Perform. Lender may, at its option, and without any
obligation to do so, pay, perform and discharge any and all obligations agreed
to be paid or Performed in the Loan Documents by Borrower or any surety for the
Performance of the Obligations if (a) such person fails to do so and (b) (i) an
Event of Default exists and at least five (5) Business Days' notice has been
given to such person of Lender's intention to take such action, (ii) the action
taken by Lender involves obtaining insurance which such person has failed to
maintain in accordance with the Loan Documents or to deliver evidence thereof,
or (iii) in the opinion of Lender, such action must be taken because an
emergency exists or to preserve any of the Collateral or its value. For such
purposes Lender may use the proceeds of the Collateral. All amounts expended by
Lender in so doing or in exercising its remedies under the Loan Documents
following an Event of Default shall become part of the Obligations, shall be
immediately due and payable by Borrower to Lender upon demand, and shall bear
interest at the Default Rate from the dates of such expenditures until paid.
7.7 Non-Exclusive Remedies. No remedy in any Loan Document conferred on or
reserved to Lender is intended to be exclusive of any other remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under any Loan Document or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power shall be
construed to be a waiver of or acquiescence to any default or a waiver of any
right or power; and every such right and power may be exercised from time to
time and as often as may be deemed expedient.
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7.8 Waiver of Marshalling. Borrower, for itself and for all who may claim
through or under it, hereby expressly waives and releases all right to have the
Collateral, or any part of the Collateral, marshalled on any foreclosure, sale
or other enforcement of Lender's rights and remedies.
7.9 Attorney-in-Fact. For the purpose of exercising its rights and remedies
under paragraphs 7.2(d) and 7.6, Lender may do so in Borrower's name or its name
and is hereby appointed as Borrower's attorney-in-fact to take any and all
actions in Borrower's name and/or on Borrower's behalf as Lender may deem
necessary or appropriate in its discretion in the accomplishment of such
purposes.
8. COSTS AND EXPENSES; INDEMNIFICATION
8.1 Costs and Expenses.
8.1.1 Borrower will pay on demand any and all costs and expenses incurred
by Lender (exclusive of Lender's employees' expenses other than travel expenses)
in connection with the initiation, documentation and closing of the Receivables
Loan and the Inventory Loan, the making of Advances, the protection of the
Collateral, or the enforcement of the Obligations against Borrower, including,
without limitation, all attorneys', inspecting architect's/engineer's and other
professionals' fees (including, without limitation, reasonable out-of-pocket
expenses and reasonable and normal charges of such attorneys' and other
professionals for photocopy, telecopy and computer services, and clerical
overtime), consumer credit reports, and revenue, documentary stamp, transaction
and intangible taxes. Without limiting the generality of the foregoing, if a
bankruptcy proceeding is commenced by or against Borrower or otherwise involving
the Collateral, Lender shall, to the extent not already provided for herein, be
entitled to recover, and Borrower shall be obligated to pay, Lender's attorneys'
fees and costs incurred in connection with: any determination of the
applicability of the bankruptcy laws to the terms of the Loan Documents or
Lender's rights thereunder; any attempt by Lender to enforce or preserve its
rights under the bankruptcy laws or to prevent Borrower or any other person from
seeking to deny Lender its rights thereunder; any effort by Lender to protect,
preserve or enforce its rights against the Collateral, or seeking authority to
modify the automatic stay of 11 U.S.C. Section 362 or otherwise seeking to
engage in such protection, preservation or enforcement; or any proceeding(s)
arising under the bankruptcy laws, or arising in or related to a case under the
bankruptcy laws. In addition to the foregoing, Borrower agrees to timely pay all
fees and expenses of Receivables Trustee to perform the services contemplated
under the Pledge Agreement and under the Receivables Trusts. Borrower agrees to
supply to Lender written notice in the event the Receivables Trustee advises
Borrower that the Receivables Trustee intends to increase the fees and expenses
payable to Receivables Trustee in connection with the performance of its
services under the Pledge Agreement and Receivables Trusts, within three (3)
Business Days following Borrower's Knowledge of such contemplated increase.
8.1.2 Borrower agrees to timely pay and reimburse the Receivables Trustee
for all Receivables Trustee's fees, costs and expenses incurred by or due and
owing to the Receivables Trustee under or in connection with the Receivables
Trusts and Pledge Agreement and agrees to take such steps as are necessary in
order to prevent the Receivables Trustee from charging such costs, fees and
expenses against the Trust Estate (as that term is defined in the Receivables
Trusts) or from seeking reimbursement of such fees and expenses from the
proceeds of the Receivables Collateral. In the event Borrower or Receivables
Trustee withholds tax from the proceeds otherwise payable under the Receivables
Collateral, Borrower shall pay to Lender on the last day of each and every month
during the Term, the amount of tax so withheld during such month. In the event
Receivables Trustee expends or advances any funds which will be charged against
the Trust Estate or for which Receivables Trustee will be seeking reimbursement
from the proceeds of the Receivables Collateral, Borrower shall, within eight
(8) days following notification by Receivables Trustee as to such contemplated
expenditure or advance, deposit with Receivables Trustee, monies in an amount
equal to such contemplated advance or expenditure so that the Trust Estate and
the proceeds from the Receivables Collateral shall not be reduced by such
advance or expenditure. In the event such notice is given and Borrower fails to
deposit such monies (and notwithstanding the fact that such failure shall be
deemed an Event of Default), in the event Receivables Trustee does not or, has
no obligation to so notify Borrower, or in the event the Receivables Trustee
charges Receivables Trustee's fees, costs or expenses against the Trust Estate
or against the proceeds of the Receivables Collateral (and notwithstanding the
fact that
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such act on the part of the Receivables Trustee shall be deemed an Event of
Default), Borrower nevertheless shall pay to Lender on the last day of each and
every month during the Term, the amount of such advance, expenditure or charge
so made by Receivables Trustee during such month. The amounts payable by
Borrower to Lender hereunder shall be deemed proceeds from the Receivables
Collateral and shall be applied in the priority set forth in paragraph 2.10
hereof.
8.1.3 Borrower agrees to timely pay and reimburse the Land Trustee for all
of the Land Trustee's fees, costs and expenses incurred by or due and owing to
the Land Trustee under or in connection with the Guaranty Trusts in the
performance by the Land Trustee of the services contemplated to be performed by
it under the Guaranty Trusts. Borrower furthermore agrees to timely pay all
other fees, costs and expenses required to be paid by the Borrower under the
Guaranty Trusts.
8.2 Indemnification. Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS, and defend
Lender, FPSI and their respective successors, assigns and shareholders
(including corporate shareholders), and the directors, officers, employees,
servants and agents of the foregoing, for, from and against: (a) any and all
liability, damage, penalties, or fines, loss, costs or expenses (including,
without limitation, court costs and attorneys' fees), claims, demands, suits,
proceedings (whether civil or criminal), orders, judgments, penalties, fines and
other sanctions whatsoever asserted against it and arising from or brought in
connection with the Time-Share Project, the Collateral, Lender's status by
virtue of the Loan Documents, creation of liens and security interests, the
terms of the Loan Documents or the transactions related thereto, the security
interest that Lender asserts in the Receivables Trust Collateral, the holding by
Lender of a beneficial interest in the Receivables Trusts or the dissolution and
liquidation of the Receivables Trusts, a breach of Borrower's obligations under
Paragraph 6.1(g), any assertion or claim that Lender is required to withhold any
tax due on the proceeds of any Instrument or Receivables Trust Collateral, or
any act or omission of Borrower or an Agent, or their respective employees or
agents, whether actual or alleged unless such act or omission is caused by
Lender's gross negligence or willful misconduct; and (b) any and all brokers'
commissions or finders' fees or other costs of similar type by any party in
connection with the Receivables Loan and the Inventory Loan. On written request
by a person or other entity covered by the above agreement of indemnity,
Borrower will undertake, at its own cost and expense, on behalf of such
indemnitee, using counsel satisfactory to the indemnitee, the defense of any
legal action or proceeding to which such person or entity shall be a party. At
Lender's option, Lender may at Borrower's expense prosecute or defend any action
involving the priority, validity or enforceability of the Collateral. FPSI is
hereby expressly made a third-party beneficiary of the indemnity obligations of
Borrower contained in this paragraph 8.2 and shall have the right to enforce
such indemnity obligations against Borrower in the same manner as if FPSI were a
party to this Agreement.
9. CONSTRUCTION AND GENERAL TERMS
9.1 Special Provisions Relating to Receivables Trusts.
(a) Borrower acknowledges that Lender's security interest in the
Receivables Collateral and other collateral pledged to Lender as security for
the Obligations and Receivables Trustee's obligations under the Pledge Agreement
secures, inter alia, the payment and performance by Receivables Trustee of its
obligations under the Pledge Agreement. Borrower agrees that neither demand on,
nor pursuit of any remedies against Receivables Trustee shall be required as a
condition precedent to, and neither the pendency nor prior termination of any
action, suit or proceeding against Receivables Trustee shall bar or prejudice
the making of a demand upon Borrower hereunder or the exercise of any remedies
against Borrower. Neither (i) the exercise or failure to exercise by Lender of
any rights or remedies conferred to it under the Pledge Agreement; (ii) the
recovery of a judgment against Receivables Trustee; (iii) the commencement of
any action at law or the recovery of a judgment against Receivables Trustee and
the enforcement thereof; (iv) the taking or institution of any action against
Receivables Trustee nor (v) any delay in taking or pursuing any of the foregoing
shall extinguish or affect the obligations of Borrower hereunder. Lender may,
without impairing the liability of
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Borrower hereunder, extend the time for payment or performance of any
obligations of Receivables Trustee under the Pledge Agreement; release or
compromise any liability of Receivables Trustee thereunder; extend the time for
payment of the obligations of Receivables Trustee thereunder; and agree to any
amendment or modification or alteration of the Pledge Agreement on such terms
and conditions as may be acceptable to Lender. Borrower shall have no rights of
subrogation and hereby waives any right to participate in any of the Collateral
(as that term is defined in the Pledge Agreement). Borrower waives any and all
suretyship defenses and defenses in the nature thereof.
(b) Borrower agrees to perform all acts that are necessary, required or
contemplated under the terms of the Receivables Trusts in order for Lender to
have and receive a security interest in the Receivables Collateral (including
without limitation a security interest in the Receivables Trust Collateral and
an assignment of the Pass-Through Certificates) and in order to insure that all
of the proceeds of the Receivables Collateral are paid directly to Lender by
virtue of and as a result of Lender's Security Interest in the Receivables Trust
Collateral and by virtue of the assignment in favor of Lender of the
Pass-Through Certificates.
(c) Without limiting the generality of the foregoing, Borrower agrees to
notify Receivables Trustee, pursuant to the provisions of Section V(D) of the
Receivables Trusts, that (i) Lender has a Security Interest in the Receivables
Trust Collateral, (ii) such Security Interest is a Pledge and/or Security
Interest (as such terms are defined in the Receivables Trusts) and not an
outright assignment and (iii) all amounts due with respect to the Receivables
Trust Collateral shall be paid to Lender rather than to Borrower until all of
the Obligations have been paid and Performed in full. Borrower agrees not to
vary, modify or revoke the foregoing instructions to Receivables Trustee without
the prior written consent of Lender.
(d) Without further limiting the generality of the foregoing, Borrower
agrees to instruct Receivables Trustee, pursuant to Section II(C) of the
Receivables Trusts, to grant to Lender a Security Interest in Receivables
Trustee's interest in the Receivables Collateral as security for the payment and
Performance of the Obligations. Borrowers agree not to vary, modify or revoke
the foregoing instructions to Receivables Trustee, without the prior written
consent of Lender.
(e) Borrower hereby agrees that Lender is entitled to receive, by virtue of
its security interest in the Receivables Trust Collateral, all proceeds from
Receivables Collateral and that all amounts due with respect to the Receivables
Trust Collateral (to the extent arising from or pertaining to the Receivables
Collateral) shall be paid to Lender rather than to Borrower until all of the
Obligations have been paid and Performed in full.
(f) Borrower shall not authorize or approve the performance by Receivables
Trustee of any extraordinary services, for which Receivables Trustee shall seek
compensation, without the advance written consent of Lender.
(g) Borrower shall not remove Receivables Trustee (or any successor to
Receivables Trustee) as trustee under the Receivables Trusts without the express
written consent of Lender. Borrower shall not appoint a successor trustee under
the Receivables Trusts without obtaining Lender's consent as to the identity of
such successor and without causing such successor, as a condition to such
appointment, to become a party to the Pledge Agreement, the Servicing Agreement
and the Lockbox Agreement in the same manner and to the extent that Receivables
Trustee is such a party. Borrower shall not modify the Receivables Trusts in any
respect without the prior written consent of Lender. Borrower shall not revoke
or terminate the Receivables Trusts without the prior written consent of Lender.
(h) Borrower recognizes that registration of certain of the Receivables
Collateral or other collateral under the federal and state securities laws may
be impractical because of the expenses or delays involved in the registration
process and that in the absence of such registration, Lender may be unable to
effect a public sale of all or a part of the Collateral, but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such collateral for their
own account, for investment and not with a view to the distribution or resale
thereof. Borrower
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agrees that private sales so made may be at prices and other terms less
favorable to the seller than if such collateral were sold at public sales, and
that Lender has no obligation to delay sale of any such Collateral for a period
of time necessary to permit such collateral to be registered for public sale
under the Securities Act of 1933, as amended, and any applicable Blue Sky or
other state securities laws. Borrower agrees that sales made under the foregoing
circumstances shall not be deemed to have been made in a commercially
unreasonable manner by virtue of any terms less favorable to the seller
resulting from the private nature of such sales.
(i) Borrower agrees to enforce, short of termination, all of the
obligations of Receivables Trustee under the Receivables Trusts and hereby
authorizes Lender, following an Event of Default, to so enforce such
obligations, in the name of Borrower or otherwise but at the cost and the
expense of Borrower.
(j) Borrower shall not, at any time during the Term, (i) own in the
aggregate ten percent (10%) or more of the voting stock of any corporate obligor
of any receivables held by the Receivables Trusts, or ten percent (10%) or more
of the capital or profits interests of any obligor of any such receivables that
is a partnership or (ii) become a related person with respect to any obligor on
any of the receivables within the Receivables Trusts (within the meaning of IRC
Section 864(d)(4);
(k) Notwithstanding the fact that such transfer may constitute an Event of
Default, the Pass-Through Certificates shall be transferred only by the
surrender of an old Pass-Through Certificate and either the reissuance of the
old Pass-Through Certificate to the new holder or the issuance of a new
Pass-Through Certificate, in each case registered in the name of the new holder;
(l) The identity of the owner of the receivables held by the Receivables
Trusts shall be reflected on books and records maintained by the Collection
Agent maintained pursuant to the Receivables Trusts on behalf of the makers of
those note representing such receivables.
9.2 Payment Location. All monies payable under the Loan Documents shall be paid
to Lender at its address set forth following its signature in lawful monies of
the United States of America, unless otherwise designated in the Loan Documents
or by Lender by notice.
9.3 Entire Agreement. The Loan Documents exclusively and completely state the
rights and obligations of Lender and Borrower with respect to the Receivables
Loan and the Inventory Loan. No modification, variation, termination, discharge,
abandonment or waiver of any of the provisions or conditions of the Loan
Documents shall be valid unless in writing and signed by a duly authorized
representative of the party sought to be bound by such action. The Loan
Documents supersede any and all prior representations, warranties and/or
inducements, written or oral, heretofore made by Lender, Borrower and the
Required Guarantors concerning this transaction, including the Commitment
Letter.
9.4 Powers Coupled with an Interest. The powers and agency hereby granted by
Borrower are coupled with an interest and are irrevocable until the Obligations
have been paid in full and are granted as cumulative to Lender's other remedies
for collection and enforcement of the Obligations.
9.5 Counterparts; Facsimile Signatures. Any Loan Document may be executed in
counterpart, and any number of copies of such Loan Document which have been
executed by all parties shall constitute one (1) original. Delivery of an
executed counterpart of any Loan Document by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of such Loan Document.
Any party delivering an executed counterpart of any Loan Document by
telefacsimile shall also deliver a manually executed counterpart of such Loan
Document, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of such Loan Document.
9.6 Notices. All notices, requests or demands required or permitted to be given
under the Loan Documents shall be in writing, and shall be deemed effective (a)
upon hand delivery, if hand delivered or (b) two (2) Business Days after such
are deposited for delivery via Federal Express or other nationally recognized
overnight courier service, addressed as shown below, or to such other address as
the party being notified may have designated in a notice given to the other
party. Written notice may be given by telecopy to the telecopier number shown
below or to such other telecopier number as the party being notified may have
designated in a
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notice given to the other party, which notice shall be effective on the day of
receipt if received during the recipient's normal business hours on the day of
receipt or otherwise on the next Business Day; provided that such notice shall
not be deemed effective unless not later than the next Business Day, a copy of
such notice is hand delivered or deposited for delivery via courier in
accordance with the requirements set forth above. The notice addresses and
telecopy numbers for Borrower and Lender are set forth at the end of this
Agreement following their respective signatures.
9.7 Successors and Assigns. All the covenants of Borrower and all the rights and
remedies of the Lender contained in the Loan Documents shall bind Borrower, and,
subject to the restrictions on merger, consolidation and assignment contained in
the Loan Documents, its successors and assigns, and shall inure to the benefit
of Lender, its successors and assigns, whether so expressed or not. Borrower may
not assign its rights in the Loan Documents in whole or in part. Except as may
be expressly provided in a Loan Document, no person or other entity shall be
deemed a third party beneficiary of any provision of the Loan Documents.
9.8 Severability. If any provision of any Loan Document is held to be invalid,
illegal or unenforceable under present or future laws, the legality, validity
and enforceability of the remaining provisions of the Loan Documents shall not
in any way be affected or impaired thereby. In lieu of each such illegal,
invalid or unenforceable provision, there shall be added to the Loan Document
affected, a provision that is legal, valid and enforceable and as similar in
terms to such illegal, invalid and unenforceable provision as may be possible.
9.9 Time of Essence. Time is of the essence in the Performance of the
Obligations.
9.10 Miscellaneous. All headings are inserted for convenience only and shall not
affect any construction or interpretation of the Loan Documents. Unless
otherwise indicated, all references in a Loan Document to clauses and other
subdivisions refer to the corresponding paragraphs, clauses and other
subdivisions of the Loan Document; the words "herein," "hereof," "hereto,"
"hereunder" and words of similar import refer to the Loan Documents as a whole
and not to any particular paragraph, clause or other subdivision; and reference
to a numbered or lettered subdivision of an Article or paragraph shall include
relevant matter within the Article or paragraph which is applicable to but not
within such numbered or lettered subdivision. All Schedules and Exhibits
referred to in this Agreement are incorporated in this Agreement by reference.
Whenever the words "including", "include", or "includes" are used in the Loan
Documents, they shall be interpreted in a non-exclusive manner as though the
words, "without limitation," immediately followed the same.
[Remainder of Page Intentionally Left Blank]
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9.11 CHOICE OF LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED THEREIN, THE LOAN
DOCUMENTS AND THE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES THERETO SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ARIZONA (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND TO THE EXTENT
THEY PREEMPT THE LAWS OF SUCH STATE, THE LAWS OF THE UNITED STATES.
9.12 CHOICE OF JURISDICTION; WAIVER OF VENUE. EACH OF BORROWER AND LENDER: (A)
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS, JURISDICTION AND VENUE OF THE
COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY, AND TO THE PROCESS,
JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT OR THE SUBJECT MATTER THEREOF AND WAIVE ANY OTHER
JURISDICTION OR VENUE TO WHICH THE PARTIES MAY OTHERWISE BE ENTITLED; AND (B)
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HEREBY WAIVES AND AGREES NOT
TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
THE ABOVE-NAMED COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH OF BORROWER AND LENDER HEREBY WAIVES THE RIGHT TO COLLATERALLY
ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER FORUM.
9.13 WAIVER OF JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER ANY LOAN DOCUMENT WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES; AND THEREFORE, THEY AGREE THAT ANY LAWSUIT ARISING
OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED BY A JUDGE SITTING WITHOUT A JURY,
AND KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY SUCH PROCEEDING.
9.14 INDUCEMENT TO LENDER. ALL OF THE PROVISIONS SET FORTH IN THE PARAGRAPHS
REFERENCED BELOW ARE MATERIAL INDUCEMENTS FOR LENDER'S MAKING ADVANCES TO
BORROWER.
(BORROWER'S INITIALS
RE: 9.11 - 9.14 /s/DYB)
RE: 9.11 - 9.14 /s/DYB)
RE: 9.11 - 9.14 /s/DYB)
RE: 9.11 - 9.14 /s/DYB)
RE: 9.11 - 9.14 /s/DYB)
RE: 9.11 - 9.14 /s/DYB)
RE: 9.11 - 9.14 /s/DYB)
[Remainder of Page Intentionally Left Blank]
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9.15 Compliance With Applicable Usury Law. It is the intent of the parties
hereto to comply with the Applicable Usury Law. Accordingly, notwithstanding any
provisions to the contrary in the Loan Documents, in no event shall the Loan
Documents require the payment or permit the collection of interest in excess of
the maximum contract rate permitted by the Applicable Usury Law.
9.16 NO RELATIONSHIP WITH PURCHASERS. LENDER DOES NOT HEREBY ASSUME AND SHALL
HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY TO PURCHASERS, LENDER'S
RELATIONSHIP BEING THAT ONLY OF A CREDITOR WHO HAS TAKEN AN ASSIGNMENT FROM
BORROWER OF THE INSTRUMENTS IN ORDER TO FACILITATE PERFORMANCE OF THE
OBLIGATIONS. EXCEPT AS REQUIRED BY LAW AND FOR FILINGS MADE WITH THE SECURITIES
& EXCHANGE COMMISSION OR ANY STOCK EXCHANGE ON WHICH BORROWER'S STOCK IS TRADED,
BORROWER WILL NOT, AT ANY TIME, USE THE NAME OF OR MAKE REFERENCE TO LENDER WITH
RESPECT TO THE TIME-SHARE PROJECT, THE SALE OF TIME-SHARE INTERESTS OR
OTHERWISE, WITHOUT THE EXPRESS WRITTEN CONSENT OF LENDER.
9.17 NO JOINT VENTURE. THE RELATIONSHIP OF BORROWER AND LENDER IS THAT OF DEBTOR
AND CREDITOR, AND IT IS NOT THE INTENTION OF EITHER OF SUCH PARTIES BY THIS OR
ANY OTHER INSTRUMENT BEING EXECUTED IN CONNECTION WITH THE RECEIVABLES LOAN OR
THE INVENTORY LOAN TO ESTABLISH A PARTNERSHIP, AND THE PARTIES HERETO SHALL NOT
UNDER ANY CIRCUMSTANCES BE CONSTRUED TO BE PARTNERS OR JOINT VENTURERS.
9.18 Standards Applied to Lender's Actions. Unless otherwise specifically
stipulated elsewhere in the Loan Documents, if a matter is left in the Loan
Documents to the decision, requirement, request, determination, judgment,
opinion, approval, consent, satisfaction, acceptance, agreement, option or
discretion of Lender, its employees, Lender's counsel or any agent for or
contractor of Lender, such action shall be deemed to be exercisable by Lender or
such other person in its sole and absolute discretion and according to standards
established in its sole and absolute discretion. Without limiting the generality
of the foregoing, "option" and "discretion" shall be implied by use of the words
"if" or "may."
9.19 Meaning of Subordination. Any subordination required to be given under the
Loan Documents to Lender shall include the subordination of and the deferral of
the right to receive payments on the subordinated obligations except to the
extent expressly permitted in this Agreement; the remittances to Lender of all
prohibited payments received by the third party; the subordination of all liens,
security interests, assignments and other encumbrances and claims held by the
subordinating party on or against any of Borrower's property to Lender's
interest (whenever acquired) in such property; and an agreement on the part of
the third party not to exercise any remedies against Borrower so long as all
obligations under the Loan Documents have not been fully satisfied.
9.20 Scope of Reimbursable Attorney's Fees. As used in the Loan Documents, the
term "attorneys' fees" includes the reasonable fees of attorneys licensed to
practice law in any jurisdiction, law clerks, paralegals, investigators and
others not admitted to the bar but performing services under the supervision of
a licensed attorney, and the expenses (including, without limitation, normal and
customary charges for telecopy and photocopy services and clerical overtime)
incurred by them in the performance of their services. As used in the Loan
Documents, attorneys' fees incurred by Lender in the enforcement of any remedy
or covenant include, without limitation, attorneys' fees incurred in any
foreclosure of the Security Documents, in protecting or sustaining the lien or
priority of the Collateral, or in any proceeding arising from or connected with
any such matter, including any bankruptcy, receivership, injunction or other
similar proceeding, or any appeal from or petition for review of any such
matter, and with or without litigation.
9.21 Publicity. Lender is hereby authorized to issue appropriate press releases
and to cause a tombstone to be published announcing the consummation of this
transaction and the aggregate amount thereof. Borrower consents to such
advertising and authorizes Lender to use Borrower's name, logo, insignia,
descriptive art work, trade name, trademark, or other similar material, whether
or not protected by copyright (or otherwise), in any such advertisement.
9.22 Joint and Several. All of the Obligations, covenants, representations and
warranties of Borrower in any of the Loan Documents shall be the joint and
several Obligations, covenants, representations and warranties of each entity
constituting Borrower, except to the extent otherwise set forth to the contrary.
Although Lender and Borrower intend that each entity constituting Borrower shall
be jointly and severally liable for all
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Obligations, to the extent that this Agreement or the other Loan Documents may
be determined to secure indebtedness of any Borrower for which any other
Borrower is not primarily liable, each Borrower expressly waives the benefit of
any and all defenses available to a guarantor, surety, endorser or accommodation
party dependent on an obligor's character as such. Without limiting the
generality of the foregoing, each such other Borrower's liability hereunder
shall not be affected or impaired in any way by any of the following acts or
things (which Lender is hereby expressly authorized to do, omit or suffer from
time to time without notice to or consent of anyone):
(i) any acceptance of collateral security, guarantors, accommodation
parties or sureties for any or all Obligations;
(ii) any extension or renewal of any Obligations (whether or not for longer
than the original period) or any modification of the interest rate,
maturity or other terms of the Obligations;
(iii) any waiver or indulgence granted to any Borrower, and any delay or
lack of diligence in the enforcement of any or all Obligations owed by any
Borrower;
(iv) any full or partial release of, compromise or settlement with, or
agreement not to sue, any Borrower or the Guarantor or other person liable
on any Obligations;
(v) any release, surrender, cancellation or other discharge of any or all
Obligations of Borrower or the acceptance of any instrument in renewal or
substitution for any instrument evidencing any Obligations;
(vi) any failure to obtain collateral security (including rights of setoff)
for any Obligations or to see to the proper or sufficient creation and
perfection thereof, or to establish the priority thereof, or to preserve,
protect, insure, care for, exercise or enforce any collateral security for
any Obligations;
(vii) any modification, alteration, substitution, exchange, surrender,
cancellation, termination, release or other change, impairment, limitation,
loss or discharge of any collateral security for any Obligations;
(viii) any assignment, sale, pledge or other transfer of any of the
Obligations owed by any Borrower; or
(ix) any manner, order or method of application of any payments or credits
on any Obligations.
Each Borrower waives all rights that it may now have or hereafter acquire,
whether by subrogation, contribution, reimbursement, recourse, exoneration,
contract or otherwise, to recover from any other Borrower or from any property
of any other Borrower any sums paid under this Agreement. No Borrower will
exercise or enforce any right of contribution to recover any such sums from any
person who is a co-obligor with any Borrower or a guarantor or surety of the
Obligations or from any property of any such person or entity until all of the
Obligations shall have been fully paid and discharged.
9.23 Reliance. Lender's examination, inspection, or receipt of information
pertaining to Borrower, any Guarantor, the Collateral or the Time-Share Project
shall not in any way be deemed to reduce the full scope and protection of the
warranties, representations and Obligations contained in the Loan Documents.
9.24 Currency. All monetary amounts for all purposes hereunder shall be
denominated in Dollars. All amounts payable under the Loan Documents shall be
payable solely in Dollars in immediately available funds for deposit into the
bank account set forth in the attached Exhibit D or such other account as Lender
shall from time to time indicate by written notice to Borrower.
9.25 Consideration. Each of the entities comprising Borrower acknowledges the
Lender would not make the Receivables Loan or Inventory Loan contemplated hereby
unless each of such entities (a) became a party to this Agreement and the other
Loan Documents, (b) became jointly and severally liable for the payment and
performance of all of the Obligations, and (c) granted to Lender a security
interest, subject to Permitted Encumbrances, in all items of Collateral owned by
each Borrower. Although each of the entities comprising Borrower maintains its
separate legal existence and operates as a distinct and separate entity, such
entities have historically engaged in substantial business with each other and
have operated, and intend to continue operating, as a joint and consolidated
entity for financial planning and cash management purposes and for purposes of
achieving certain business operation efficiencies. Each of the entities
comprising Borrower will therefore benefit from the financing arrangement and
accommodations made by Lender under this Agreement and the other Loan Documents.
Finally, it was a condition precedent on the part of Lender to the closing of
the Receivables Loan that each of CR Cabo, CR Cancun and CR Puerto Vallarta form
Cabo
43
<PAGE>
Sub, Cancun Sub and Puerto Vallarta Sub, respectively, and that CR Cabo, CR
Cancun and CR Puerto Vallarta assign to Cabo Sub, Cancun Sub and Puerto Vallarta
Sub, inter alia, all of their right, title and interest, if any, in and to the
beneficial interest in the Receivables Trusts.
9.26 Judgment Currency. If, for the purpose of obtaining or enforcing judgment
against Borrower or Guarantor in any court in any jurisdiction, it becomes
necessary to convert into any other currency (such other currency being
hereinafter referred to as the "Judgment Currency") an amount due in Dollars
under the Loan Documents, the conversion shall be made at the rate of exchange
available to Lender on the Business Day immediately preceding (i) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
the State of Arizona or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date, or (ii) the date on which the
judgment is given, in the case of any proceeding in the courts of any other
jurisdiction (the applicable date as of which such conversion is made pursuant
to this provision being hereinafter referred to as the "Judgment Conversion
Date"). If, in the case of any proceeding in the court of any jurisdiction
referred to above, there is a change in the rate of exchange available to Lender
between the Judgment Conversion Date and the date of actual receipt of the
amount due in immediately available funds, Borrower or Guarantor, as the case
may be, shall pay such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount actually received in the
Judgment Currency, when converted at the rate of exchange available to Lender on
the date of payment, will produce the amount of Dollars, which could have been
purchased with the amount of the Judgment Currency stipulated in the judgment or
judicial order at the rate of exchange on the Judgment Conversion Date.
[SIGNATURE PAGE FOLLOWS]
44
<PAGE>
[SIGNATURE PAGES FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective name, personally or by their duly authorized
representatives as of April 23, 1999.
BORROWER CR RESORTS CANCUN, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
CR RESORTS LOS CABOS, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
[ADDITIONAL SIGNATURES FOLLOW]
45
<PAGE>
CR RESORTS PUERTO VALLARTA, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
CORPORACION MEXITUR, S. de R.L., de C.V., a Mexican limited
responsibility corporation with variable capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
[ADDITIONAL SIGNATURES FOLLOW]
46
<PAGE>
CR RESORTS CANCUN TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
CR RESORTS CABOS TIMESHARE TRUST,S.de R.L.de C.V., a Mexican
limited responsibility corporation with variable capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
[ADDITIONAL SIGNATURES FOLLOW]
47
<PAGE>
CR RESORTS PUERTO VALLARTA TIMESHARE TRUST,S.de R.L.de C.V.,
Mexican limited responsibility corporation with variable
capital
By: /s/DOUGLAS Y. BECH
Douglas Y. Bech
Title: Attorney-in-Fact
WITNESS: /s/BRIAN R. TUCKER
Name: Brian R. Tucker
Notice Address and Telecopy Number:
Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
A copy of all notices to the Borrower shall also be sent as follows (which shall
not be deemed notice):
Battle Fowler
2049 Century Park East, Suite 2350
Los Angeles, California 90067
Attention: Rick Davis, Esq.
Telecopy No.: 310-277-0336
48
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of CR Resort Cancun, S. de R.L.
S. de C.V., a Mexican limited responsibility corporation with variable capital
on behalf of such corporation. He/She is personally known to me or has produced
__________________________ as identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of CR Resorts Los Cabos, S. de
R.L. de C.V., a Mexican limited responsibility corporation with variable capital
on behalf of such corporation. He/She is personally known to me or has produced
__________________________ as identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of CR Resort Puerto Vallarta, S.
de R.L. de C.V., a Mexican limited responsibility corporation with variable
capital on behalf of such corporation. He/She is personally known to me or has
produced __________________________ as identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
49
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of Corporacion Mexitur, S. de
R.L. de C.V., a Mexican limited responsibility corporation with variable capital
on behalf of such corporation. He/She is personally known to me or has produced
__________________________ as identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of CR Resorts Cancun Timeshare
Trust, S. de R.L. de C.V., a Mexican limited responsibility corporation with
variable capital on behalf of such corporation. He/She is personally known to me
or has produced __________________________ as identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of CR Resorts Cabos Timeshare
Trust, S. de R.L. de C.V., a Mexican limited responsibility corporation with
variable capital, on behalf of such corporation. He/She is personally known to
me or has produced __________________________ as identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
50
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 9 day of April,
1999, by DOUGLAS Y. BECH, the Attorney-in-Fact of CR Resorts Puerto Vallarta
Timeshare Trust, S. de R.L. de C.V., a Mexican limited responsibility
corporation with variable capital on behalf of such corporation. He/She is
personally known to me or has produced __________________________ as
identification.
/s/BEA M. ROBERTSON
Notary Public in and for said State and County
My commission expires: 10-31-99
51
<PAGE>
LENDER FINOVA CAPITAL CORPORATION, a Delaware corporation
By: /s/GAYLE R. McKENZIE
Name: Gayle R. McKenzie
title: Vice President
Lender's Notice Address and Telecopy Number:
FINOVA Capital Corporation
7272 East Indian School Road, Suite 410
Scottsdale, Arizona 85251
Attn.: Vice President--International Resort Finance
Telecopy: (602) 874-6444
with a copy to:
FINOVA Capital Corporation
7272 East Indian School Road, Suite 410
Scottsdale, Arizona 85251
Attn.: Vice President-Group Counsel
Telecopy: (602) 874-6445
52
<PAGE>
SCHEDULE OF ADDITIONAL TERMS
S.1 This Schedule has been incorporated by reference into and form a part of
that First Amended and Restated Loan and Security Agreement dated as of April
23, 1999, between FINOVA Capital Corporation and CR Resorts Cancun, S. de R.L.
de C.V., CR Resorts Los Cabos, S. de R.L. de C.V., CR Resorts Puerto Vallarta,
S. de R.L. de C.V., Corporacion Mexitur, S. de R.L. de C.V., CR Resorts Cancun
Timeshare Trust, S. de R.L. de C.V., CR Resorts Cabos Timeshare Trust, S. de
R.L. de C.V. and CR Resorts Puerto Vallarta Timeshare Trust, S. de R.L. de C.V.
S.2 To the extent of any inconsistency between this Schedule and the other
provisions of the provisions of the First Amended and Restated Loan and Security
Agreement, the provisions of this Schedule shall prevail.
S.3 The provisions of the Loan and Security Agreement are supplemented as
follows (paragraph references are references to paragraphs of the Loan and
Security Agreement) which are intended to be supplemented by the following
provisions :
(a) P. 1. Basic Interest Rate (Inventory): Two and one-fourth
percent (2.25%) per annum in excess of the Base Rate
fluctuating monthly on the first day of each calendar month
based upon the Base Rate in effect on such date.
(b) P. 1. Basic Interest Rate (Receivables): One and
three-fourths percent (1.75%) per annum in excess of the
Base Rate fluctuating monthly on the first day of each
calendar month based upon the Base Rate in effect on such
date.
(c) P. 1. Default Rate: with respect to the Inventory Loan (a)
two percent (2%) above the Basic Interest Rate (Inventory)
or (b) the maximum contract rate permitted under the
applicable usury law, whichever of (a) or (b) is lesser,
with respect to the Receivables Loan (x) two percent (2%)
above the Basic Interest Rate (Receivables) or (y) the
maximum contract rate permitted under the applicable usury
law, whichever of (x) or (y) is lesser, and with respect to
monetary Obligations owed by Borrower to Lender other than
the principal and interest due under the Inventory Loan or
the Receivables Loan (i) four and one-quarter percent
(4.25%) per annum in excess of the Base Rate fluctuating
monthly on the first day of each calendar month based upon
the Base Rate in effect on such date or (ii) the maximum
contract permitted under the applicable usury law, whichever
of (i) or (ii) is lesser.
(d) P. 1. Inventory Loan Borrowing Term Expiration Date:
September 30, 1999.
(e) P. 1. Inventory Loan Fee: One Hundred Ten Thousand and
No/100 Dollars ($110,000).
(f) P. 1. Inventory Loan Maturity Date: the earlier of (a) April
30, 2001 or (b) the date which is twenty-four (24) months
from the first Advance of the proceeds of the Inventory
Loan.
(g) P. 1. Inventory Loan Opening Prepayment Date: the earlier of
(a) April 30, 2001 or (b) the date which is twelve (12)
months from the first Advance of the proceeds of the
Inventory Loan.
(h) P. 1. Inventory Loan Prepayment Premium: The Inventory Loan
Prepayment Premium at any time shall be equal to an amount
which is the product of the then unpaid principal amount
being prepaid times a percentage based upon the year after
the Inventory Loan Opening Prepayment Date in which the
prepayment occurs and determined in accordance with the
following schedule:
1
<PAGE>
Years After Inventory Loan Applicable Inventory Loan
Opening Prepayment Date Prepayment Premium Percentage
Year 1 and thereafter 3 %
Year 1 shall be the period of time commencing on the Inventory Loan Opening
Prepayment Date and expiring twelve months thereafter. If the prepayment occurs
during a period when prepayment is closed, the applicable prepayment premium
percentage (if Lender agrees to allow such prepayment) shall be five percent
(5%).
(i) P. 1. Lockbox Agent: Bank One, Arizona, N.A.
(j) P. 1. Maximum Loan Amount: the lesser of (i) Thirty-Two
Million Dollars ($32,000,000) or (ii) the maximum amount of
Indebtedness (as defined in the Indenture) that Borrower and
Guarantor may incur under the Indenture, taking into account
the amount of any other Indebtedness then owed by Borrower
or Guarantor, which, by virtue of its amount or nature, is
restricted by the Indenture.
(k) P. 1. Maximum Inventory Loan Amount: Thirteen Million Five
Hundred Thousand Dollars ($13,500,000)
(l) P. 1. Maximum Receivables Loan Amount: Twenty Million
Dollars ($20,000,000).
(m) P. 1. RLBB Principal Balance Percentage: ninety percent
(90%).
(n) P. 1. Receivables Loan Borrowing Term Expiration Date:
Eighteen (18) months following the date of the first Advance
of the Receivables Loan, provided, however, that in the
event during such eighteen (18) month period there does not
occur an Event of Default or Incipient Default with respect
to which Lender gave Borrower written notice, the
Receivables Loan Borrowing Term Expiration Date shall be
thirty six (36) months from the date of the first Advance of
the Receivables Loan.
(o) P. 1. Receivables Loan Fee: Two Hundred Thousand Dollars
($200,000).
(p) P. 1. Receivables Loan Maturity Date: Eighty-four (84)
months from the last Advance of the Receivables Loan.
(q) P. 1. Receivables Loan Opening Prepayment Date: The date two
(2) years from the date of the first Advance of the
Receivables Loan.
(r) P. 1 Receivables Loan Prepayment Premium: The Receivables
Loan Prepayment Premium at any time shall be equal to an
amount which is the product of the then unpaid principal
amount being prepaid times a percentage based upon the year
after the Receivables Loan Opening Prepayment Date in which
the prepayment occurs and determined in accordance with the
following schedule:
Years After Receivables Loan Applicable Receivables Loan
Opening Prepayment Date Prepayment Premium Percentage
Year 1 4 %
Year 2 3 %
Year 3 2 %
thereafter none
2
<PAGE>
Year 1 shall be the period of time commencing on the Receivables Loan
Opening Prepayment Date and expiring twelve months thereafter. Each Year
thereafter begins on the next succeeding anniversary date of the Receivables
Loan Opening Prepayment Date and ends twelve (12) months thereafter. If the
prepayment occurs during a period when prepayment is closed, the applicable
prepayment premium percentage (if Lender agrees to allow such prepayment) shall
be five percent (5%).
(s) P. 1. Required Closing Date. May 27, 1999.
(t) P. 1. Required Guarantors: Raintree Resorts International,
Inc.
(u) P. 1. Servicing Agent: Resort Communications, Inc., subject
to Lender's right to remove such Servicing Agent as provided
in the Agreement.
(v) P. 1. Time Share Project: Club Regina Resort at Los Cabos,
Club Regina Resort at Puerto Vallarta and Club Regina Resort
at Cancun.
(w) P. 2.4 Inventory Advance Formula: The amount of the first
Advance of the Inventory Loan and second Advance of the
Inventory Loan shall be determined pursuant to the following
formula subject to the Maximum Loan Amount and Maximum
Inventory Loan Amount limitations.
W = A x .5 x B x .2
Y = [(A - C) x B x .2] - V;
where:
A = the then aggregate number of unsold Time-Share Interests
at each of the Time-Share Projects as revealed by the
inventory audits described in paragraph 4.1(n) of the
Agreement (with respect to the first Advance of the
Inventory Loan) and in paragraph 4.2(b)(ii) of the Agreement
(with respect to the second Advance of the Inventory Loan).
B = the average aggregate retail sales price per Time-Share
Interest sold at each of the Time-Share Projects over the
previous six (6) month period of time measured from, as the
case may be, the date of the first Advance or the second
Advance of the Inventory Loan;
C = the average number of Time-Share Interests sold at all
of the Time-Share Projects during a calendar month
(determined on the basis of the number of sales over the
previous six (6) month period of time, measured from the
date of the second Advance of the Inventory Loan);
V = the outstanding principal balance of the Inventory Loan
as of but immediately prior to the making of the second
Advance of the Inventory Loan
W = the amount of the first Advance, inclusive of the
interest reserve to be established pursuant to paragraph 2.4
of the Agreement.
Y = the amount of the second Advance, inclusive of the
interest reserve to be established pursuant to paragraph 2.4
of the Agreement.
(x) P. 2.9(a) Payment of Inventory Loan Fee. The Inventory Loan
Fee shall be payable in full on the earlier of April 15,
1999 or concurrently with the first Advance of the proceeds
of the Inventory Loan.
3
<PAGE>
(y) P. 2.9(a).Payment of Receivables Loan Fee: The Receivables
Loan Fee shall be payable as follows: A total of One Hundred
Fifty Thousand Dollars ($150,000) of the Receivables Loan
Fee was paid prior to the date hereof in connection with the
Original Agreement. The remaining balance of Fifty Thousand
Dollars ($50,000) is due on the earlier of November 25, 2000
or at such time as the unpaid principal balance of the
Receivables Loan reaches Fifteen Million Dollars
($15,000,000).
(z) P. 2.9(b).Custodial Fee: Five Dollars ($5).
(aa) P. 2.9(c).Availability Fee Percentage: one percent (1%).
(bb) P. 4.5. Minimum Advance Amount. One Hundred Thousand Dollars
($100,000).
(cc) P. 4.5. Maximum Advance Frequency: twice per calendar month
with a Five Hundred Dollar ($500) charge being imposed in
connection with the second Receivables Advance in any one
(1) calendar month. Lender shall have the right to withhold
the amount of such charge from such Advance.
(dd) P. 4.6. Wire Transfer Fee. Twenty Five Dollars ($25).
(ee) P. 5.1, 6.1. Borrower's Type of Business Organization:
(1) CR Cancun: a Mexican limited responsibility corporation
with variable capital;
(2) CR Cabos: a Mexican limited responsibility corporation
with variable capital;
(3) CR Puerto Vallarta: a Mexican limited responsibility
corporation with variable capital;
(4) Corporacion Mexitur: a Mexican limited responsibility
corporation with variable capital;
(5) Cancun Sub: a Mexican limited responsibility
corporation with variable capital;
(6) Cabos Sub: a Mexican limited responsibility corporation
with variable capital; and
(7) Puerto Vallarta Sub: a Mexican limited responsibility
corporation with variable capital.
(ff) P. 5.1, 6.1. Borrower's Jurisdiction of Organization.
(1) CR Cancun: Mexico
(2) CR Cabos: Mexico
(3) CR Puerto Vallarta: Mexico
(4) Corporacion Mexitur: Mexico
(5) Cancun Sub: Mexico
(6) Cabos Sub: Mexico
4
<PAGE>
(7) Puerto Vallarta Sub: Mexico
(gg) P. 5.3. Borrower's Principal Place of Business.
(1) CR Cancun: Boulevard Adolfo Ruiz Cortinez No. 3642 P.B.
y Piso 7 Col. Jardines del Pedregal C.P. 01900, Mexico
DF
(2) CR Cabos: Boulevard Adolfo Ruiz Cortinez No. 3642 P.B.
y Piso 7 Col. Jardines del Pedregal C.P. 01900, Mexico
DF
(3) CR Puerto Vallarta: Boulevard Adolfo Ruiz Cortinez No.
3642 P.B. y Piso 7 Col. Jardines del Pedregal C.P.
01900, Mexico DF
(4) Corporacion Mexitur: Boulevard Adolfo Ruiz Cortinez No.
3642 P.B. y Piso 7 Col. Jardines del Pedregal C.P.
01900, Mexico DF
(5) Cancun Sub: Boulevard Adolfo Ruiz Cortinez No. 3642
P.B. y Piso 7 Col. Jardines del Pedregal C.P. 01900,
Mexico DF
(6) Cabos Sub: Boulevard Adolfo Ruiz Cortinez No. 3642 P.B.
y Piso 7 Col. Jardines del Pedregal C.P. 01900, Mexico
DF
(7) Puerto Vallarta Sub: Boulevard Adolfo Ruiz Cortinez No.
3642 P.B. y Piso 7 Col. Jardines del Pedregal C.P.
01900, Mexico DF
(hh) P. 5.3. Borrower's Chief Executive Office.
(1) CR Cancun: Boulevard Adolfo Ruiz Cortinez No. 3642 P.B.
y Piso 7 Col. Jardines del Pedregal C.P. 01900, Mexico
DF
(2) CR Cabos: Boulevard Adolfo Ruiz Cortinez No. 3642 P.B.
y Piso 7 Col. Jardines del Pedregal C.P. 01900, Mexico
DF
(3) CR Puerto Vallarta: Boulevard Adolfo Ruiz Cortinez No.
3642 P.B. y Piso 7 Col. Jardines del Pedregal C.P.
01900, Mexico DF
5
<PAGE>
(4) Corporacion Mexitur: Boulevard Adolfo Ruiz Cortinez No.
3642 P.B. y Piso 7 Col. Jardines del Pedregal C.P.
01900, Mexico DF
(5) Cancun Sub: Boulevard Adolfo Ruiz Cortinez No. 3642
P.B. y Piso 7 Col. Jardines del Pedregal C.P. 01900,
Mexico DF
(6) Cabos Sub: Boulevard Adolfo Ruiz Cortinez No. 3642 P.B.
y Piso 7 Col. Jardines del Pedregal C.P. 01900, Mexico
DF
(7) Puerto Vallarta Sub: Boulevard Adolfo Ruiz Cortinez No.
3642 P.B. y Piso 7 Col. Jardines del Pedregal C.P.
01900, Mexico DF
(ii) P. 5.9 Jurisdiction Where Sales and/or Offers to Sell Have
Occurred. Mexico.
S.4 No later than the fifteenth day of each month, Borrower shall make to Lender
a payment (the "Interval Sales Payment") determined pursuant to the formula set
forth below (or one-half of the payment determined pursuant to the formula set
forth below with respect to a particular Time-Share Interest that entitles a
Purchaser to occupy a Unit every other calendar year), for each Time-Share
Interest sold during the immediately previous calendar month. Lender shall have
the right to make a draw upon the Receivables Loan in order to make such
Interval Sales Payments or in order to make any other payments required under
the Inventory Loan Note in the event such payments are not made by Borrower in a
timely fashion. Interval Sales Payments shall be applied to the unpaid principal
balance of the Inventory Loan. In consideration of the payment by Borrower to
Lender of an Interval Sales Payment with respect to a particular Time-Share
Interest, Lender agrees to grant nondisturbance rights in favor of the Purchaser
of such Time-Share Interest more fully provided in the Guaranty Trusts.
The Interval Sales Payment after the making of the first Advance of the
Inventory Loan and prior to the making of the second Advance of the Inventory
Loan shall equal the amount obtained by application of the following formula:
W / (A x .5 x .75)
The Interval Sales Payment after the making of the second Advance of the
Inventory Loan shall equal the amount obtained by application of the following
formula:
Z / [(A - C) x .75)]
where
W, A and C shall be as defined in Section S.3(W) of this Schedule
and Z shall mean the unpaid principal balance of the Inventory Loan
(inclusive of the drawn and undrawn interest reserves established
pursuant to paragraph 2.4 of the Agreement) after the making of the
second Advance of the Inventory Loan.
S.5 In addition to the other representations, warranties and covenants of
Borrower set forth in the Loan and Security Agreement, Borrower represents,
warrants and covenants as follows:
6
<PAGE>
(a) On the final day of each fiscal quarter of Borrower,
commencing with the fiscal quarter ending March 31, 1999 and
on the final day of each fiscal year of Borrower, commencing
with the fiscal year ending December 31, 1999, the sum of
(i) the total of Borrower's consolidated costs and expenses
for commissions and selling relating to the retail sales of
time-share interests, use rights, memberships and fractional
ownership interests and (ii) the total of Borrower's
consolidated general and administrative expenses (the costs
and expenses described in clauses (i) and (ii) hereinafter
the "SGA Expenses") shall not exceed sixty percent (60%) of
the sum of the gross proceeds of Borrower's consolidated
processed sales of retail time-shares interests, use rights,
memberships and fractional ownership interests plus "Demo
Sales" for the same period (each net of cancellations of and
discounts on such sales) ("Net Sales"). The foregoing
covenant shall be tested quarterly based upon Borrower's
total aggregate SGA Expenses and Net Sales for the
immediately preceding three (3) month period and annually
based upon Borrower's total aggregate SGA Expenses and Net
Sales for the immediately preceding twelve (12) month
period. SGA Expenses and Net Sales shall be as determined in
accordance with Mexican GAAP.
(b) Borrower shall not permit Delinquencies as of the end of any
three (3) consecutive calendar months during the term of the
Receivables Loan and the Inventory Loan to exceed four
percent (4%) of the aggregate then unpaid principal balance
of all Receivables which have been pledged or assigned to
Lender. In addition, during the term of the Inventory Loan,
Borrower shall not permit Delinquencies as of the end of any
three (3) consecutive calendar months to exceed ten percent
(10%) of the aggregate then unpaid principal balance of all
Receivables arising from the Time Share Project that have
not been pledged or assigned to Lender. For purposes hereof,
Delinquencies shall mean in the case of the first sentence
above, individually and collectively, Receivables pledged or
assigned to Lender under which an installment payment
becomes more than sixty (60) days past due and in the case
of the second sentence above, individually and collectively,
Receivables arising from the Time Share Project and which
have not been pledged or assigned to Lender, under which an
installment payment becomes more than sixty (60) days past
due. This covenant shall be tested on a consolidated level
as to all of the entities constituting Borrower.
(c) Borrower shall maintain a ratio of Adjusted Current Assets
to Adjusted Current Liabilities of no less than 1.25 to 1.0
tested quarterly commencing March 31, 1999. For purposes
hereof, the term Adjusted Current Assets shall mean the
current assets shown on Borrower's balance sheet minus any
receivables owed to Borrower or any of them from any
Affiliate and any time-share accounts receivable, plus
time-share accounts receivable reserves and time-share
cancellation reserves, determined on a consolidated basis as
to all entities constituting Borrower. For purposes hereof,
the term Adjusted Current Liabilities shall mean the current
liabilities shown on Borrower's balance sheet minus the
current portion of any liabilities owed by Borrower to any
Affiliates and the current portion of any installments due
under the Mirror Notes, determined on a consolidated basis
as to all entities constituting Borrower.
7
<PAGE>
EXHIBIT A
CONDITIONS OF ELIGIBLE INSTRUMENT
(a) Lender has a valid, direct and perfected first lien/security interest
in the Instrument and security therefor and has a valid and perfected first
priority right to payments.
(b) The Instrument does not represent a sale by Borrower, directly or
indirectly, to any of its members, managers, shareholders, directors, officers,
partners, as the case may be, its agents, employees or creditors, or any
relative or Affiliate of Borrower, of Guarantor or of the foregoing.
(c) Borrower has received from the Purchaser a minimum cash down payment of
ten percent (10%) of the total sales price (no part which has been advanced or
loaned to the Purchaser by Borrower, directly or indirectly) with such down
payment being represented by a cash or credit card payment.
(d) The Instrument must provide for level consecutive monthly installments
of principal and interest in U. S. funds over a term (from its effective date)
not exceeding eighty four (84) months from the date of its execution, and after
taking into account the making of an Advance against such Instrument, the
weighted average interest rate on all Instruments then assigned or pledged to
Lender does not fall below thirteen percent (13%) per annum. The foregoing
weighted calculation shall be performed by FPSI by applying their usual and
customary weighted average formula to such Instruments.
(e) At the time of funding of an Advance against the Instrument, no
scheduled installment payment on the Instrument is more than thirty (30) days
past due or has been deferred more than thirty (30) days.
(f) The Purchaser in all respects, including, without limitation, its
creditworthiness, is acceptable to Lender; has obtained from Borrower marketable
rights to the purchased Time-Share Interest; and has not purchased more than
four (4) Time-Share Interests.
(g) The Instrument and any security for the payment of the amount due under
the Instrument are bona fide, are in form and substance satisfactory to Lender
and are valid and enforceable in accordance with their terms; upon the obligor's
default under the Instrument, subject only to notice and a reasonable grace
period, payment of the balance of the indebtedness owing under the Instrument
may be immediately accelerated and the lien of any security may be foreclosed or
realized upon; and rights of the Purchaser to the purchased Time-Share
Interest(s) is subject only to the Permitted Encumbrances.
(h) The Unit(s) and the amenities that have been promised to the Purchasers
have been completed, fully furnished and approved and ready for occupancy and
the furnishings in those Units are free of any lien except for the Permitted
Encumbrances; no Unit or other part of the common areas of the Time-Share
Project is subject to partition; and the time-share use of the Units and
amenities conform to all applicable restrictions and laws, necessary approvals
having been obtained.
(i) The Instrument, any security for the payment of the amount due under
the Instrument and the related sale transaction comply with all applicable laws;
Borrower has Performed all its obligations due to the Purchaser and there are no
executory obligations to the Purchaser to be Performed by Borrower; and the
Purchaser does not have any right of rescission, set-off, abatement,
counterclaim or the like.
(j) The Purchaser is a United States or Canadian resident, unless the
Purchasers of at least ninety percent (90%) of all other Eligible Instruments
are United States or Canadian residents.
(k) The Unit represented by such Time-Share Interest is part of the Club
Regina Multi-Resort System.
8
<PAGE>
(l) The Instrument executed by a Purchaser who is a United States resident
and representing the financed portion of the purchase price of a Time-Share
Interest is held by the Receivables Trustee in the Receivables Trust. In all
other circumstances, the Instrument is owned by Cancun Sub, Cabos Sub or Puerto
Vallarta Sub.
(m) The Instrument is serviced by the Servicing Agent.
(n) As an alternative to the eligibility criteria set forth in
subparagraphs (c) and (d) above, the Instrument provides for level consecutive
monthly installments of principal and interest in U.S. funds over a term (from
its effective date) not exceeding twenty four (24) months from its execution,
with interest accruing on the unpaid balance at a rate as low as zero percent
(0.0%) per annum and the Borrower has received from the Purchaser a minimum cash
down payment of fifty percent (50%) of the total sales price (no part of which
has been advanced or loaned to the Purchaser by the Borrower, directly or
indirectly) with such down payment being represented by cash or credit card
payment; and provided that when the unpaid principal balance of such Instrument
is added to the unpaid principal balance of all other Instruments meeting the
eligibility criteria set forth in this subparagraph and against which an Advance
has been made, such sum is not in excess of ten percent (10%) of the unpaid
principal balance of all Instruments against which an Advance has been made.
(o) The Instruments contained within the Club Regina Trust II and the Club
Regina Trust III shall contain language substantially similar to the following:
The maker and payee hereof hereby agree that the identity of the owner
of this Promissory Note and the payee entitled to receive payments of
principal and interest pursuant to this Promissory Note shall be reflected
upon books maintained by Resort Communications, Inc., the "Custodian" on
behalf of maker for such purpose, and that all transfers, including
pledges, of the ownership of this Promissory Note, or any interest therein,
must be reflected in a book entry in the record of ownership maintained by
Custodian that identifies the owner of this Promissory Note or any interest
therein. For purposes of this paragraph, a "book entry" is defined as a
written record of ownership (maintained on paper and/or in magnetic or
electronic media) that identifies the holder of an interest in the
obligations represented by this Promissory Note. This Promissory Note may
not be endorsed in blank, made payable to bearer or otherwise be
transferred in such a manner that the Promissory Note could be come a
bearer instrument.
(q) To the extent that the Instrument is made by a Mexican resident, such
Instrument is endorsed with the following form of endorsement:
Douglas Y. Bech, en mi caracter de apoderado de la
sociedad [CR Resorts Puerto Vallarta, S. de R.L. de
C.V., / CR Resorts Los Cabos, S. de R.L. de C.V. / CR
Resorts Cancun, S. de R.L. de C.V.] endoso en
propiedad este pagare suscrito por el Sr. __________
y la Sra. __________, a favor de la sociedad [CR
Resorts Puerto Vallarta Timeshare Trust, S. de R.L.
de C.V., / CR Resorts Cabos Timeshare Trust, S. de
R.L. de C.V. / CR Resorts Cancun Timeshare Trust, S.
de R.L. de C.V.], cuyo domicilio es Blvd. Adolfo Ruiz
Cortinez, No. 3642, Piso 7, Col. Jardines del
Pedregal, 01900, Mexico, D.F.
Mexico, D.F. a los ___ dias del mes de __________ de
1999.
Sr. Douglas Y. Bech
9
<PAGE>
Douglas Y. Bech, en mi caracter de apoderado de la
sodiedad [CR Resorts Puerto Vallarta Timeshare Trust,
S. de R.L. de C.V. / CR Resorts Cabos Timeshare
Trust, S. de R.L. de C.V. / CR Resorts Cancun
Timeshare Trust, S. de R.L. de C.V.], endoso en
propiedad este pagare suscrito por el Sr. __________
y Sra. __________, a favor de la sociedad FINOVA
Capital Corporation, cuyo domicilio es 7272 East
Indian School Road, Suite 410, Scottsdale, Arizona
85251, Estados Unidos de America.
Mexico, D.F., a los ___ dias del mes de _______ de
1999.
Sr. Douglas Y. Bech
10
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
Puerto Vallarta
1. Taxes which are not yet due and payable.
2. Proceedings by a public agency which may result in taxes (taxes, and any
other type of contributions, interest, actualization and penalties
collectively referred to herein as "Taxes") or assessments, or notice of
such proceedings including but not limited to taxes derived out of the
mergers and spin-offs associated with this transaction, unless shown by the
records of such agency or by the public records.
3. No insurance is afforded as to the exact square meters and/or acreage
contained in the land described herein.
4. Water rights or claims or title to water.
5. Any rights in favor of the public to use all or a portion of said land for
beach and/or recreational purposes, or any rights, interest or claims which
may exist or arise by reason of a portion of said land being used by the
public for access to and from the adjoining body of water known as the
Pacific Ocean.
6. Any adverse claim based upon the assertion that the same portion of said
land is in tide or submerged land, or has been created by artificial means
or has accreted to said portion so created.
7. Terms and conditions of that certain Operating Agreement dated March 18,
1998 effective as of August 18, 1997 among Starwood Puerto Vallarta, S. de
R.L. de C.V., C.R. Resorts Puerto Vallarta, S. de R.L. de C.V., C.R.
Resorts Remainder Company, S. de R.L. de C.V. and Bancomer S.A.,
Institucion de Banca Multiple, Grupa Financiero Bancomer, Direccion
Fiduciaria, as trustee, filed as Public Instrument Number 60,299, dated
April 22, 1998, granted before Mr. Armando Galvez Perez Aragon, Notary
Public Number 103 in and for Mexico City, Federal District, which was
recorded with the Puerto Vallarta Real Estate Public Registry under Number
17, Pages 174 to 222, Book Number 29, Section 5 on May 21, 1998.
8. Rights of the holder of any Trust Rights B under the Puerto Vallarta
Timeshare Trust.
9. Terms and conditions of the condominium regime created under that certain
Condominium Declaration at Public Instrument Number 11,924, dated August 8,
1997, granted before Mr. Carlos Castro Segundo, Notary Public Number 13 of
the City of Puerto Vallarta, Jalisco, Mexico.
10. Survey entitled "Levantamiento Topografico" certified on May 7, 1999,
pertaining to the real property located at Boulevard Paseo de la Marina Sur
No. 205, Puerto Vallarta, Jalisco, Mexico (the "Survey"), shows the
following:
(a) Subject perimeter parcel which contains, the Hotel Condominium Unit,
as well as the Timeshare Condominium, as well as the Common Area (the
"Units"), all as defined by that certain Condominium Declaration
referenced in Item 9 herewith. Said survey shows subject parcel with
buildings and improvements thereon all within boundary lines except as
follows:
(i) Encroachment by wall along the southwesterly boundary line into
the estimated Federal Maritime Zone (Zona Federal Maritimo
Terrestre).
(ii) Encroachment by a portion of a hotel unit swimming pool onto the
insured premises.
(b) This policy excepts as a result of the matters disclosed by said
Survey, all encroachments noted above as well as the following:
11
<PAGE>
(i) Utility lines and drainage ditches crossing the insured premises
for the benefit of other than the Insured, which are not shown on
said Survey.
(ii) No title is insured to that portion of the insured premises lying
within the Federal Maritime Zone (Zona Federal Maritimo
Terrestre).
12
<PAGE>
PERMITTED ENCUMBRANCES
Los Cabos
1. Taxes which are not yet due and payable.
2. Proceedings by a public agency which may result in taxes (taxes, and any
other type of contributions, interest, actualization and penalties
collectively referred to herein as "Taxes") or assessments, or notice of
such proceedings including but not limited to taxes derived out of the
mergers and spin-offs associated with this transaction, unless shown by the
records of such agency or by the public records.
3. No insurance is afforded as to the exact square meters and/or acreage
contained in the land described herein.
4. Water rights or claims or title to water.
5. Any rights in favor of the public to use all or a portion of said land for
beach and/or recreational purposes, or any rights, interest or claims which
may exist or arise by reason of a portion of said land being used by the
public for access to and from the adjoining body of water known as the Sea
of Cortez.
6. Any adverse claim based upon the assertion that the same portion of said
land is in tide or submerged land, or has been created by artificial means
or has accreted to said portion so created.
7. Terms and conditions of that certain Operating Agreement dated March 18,
1998 effective as of August 18, 1997 among Starwood Los Cabos, S. de R.L.
de C.V., C.R. Resorts Cabos, S. de R.L. de C.V., CR Resorts Remainder
Company, S. de R.L. de C.V., and Bancomer S.A. Institucion de Banca
Multiple, Grupo Financiero Bancomer, Direccion Fiduciaria, as trustee,
filed as Public Instrument number 60,301 on April 22, 1998, granted before
Mr. Armando Galvez Perez Aragon, Notary Public Number 103 in and for Mexico
City, Federal District, whch was recorded with the Los Cabos Real Estate
Public Registry under Number 42, Volume Number 21, Section 4 on August 10,
1998.
8. Terms and conditions of the condominium regime created under that certain
Condominium Declaration at Public Instrument Number 34,708, dated August
12, 1997, granted before Mr. Hector Castro Castro, Notary Public Number 7
of the City of La Paz, Baja California Sur, Mexico.
9. Survey entitled "Levantamiento Topografico" certified on May 7, 1999,
pertaining to the real property located at Km. 22.5 de la Carretera
Transpenisular Corredor Turistico de Los Cabos, Baja California Sur, Mexico
(the "Survey") shows the following:
(a) Subject perimeter parcel which contains, the Hotel Condominium Unit,
as well as the Timeshare Condominium, as well as the Common Area (the
"Units"), all as defined by that certain Condominium Declaration
referenced in Item 9 herewith. Subject parcel with buildings and
improvements thereon all within boundary lines except as follows:
(i) Encroachment by a portion of the restaurant located in the
southwesterly corner of the premises into the Federal Maritime
Zone (Zona Federal Maritimo Terrestre).
(ii) Encroachment by a portion of a pool located in the southeast
corner of the premises into Federal Maritime Zona (Zona Federal
Maritimo Terrestre).
(iii)Encroachment by steps and a portion of a pool located in the
southerly portion of premises outside of the boundary lines.
(iv) Encroachment by steps in the southerly portion of the premises
into Federal Maritime Zone (Zona Maritimo Terrestre).
13
<PAGE>
(b) This policy excepts as a result of the matters disclosed by said
Survey, all encroachments noted above as well as the following:
(i) Utility lines and drainage ditches crossing the insured premises
for the benefit of other than the Insured, which are not shown on
said Survey.
(ii) No title is insured to that portion of the insured premises lying
within the bounds of the Federal Maritime Zone (Zona Federal
Maritimo Terrestre).
(iii) No title is insured lying outside of the property lines.
14
<PAGE>
PERMITTED ENCUMBRANCES
Cancun
1. Taxes which are not yet due and payable.
2. Proceedings by a public agency which may result in taxes (taxes, and any
other type of contributions, interest, actualization and penalties
collectively referred to herein as "Taxes") or assessments, or notice of
such proceedings including but not limited to taxes derived out of the
mergers and spin-offs associated with this transaction, unless shown by the
records of such agency or by the public records.
3. No insurance is afforded as to the exact square meters and/acreage
contained in the land described herein.
4. Water rights or claims or title to water.
5. Any rights in favor of the public to use all or a portion of said land for
beach and/or recreational purposes, or any rights, interest or claims which
may exist or arise by reason of a portion of said land being used by the
public for access to and from the adjoining body of water known as the Gulf
of Mexico.
6. Any adverse claim based upon the assertion that the same portion of said
land is in tide or submerged land, or has been created by artificial means
or has accreted to said portion so created.
7. Terms and conditions of that certain Operating Agreement dated March 18,
1998 effective as of August 18, 1997 among Starwood Cancun, S. de R.L. de
C.V., C.R. Cancun Resorts, S. de R.L. de C.V., C.R. Resorts Remainder
Company, S. de R.L. de C.V., and Bancomer S.A., Institucion de Banca
Multiple, Grupo Financiero Bancomer, Direccion Fiduciaria, as trustee,
filed as Public Instrument Number 60,300, dated April 22, 1998, granted
before Mr. Armando Galvez Perez Aragon, Notary Public Number 103 in and for
Mexico City, Federal District, which was recorded with the Cancun Real
Estate Public Registry under Number 39, Page 487 to 497, Volume number 295,
Section 1, on June 23, 1998.
8. Rights of the holder of any Trust Rights B under the Cancun Timeshare
Trust.
9. Terms and conditions set forth in that certain Concession No. DZF-064/93
that expires on May 14, 2003.
10. Terms and conditions of the condominium regime created under that certain
Condominium Declaration at Public Instrument Number 10,973, dated August
11, 1997, granted before Mr. Luis Miguel Camara Patron, Notary Public
Number 13 of the City of Cancun, Quintana Roo, Mexico.
11. Survey entitled Linderos Segun Fonatur, Areas Privativas y Construcciones
Segun Levantamiento certified on May 7, 1999, pertaining to the real
propety located at Boulevard Kukulcan No. 70-71, Cancun, Quintana Roo,
Mexico (the "Survey") shows the following:
(a) Subject perimeter parcel which contains the Hotel Condominium Unit, as
well as the Timeshare Condominium, as well as the Common Area (the
"Units"), all as defined by that certain Condominium Declaration
referenced in Item 10 of Schedule B herewith. Said survey shows
subject parcel with buildings and improvements thereon all within
boundary lines except as follows:
(i) Encroachment into the Federal "Safe" Zone (Zona Ganada Al Mar) by
decks and a bar along the easterly boundary line.
(b) This policy excepts as a result of the matters disclosed by said
Survey, all encroachments noted above as well as the following:
(i) Utility lines and drainage ditches crossing the insured premises
for the benefit of other than the Insured, which are not shown on
said Survey.
(ii) No title is insured to that portion of the insured premises lying
within the Federal "Safe" Zone (Zona Federal Maritimo Terrestre)
as shown along the southwesterly boundary line.
15
<PAGE>
EXHIBIT C
BORROWER'S CERTIFICATE
CR Resorts Cancun, S. de R.L. de C.V., a Mexican limited responsibility
corporation with variable capital; CR Resorts Los Cabos, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital; CR Resorts
Puerto Vallarta, S. de R.L. de C.V., a Mexican limited responsibility
corporation with variable capital; Corporacion Mexitur, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital; CR Resorts
Cancun Timeshare Trust, S. de R.L. de C.V., a Mexican limited responsibility
corporation with variable capital; CR Resorts Cabos Timeshare Trust, S. de R.L.
de C.V., a Mexican limited responsibility corporation with variable capital and
CR Resorts Puerto Vallarta Timeshare Trust, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital (collectively
"Borrower") hereby jointly and severally certify to FINOVA CAPITAL CORPORATION
("Lender") that (i) the total unpaid payments due under the Instruments
described in Schedule A attached hereto and by this reference incorporated
herein and the unpaid principal balance for each such Instrument is as set forth
in Schedule A; and (ii) such Instruments are, individually and collectively,
Eligible Instruments.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the First
Amended and Restated Loan and Security Agreement between Borrower and Lender
dated as of ______________, 199____, as it may be from time to time renewed,
amended, replaced or restated.
DATED: ____________, ______.
"BORROWER" CR RESORTS CANCUN, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS LOS CABOS, S.de R.L.de C.V.,a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS PUERTO VALLARTA, S.de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital
By:
Type/Print Name:
Title:
16
<PAGE>
CORPORACION MEXITUR, S de R.L.de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS CANCUN TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
CR RESORTS CABOS TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
CR RESORTS PUERTO VALLARTA TIMESHARE TRUST, S.de R.L. de
C.V., a Mexican limited responsibility corporation with
variable capital
By:
Type/Print Name:
Title:
17
<PAGE>
EXHIBIT C-1
RECEIVABLES RE-ASSIGNMENT
When recorded, mail to:
18
<PAGE>
RE-ASSIGNMENT OF INSTRUMENTS
KNOW ALL MEN BY THESE PRESENTS:
That FINOVA Capital Corporation, a Delaware corporation ("Assignor") for
Ten Dollars ($10.00) and other valuable consideration to it in hand, the receipt
whereof is hereby acknowledged, does by these presents grant, bargain, sell,
assign, transfer and set over unto [Receivables Trustee or Borrower depending
upon the nature of Instrument] ("Assignee") Assignee all of Assignor's interest
in the Instruments ("Instruments") described in Schedule A attached hereto and
by this reference incorporated herein.
TOGETHER WITH all obligations therein secured, all moneys due and to become
due thereunder, and all interest thereon, and all rights arising therefrom.
This re-assignment is made without recourse and without representation or
warranty of any kind, express and implied (except that Assignor has not sold or
assigned any interest in or otherwise encumbered the Instruments or other rights
being reassigned hereunder).
IN WITNESS WHEREOF, the Assignor has caused these presents to be executed
the ____ day of _________________, 199__.
WITNESS: "Assignor"
FINOVA CAPITAL CORPORATION, a Delaware corporation
By:
Type/Print Name:
Title:
STATE OF ___________________) )
County of ____________________)
I, _______________________, a notary public in and for the State and County
aforesaid, do certify that ____________________________________ whose name, as
________________________ of _____________________, is signed to the writing
above, bearing date on the ___ day of ________________________, has acknowledged
the same before me in my County aforesaid.
Given under my hand and official seal this ___ day of ___________________.
My term of office expires on the ____ day of ____________________.
Notary Public
19
<PAGE>
SCHEDULE a
to RE-assignment of instruments
Purchaser
Date
Original Principal
Amount Secured
20
<PAGE>
EXHIBIT D
FINOVA BANK ACCOUNT
CITIBANK, N.A.
NEW YORK, NEW YORK
ACCOUNT NO. 3846-7458
OBI REFERENCE: ZOX 3500ZOX
ABA NO. 021-000089
REFERENCE: RAINTREE/REGINA
21
<PAGE>
EXHIBIT E
ADDITIONAL CONDITIONS
TO RECEIVABLES LOAN ADVANCES
(a) a completed and executed "Request for Receivables Loan Advance and
Certification," in form and substance identical to Exhibit E-1.
(b) (i) signed original Instruments which qualify as Eligible Instruments
and have been duly and unconditionally endorsed to Lender by Borrower or the
Receivables Trustee, as the case may be, (ii) copies of signed receipts for
public offering statements/property reports/prospectuses to the extent the same
are given or are required to be given to Purchasers in connection with the sales
of Time-Share Interests giving rise to such Instruments, (iii) the original
Purchase Contracts and copies of credit disclosure statements and other items
requested by Lender which were signed by such Purchasers in connection with such
sales, and (iv) evidence that all rescission rights have expired and Borrower
has Performed all its statutory and contractual obligations with respect
thereto.
(c) a Receivables Assignment in recordable form and otherwise in form and
substance identical to Exhibit E 2 to the Loan and Security Agreement, properly
completed, executed and acknowledged assigning the Instruments covered by item
(b) above.
(d) if not previously furnished, evidence satisfactory to Lender that: (i)
all Time-Share Interests which are the subject of the Instruments covered by
item (b) above have all necessary and promised on-site and off-site improvements
thereto and necessary and promised utilities are available; (ii) all Units and
amenities which are to be available to Purchasers obligated on the Instruments
covered by item (b) above have been completed in accordance with all applicable
building codes and are fully furnished, necessarily equipped and will be
available for use by Purchasers without disturbance or termination of their use
rights so long as they are not in default of their obligations under the
Instruments; and (iii) all furnishings in the Units and amenities are owned by
the Borrower, free of charges, liens and security interests other than the
Permitted Encumbrances.
(e) if requested by Lender, written confirmation from the Servicing Agent
that it has not received notice of any complaint, demand, set-off, or claim by
any person, including, without limitation, any Purchaser, with respect to the
Instruments covered by item (b) above (other than as to routine matters
involving the servicing of an Instrument) and certifying the unpaid total
payments due under the unpaid principal balance of such Instruments.
(f) if requested by Lender in accordance with its normal underwriting
procedures, a credit report from a recognized consumer credit reporting agency
on each Purchaser obligated under an Instrument covered by item (b) above.
(g) if requested by Lender, evidence reasonably satisfactory to it that
there are no conflicting charges or security interests claimed in the
Receivables Collateral.
(h) if requested by Lender following a material change of circumstances or
not more often than annually at Lender's discretion, an opinion from independent
counsel to Borrower satisfactory to Lender with respect to the continued
compliance of the Time-Share Project and Borrower's sales and marketing
activities with applicable laws, the enforceability of the Instruments and such
other matters as Lender shall reasonably require.
(i) if requested by Lender following a material change of circumstances or
not more often than annually at Lender's discretion, an opinion letter from
independent counsel to Lender with respect to the continued compliance of the
Time-Share Project and Borrower's sales and marketing activities with applicable
laws, the enforceability of the Instruments and such other matters as Lender
shall reasonably require.
(j) if requested by Lender, such other items which are reasonably necessary
to evaluate the request for the Receivables Loan Advance and the satisfaction of
the conditions precedent thereto.
(k) evidence that the Borrower has delivered to the Receivables Trustee and
the Lender a Form W-8 as required under Paragraph 6.1(q)(iii) of the Agreement
of which this Exhibit forms a part.
22
<PAGE>
EXHIBIT E-1
REQUEST FOR RECEIVABLES LOAN ADVANCE
AND CERTIFICATION
The undersigned ("Borrower") requests FINOVA CAPITAL CORPORATION ("Lender")
to make a Receivables Loan Advance in the sum of _____________________________
______________ UNITED STATES DOLLARS (U.S. $_____________) upon receipt hereof,
pursuant to the First Amended and Restated Loan and Security Agreement between
such parties dated as of _______________, 19____ (with any amendments,
"Agreement").
Borrower hereby certifies to Lender that (i) the total unpaid payments due
under the Instruments for which the requested disbursement of the Receivables
Loan is sought and the unpaid principal balance for each such Eligible
Instrument is as set forth on Schedule A attached hereto and by this reference
incorporated herein; (ii) the Instruments against which the requested
disbursement of the Receivables Loan is sought are, individually and
collectively, Eligible Instruments; (iii) no material adverse change has
occurred in the financial condition or in the business and operations of
Borrower since _______________, _____, the date of the last financial statements
delivered to Lender; (iv) all representations and warranties contained in the
Agreement are true and correct as of the date hereof; (v) neither an Event of
Default nor an Incipient Default exists; and (vi) Borrower has Performed and
complied with all agreements, covenants and conditions required by the Agreement
to be Performed and complied with prior to or at the date of the requested
disbursement of the Receivables Loan.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Agreement.
DATED: ________________, ______.
"BORROWER" CR RESORTS CANCUN, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS LOS CABOS, S.de R.L.de C.V.,a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
23
<PAGE>
CR RESORTS PUERTO VALLARTA, S.de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CORPORACION MEXITUR, S.de R.L.de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS CANCUN TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
CR RESORTS CABOS TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
CR RESORTS PUERTO VALLARTA TIMESHARE TRUST, S. de R.L.de
C.V., a Mexican limited responsibility corporation with
variable capital
By:
Type/Print Name:
Title:
24
<PAGE>
EXHIBIT E-2
RECEIVABLES ASSIGNMENT
25
<PAGE>
ASSIGNMENT OF INSTRUMENTS AND RECEIVABLES COLLATERAL
KNOW ALL MEN BY THESE PRESENTS:
That U. S. Trust Company, National Association, as Trustee of the Club
Regina Trust I; U.S. Trust Company, a national association, as Trustee of the
Club Regina Trust II; U.S. Trust Company, National Association, as Trustee of
the Club Regina Trust III; CR Resorts Cancun, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital; CR Resorts Los Cabos,
S. de R.L. de C.V., a Mexican limited responsibility corporation with variable
capital; CR Resorts Puerto Vallarta, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital; Corporacion Mexitur, S. de
R.L. de C.V., a Mexican limited responsibility corporation with variable
capital; CR Resorts Cancun Timeshare Trust, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital; CR Resorts Cabos
Timeshare Trust, S. de R.L. de C.V., a Mexican limited responsibility
corporation with variable capital and CR Resorts Puerto Vallarta Timeshare
Trust, S. de R.L. de C.V., a Mexican limited responsibility corporation with
variable capital (collectively, "Assignor"), as owner of the Instruments
("Instruments") described in Schedule A attached hereto and by this reference
incorporated herein, together with all other items of Receivables Collateral
pertaining to such Instruments, for Ten Dollars ($10.00) and other valuable
consideration to it in hand paid by FINOVA Capital Corporation, a Delaware
corporation ("Assignee"), the receipt whereof is hereby acknowledged, does by
these presents grant, bargain, sell, assign, transfer and set over unto Assignee
all of Assignor's interest in said Instruments and Receivables Collateral
pertaining thereto.
TOGETHER WITH all obligations therein secured, all moneys due and to become
due thereunder, and all interest thereon, and all rights arising therefrom.
For purposes hereof, the term Receivables Collateral shall be as defined in
that certain First Amended and Restated Loan and Security Agreement between CR
Resorts Cancun, S. de R.L. de C.V., CR Resorts Los Cabos, S. de R.L. de C.V., CR
Resorts Puerto Vallarta, S. de R.L. de C.V., Corporacion Mexitur S. de R.L. de
C.V., CR Resorts Cancun Timeshare Trust, S. de R.L. de C.V, CR Resorts Puerto
Vallarta Timeshare Trust, S. de R.L. de C.V. and CR Resorts Cabos Timeshare
Trust, S. de R.L. de C.V., as Borrower and FINOVA Capital Corporation as Lender
dated __________, 1999, as amended.
This Assignment may be executed in any number of separate counterparts, all
of which, when taken together, shall constitute one and the same instrument,
notwithstanding the fact that all parties have not signed the same counterpart.
IN WITNESS WHEREOF, the Assignor has caused these presents to be executed
the ___ day of ________________, 199__.
"Assignor"
WITNESS: CR RESORTS CANCUN, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
26
<PAGE>
WITNESS: CR RESORTS LOS CABOS, S.de R.L.de C.V.,a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
WITNESS: CR RESORTS PUERTO VALLARTA, S.de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital
By:
Type/Print Name:
Title:
WITNESS: CORPORACION MEXITUR, S.de R.L.de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
WITNESS: CR RESORTS CANCUN TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
WITNESS: CR RESORTS CABOS TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
27
<PAGE>
WITNESS: CR RESORTS PUERTO VALLARTA TIMESHARE TRUST, S.de R.L.de
C.V., a Mexican limited responsibility corporation with
variable capital
By:
Type/Print Name:
Title:
WITNESS: U. S. TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee of
the Club Regina Trust I
By:
Type/Print Name:
Title:
WITNESS: U. S. TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee of
the Club Regina Trust II
By:
Type/Print Name:
Title:
WITNESS: U. S. TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee of
the Club Regina Trust III
By:
Type/Print Name:
Title:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
____________________, 1999, by _______________________________________, the
__________________________ of CR Resorts Cancun, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital on behalf of such
corporation. He/She is personally known to me or has produced
__________________________ as identification.
Notary Public in and for said State and County
My commission expires:
28
<PAGE>
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____
day of ____________________, 1999, by _______________________________________,
the __________________________ of CR Resorts Los Cabos, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital on behalf of
such corporation. He/She is personally known to me or has produced
__________________________ as identification.
Notary Public in and for said State and County
My commission expires:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
________________________, 1999, by _______________________________________, the
__________________________ of CR Resorts Puerto Vallarta, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital on behalf of
such corporation. He/She is personally known to me or has produced
__________________________ as identification.
Notary Public in and for said State and County
My commission expires:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
________________________, 1999, by _______________________________________, the
__________________________ of Corporacion Mexitur, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital on behalf of such
corporation. He/She is personally known to me or has produced
__________________________ as identification.
Notary Public in and for said State and County
My commission expires:
29
<PAGE>
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
________________________, 1999, by _______________________________________, the
__________________________ of CR Resorts Cancun Timeshare Trust, S. de R.L. de
C.V., a Mexican limited responsibility corporation with variable capital on
behalf of such corporation. He/She is personally known to me or has produced
__________________________ as identification.
Notary Public in and for said State and County
My commission expires:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
____________________, 1999, by _______________________________________, the
__________________________ of CR Resorts Cabos Timeshare Trust, S. de R.L. de
C.V., a Mexican limited responsibility corporation with variable capital, on
behalf of such corporation. He/She is personally known to me or has produced
__________________________ as identification.
Notary Public in and for said State and County
My commission expires:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
____________________, 1999, by _______________________________________, the
__________________________ of CR Resorts Puerto Vallarta Timeshare Trust, S. de
R.L. de C.V., a Mexican limited responsibility corporation with variable
capital, on behalf of such corporation. He/She is personally known to me or has
produced __________________________ as identification.
Notary Public in and for said State and County
My commission expires:
30
<PAGE>
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
____________________, 1999, by _______________________________________, the
__________________________ of U. S. Trust Company, National Association, as
Trustee of the Club Regina Trust I, on behalf thereof. He/She is personally
known to me or has produced __________________________ as identification.
Notary Public in and for said State and County
My commission expires:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
____________________, 1999, by _______________________________________, the
__________________________ of U. S. Trust Company, National Association, as
Trustee of the Club Regina Trust II, on behalf thereof. He/She is personally
known to me or has produced __________________________ as identification.
Notary Public in and for said State and County
My commission expires:
STATE OF _____________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
____________________, 1999, by _______________________________________, the
__________________________ of U. S. Trust Company, National Association, as
Trustee of the Club Regina Trust III, on behalf thereof. He/She is personally
known to me or has produced __________________________ as identification.
Notary Public in and for said State and County
My commission expires:
31
<PAGE>
SCHEDULE a
to assignment of instruments
Purchaser
Date
Original Principal
Amount Secured
32
<PAGE>
EXHIBIT F
REQUEST FOR INVENTORY LOAN ADVANCE
AND CERTIFICATION
The undersigned ("Borrower") requests FINOVA CAPITAL CORPORATION ("Lender")
to make an Inventory Loan Advance in the sum of ______________________________
UNITED STATES DOLLARS (U.S. $__________) upon receipt hereof, pursuant to the
First Amended and Restated Loan and Security Agreement between such parties
dated as of ____________________, 19___ (with any amendments, "Agreement").
Borrower hereby certifies to Lender that (i) the total aggregate number of
unsold Time-Share Interests as of the date hereof as __________; (ii) no
material adverse change has occurred in the financial condition or in the
business and operations of Borrower since __________, _____, the date of the
last financial statements delivered to Lender; (iii) all representations and
warranties contained in the Agreement are true and correct as of the date
hereof; (iv) neither an Event of Default nor an Incipient Default exists; and
(v) Borrower has Performed and complied with all agreements, covenants and
conditions required by the Agreement to be Performed and complied with prior to
or at the date of the requested disbursement of the Receivables Loan.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Agreement.
DATED: ____________________.
"BORROWER"
CR RESORTS CANCUN, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS LOS CABOS, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS PUERTO VALLARTA, S. de R.L. de C.V., a Mexican
limited responsibility corporation with variable capital
By:
Type/Print Name:
Title:
33
<PAGE>
CORPORACION MEXITUR, S de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital
By:
Type/Print Name:
Title:
CR RESORTS CANCUN TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
CR RESORTS CABOS TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable
capital
By:
Type/Print Name:
Title:
CR RESORTS PUERTO VALLARTA TIMESHARE TRUST, S. de R.L. de
C.V., a Mexican limited responsibility corporation with
variable capital
By:
Type/Print Name:
Title:
34
<PAGE>
CONSENT OF GUARANTOR
AND AMENDMENT NO. 1 TO CORPORATE GUARANTEE
AND SUBORDINATION AGREEMENT
The undersigned, RAINTREE RESORTS INTERNATIONAL, INC., a Nevada corporation
("Guarantor"), hereby acknowledges that Guarantor executed and delivered to
FINOVA CAPITAL CORPORATION, a Delaware corporation ("Lender"), a Corporate
Guarantee and Subordination Agreement dated as of November 23, 1998 (the
"Original Guarantee"), guaranteeing performance of the obligations of CR RESORTS
CANCUN, S. de R.L. de C.V., a Mexican limited responsibility corporation with
variable capital; CR RESORTS LOS CABOS, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital; CR RESORTS PUERTO VALLARTA, S.
de R.L. de C.V., a Mexican limited responsibility corporation with variable
capital; CORPORACION MEXITUR, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital; CR RESORTS CANCUN TIMESHARE
TRUST, S. de R.L. de C.V., a Mexican limited responsibility corporation with
variable capital; CR RESORTS CABOS TIMESHARE TRUST, S. de R.L. de C.V., a
Mexican limited responsibility corporation with variable capital, and CR RESORTS
PUERTO VALLARTA TIMESHARE TRUST, S. de R.L. de C.V., a Mexican limited
responsibility corporation with variable capital, (individually, collectively,
jointly and severally, "Borrower"), to Lender under the Agreement, the Note and
the Receivables Loan Documents (as the terms "Loan Agreement," "Note" and
"Receivables Loan Documents" are defined in the Original Guarantee). All terms
used herein with initial capital letters, to the extent not otherwise defined in
the Original Guarantee or this Consent, shall have the meanings given such terms
in the Amended and Restated Loan Agreement (as defined below).
Guarantor hereby acknowledges that pursuant to the terms of that certain
First Amended and Restated Loan and Security Agreement (as hereafter amended,
the "Amended and Restated Loan Agreement") of even date herewith, Lender
proposes to (i) to make an additional loan to Borrower in an amount not to
exceed Thirteen Million Five Hundred Thousand United States Dollars
(U.S.$13,500,000) (the "Inventory Loan") and (ii) to modify certain covenants
contained in the Agreement, which covenants include the pledging by certain of
the Borrowers to Lender of certain real property interests which are identified
as the Inventory Collateral in the Amended and Restated Loan Agreement.
Guarantor further acknowledges that (i) the Inventory Loan will be
evidenced by an Inventory Promissory Note (the "Inventory Loan Note") to be
executed and delivered to Lender by Borrower simultaneously with execution of
the Amended and Restated Loan Agreement and (ii) pursuant to the terms and
conditions of the Amended and Restated Loan Agreement, Lender and Borrower are
modifying and amending certain of the Receivables Loan Documents (such
modifications being hereinafter referred to as the "Loan Document
Modifications").
1
<PAGE>
Guarantor consents to the making and execution by Borrower of the Amended
and Restated Loan Agreement, the Inventory Loan Note and the Loan Document
Modifications, and agrees that (i) the Original Guarantee shall remain in full
force and effect, (ii) Guarantor's liability under the Original Guarantee shall
continue undiminished by and shall include the obligations of the Borrower under
the Amended and Restated Loan Agreement, the Inventory Loan Note, the Loan
Document Modifications and any other documents and instruments executed by
Borrower in connection with the Amended and Restated Loan Agreement, and (iii)
all terms, conditions and provisions set forth in the Amended and Restated Loan
Agreement, the Inventory Loan Note, the Loan Document Modifications and all
other documents and instruments executed by Borrower in connection therewith,
are hereby ratified, approved and confirmed.
The Guarantor hereby confirms that the Original Guarantee, as amended
hereby, remains in full force and effect. Guarantor hereby reaffirms all of its
agreements and covenants contained in the Original Guarantee and reaffirms, as
if made on the date hereof, all of its representations and warranties contained
in the Original Guarantee except as otherwise set forth on Exhibit 1 attached
hereto. Guarantor acknowledges that as of the date hereof, it has (a) no
defense, counterclaim, offset, cross-complaint, claim or demand of any nature
whatsoever which can be asserted as a basis to seek affirmative relief or
damages from Lender or as a basis to reduce or eliminate all or any part of its
liability under the Original Guarantee, and (b) no other claim against Lender
with respect to any portion of the transactions described in the Receivables
Loan Documents.
The reference in the Original Guarantee to "Corporacion Mexitur, S.A. de
C.V., a Mexican corporation with variable capital" incorrectly stated the name
of that Borrower. The Guarantor acknowledges the correct name of that Borrower
is "Corporacion Mexitur, S. de R.L. de C.V., a Mexican limited responsibility
corporation with variable capital" and the Original Guarantee is hereby amended
to reflect the foregoing.
The Original Guarantee shall be further amended as follows:
(a) The reference in the Original Guarantee the "Note" shall mean
individually and collectively, the "Inventory Loan Note" and the
"Receivables Loan Note", as each of the foregoing terms are defined in the
Amended and Restated Loan Agreement.
(b) The reference in the Original Guarantee to "Receivables Loan
Documents" shall mean "Loan Documents" as the foregoing term is defined in
the Amended and Restated Loan Agreement.
(c) The reference in the Original Guarantee to the term Agreement
shall mean the Amended and Restated Loan Agreement, as further amended,
restated, supplemented or modified from time to time.
2
<PAGE>
[SIGNATURE PAGE TO CONSENT OF GUARANTOR
AND AMENDMENT NO. 1 TO CORPORATE GUARANTEE
AND SUBORDINATION AGREEMENT]
IN WITNESS WHEREOF, Guarantor and Lender have hereunto executed this
instrument as of the 23rd day of April, 1999.
RAINTREE RESORTS INTERNATIONAL, INC., a Nevada corporation
By /s/ DOUGLAS Y. BECH
Name Douglas Y. Bech
Title Attorney-in-Fact
FINOVA CAPITAL CORPORATION, a Delaware corporation
By /s/ SUSAN BABBITT
Name Susan Babbitt
Title Vice President
3
<PAGE>
EXHIBIT 1 TO
CONSENT OF GUARANTOR
Exceptions To Representations And Warranties Reaffirmed
By Guarantor Pursuant To This Consent
NONE
4
<PAGE>
LOAN AND
SECURITY AGREEMENT
The Teton Club, LLC
Raintree Resorts International, Inc.
Borrower
76-0587553 (Teton)
76-0549149 (Raintree)
Federal Employee Identification No.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Address
$33,250,000 Construction Loan
$7,500,000 Working Capital Loan
$20,000,000 Receivable Loan
Amount of Loan
Date: June 29, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
1. DEFINITIONS....................................................................................................1
2. LOAN COMMITMENT; USE OF PROCEEDS...............................................................................9
2.1 Loan Commitment; Determination of Advance Amounts.....................................................9
2.2 Loan Revolver........................................................................................10
2.3 Continuation of Obligations Throughout Term..........................................................10
2.4 Use of Advances......................................................................................10
2.5 Repayment............................................................................................10
2.6 Interest.............................................................................................11
2.7 Minimum Required Payments............................................................................11
2.8 Prepayment...........................................................................................12
2.9 Construction Loan Fee Receivables Loan Fee; Working Capital Loan Loan Fee; Custodial Fee;............13
2.10 Application of Proceeds of Collateral and Payments...................................................13
2.11 Borrower's Unconditional Obligation to Make Payments.................................................15
3. SECURITY......................................................................................................15
3.1 Grant of Security Interest...........................................................................15
3.2 Ineligible Instruments...............................................................................15
3.3 Lockbox Collections and Servicing....................................................................16
3.4 Replacement of Agents................................................................................16
3.5 Maintenance of Security..............................................................................16
4. CONDITIONS PRECEDENT TO ADVANCES; MINIMUM AMOUNT AND MAXIMUM FREQUENCY ADVANCES; METHOD OF DISBURSEMENT.......17
4.1 Delivery of Loan Documents and Due Diligence Items Prior to Initial Advance..........................17
4.2 Additional Conditions Precedent......................................................................19
4.3 General Conditions Precedent to All Advances.........................................................20
4.4 Receivables Loan Conditions..........................................................................20
4.5 Conditions Satisfied at Borrower's Expense...........................................................20
4.6 Minimum Amount and Maximum Frequency of Advances of the Receivables Loan.............................20
4.7 Disbursement of Advances.............................................................................20
4.8 No Waiver............................................................................................20
5. BORROWER'S REPRESENTATIONS AND WARRANTIES.....................................................................20
5.1 Good Standing........................................................................................20
5.2 Power and Authority; Enforceability..................................................................21
5.3 Borrower's Principal Place of Business...............................................................21
5.4 No Litigation........................................................................................21
5.5 Compliance with Legal Requirements...................................................................21
5.6 No Misrepresentations................................................................................21
5.7 No Default for Third Party Obligations...............................................................21
5.8 Payment of Taxes and Other Impositions...............................................................21
5.9 Sales Activities.....................................................................................21
5.10 Time-Share Interest Not a Security...................................................................21
5.11 Zoning Compliance....................................................................................21
5.12 Eligible Instruments.................................................................................22
5.13 Assessments and Reserves.............................................................................22
5.14 Title to and Maintenance of Common Areas and Amenities...............................................22
5.15 [Intentionally Omitted]..............................................................................22
5.16 Year 2000............................................................................................22
5.17 Survival and Additional Representations and Warranties...............................................22
6. BORROWER'S COVENANTS..........................................................................................22
6.1 Borrower's Affirmative Covenants.....................................................................22
6.2 Borrower's Negative Covenants........................................................................26
6.3 Survival of Covenants................................................................................28
i
<PAGE>
7. DEFAULT.......................................................................................................28
7.1 Events of Default....................................................................................28
7.2 Remedies.............................................................................................30
7.3 Application of Proceeds During an Event of Default...................................................31
7.4 Uniform Commercial Remedies; Sale; Assembly of Receivables Collateral................................31
7.5 Application of Proceeds..............................................................................31
7.6 Lender's Right to Perform............................................................................32
7.7 Non-Exclusive Remedies...............................................................................32
7.8 Waiver of Marshalling................................................................................32
7.9 Attorney-in-Fact.....................................................................................32
8. COSTS AND EXPENSES; INDEMNIFICATION...........................................................................32
8.1 Costs and Expenses...................................................................................32
8.2 Indemnification......................................................................................32
9. CONSTRUCTION AND GENERAL TERMS................................................................................33
9.1 Payment Location.....................................................................................33
9.2 Entire Agreement.....................................................................................33
9.3 Powers Coupled with an Interest......................................................................33
9.4 Counterparts; Facsimile Signatures...................................................................33
9.5 Notices..............................................................................................33
9.6 Successors and Assigns...............................................................................33
9.7 Severability.........................................................................................34
9.8 Time of Essence......................................................................................34
9.9 Miscellaneous........................................................................................34
9.10 CHOICE OF LAW........................................................................................34
9.11 CHOICE OF JURISDICTION; WAIVER OF VENUE..............................................................34
9.12 WAIVER OF JURY TRIAL.................................................................................34
9.13 INDUCEMENT TO LENDER.................................................................................34
9.14 Compliance With Applicable Usury Law.................................................................34
9.15 NO RELATIONSHIP WITH PURCHASERS......................................................................35
9.16 NO JOINT VENTURE.....................................................................................35
9.17 Standards Applied to Lender's Actions................................................................35
9.18 Meaning of Subordination.............................................................................35
9.19 Scope of Reimbursable Attorney's Fees................................................................35
9.20 Publicity............................................................................................36
9.21 Permitted Contests...................................................................................36
9.22 Reliance.............................................................................................36
9.23 Joint and Several....................................................................................37
9.24 Consideration........................................................................................37
Schedule ......... Schedule of Additional Terms
Exhibit A......... Conditions of Eligible Instrument
Exhibit B......... Permitted Encumbrances
Exhibit C......... Borrower's Certificate
Exhibit C-1....... Re-Assignment of Instruments
Exhibit C-2....... Re-Assignment of Mortgage(s)
Exhibit D......... Additional Conditions to Working Capital Loan Advances
Exhibit D-1....... Request for Working Capital Loan Advance and Certification
Exhibit D-2....... Assignment
Exhibit D-3....... Certification
Exhibit E......... Additional Conditions to Receivables Loan Advances
Exhibit E-1....... Request for Receivables Loan Advance and Certification
Exhibit E-2....... Receivables Assignment
Exhibit F......... Legal Description of Real Property
Exhibit G......... Budget
Exhibit H......... Work Progress Schedule
ii
<PAGE>
Exhibit I......... Standard Construction Loan Administrative Procedures
Exhibit I-1....... AIA 702 and 703 Forms
Exhibit I-2....... Borrower's Affidavit for Advance
Exhibit I-3....... Release of Lien
Exhibit I-4....... Change Order Approval Request (AIA Document G713)
Exhibit J......... Initial Work Advance Disbursement Schedule
Exhibit K......... Excerpts from Indenture
Exhibit L......... Certification re: Indenture
Exhibit M......... Minimum Price Schedule
iii
<PAGE>
</TABLE>
This LOAN AND SECURITY AGREEMENT is entered into for good and valuable
consideration, by and between FINOVA CAPITAL CORPORATION, a Delaware corporation
("Lender"), The Teton Club, LLC, a Delaware limited liability company ("Teton"),
and Raintree Resorts International, Inc., a Nevada corporation ("Raintree";
Raintree and Teton, individually and collectively, jointly and severally,
"Borrower").
1. DEFINITIONS
As used in this Agreement and the other Loan Documents unless otherwise
expressly indicated in this Agreement or the other Loan Documents, the following
terms shall have the following meanings (such meanings to be applicable equally
both to the singular and plural terms defined).
"Advance": as the context requires, an advance of the proceeds of the
Construction Loan, the Receivables Loan or the Working Capital Loan by Lender
to, or on behalf of, Borrower in accordance with the terms and conditions of
this Agreement.
"Affiliate": with respect to any individual or entity, any other individual
or entity that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such individual
or entity.
"Agents": the Servicing Agent and the Lockbox Agent.
"Agreement": this Loan and Security Agreement, as it may be from time to
time renewed, amended, restated or replaced.
"Applicable Usury Law": the usury law chosen by the parties pursuant to the
terms of paragraph 9.10 or such other usury law which is applicable if such
usury law is not.
"Architect/Engineer": means an architect or engineer employed by Teton to
perform architectural or engineering services.
"Architect/Engineer Agreement": means a contract (written or oral, now or
hereafter in effect) between Teton and an Architect/Engineer for the performance
of architectural or engineering services, as approved by Lender in writing and
modified from time to time with Lender's prior written consent.
"Articles of Organization": the charter, articles, operating agreement,
joint venture agreement, partnership agreement, by-laws and any other written
documents evidencing the formation, organization, governance and continuing
existence of an entity.
"Assignment of Leases" shall have the meaning set forth in paragraph
6.2(h).
"Association Assessment Compliance Date": shall have the meaning set forth
in the Schedule.
"Base Rate": means the publicly announced "Corporate Base" rate of
Citibank, N.A., as initially determined on the closing of the Loan and as the
same may thereafter change from time to time. As used above, the "Corporate
Base" rate of Citibank shall mean the rate of interest publicly announced from
time to time by Citibank, N.A., New York, New York, as the base rate of interest
charged by Citibank to its most creditworthy commercial borrowers,
notwithstanding the fact that some borrowers of Citibank may borrow from
Citibank at rates less than such announced base rate.
"Basic Interest": the Basic Interest Rate (Construction), Basic Interest
Rate (Working Capital) or the Basic Interest Rate (Receivables), as the context
requires.
"Basic Interest Rate (Construction)": the per annum rate of interest
described in the Schedule as the Basic Interest Rate (Construction).
"Basic Interest Rate (Receivables)": the per annum rate of interest
described in the Schedule as the Basic Interest Rate (Receivables).
"Basic Interest Rate (Working Capital)": the per annum rate of interest
described in the Schedule as the Basic Interest Rate (Working Capital).
"Borrower": the individuals or business organizations signing below as
"Borrower"; and, subject to the restrictions on assignment and transfer
contained in this Agreement, its successors and assigns.
"Borrower's Knowledge": the actual, current knowledge of the chief
executive officers of Borrower.
"Budget": means a detailed budget cost itemization prepared by Borrower
with respect to construction of the Work, and approved in writing by Lender,
supported by firm, fixed price contracts or purchase orders, including all hard
and soft costs to be incurred in the construction and Completion of the Project,
which specifies by item the cost, source of payment and draw schedule of (a) all
labor, materials and services necessary for Completion of the Work; and (b) all
other expenses incidental to the Completion of the Work. The Budget shall
include a ten percent (10%) retainage and an interest reserve and contingency
reserve acceptable to Lender in its discretion, provided, however,
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that the aforementioned ten percent (10%) retainage shall not apply to
"Reimbursable Costs" as set forth in Section 7.1.7.7 of the General Contract.
The Budget is attached as Exhibit G and is incorporated herein by reference.
"Business Day": any day other than a Saturday, a Sunday, a national holiday
in the United States of America or a day on which banks in Phoenix, Arizona are
required to be closed.
"Capital Expenditures": shall mean payments that are made by Borrower for
the lease, purchase, improvement, construction or use of any property, the value
or cost of which under generally accepted accounting principles consistently
applied is required to be capitalized and appears on Borrower's balance sheet in
the category of property, plant or equipment, without regard to the manner in
which such payments or the instrument pursuant to which they are made is
characterized by Borrower or any other person, and shall include, without
limitation, payments for the installment purchase of property and payments under
capitalized leases. The term shall not, however, include the initial
construction of the Work.
"Certificate of Completion": means, with respect to the Work, a certificate
issued by the governmental authority having jurisdiction over the Work when all
of the Work has been completed, allowing the use of the Improvements by Borrower
for their intended purpose.
"CILP Assignment": a written assignment to be executed and delivered to
Lender by Borrower and creating in favor of Lender a perfected, direct, first
and exclusive assignment of the Contracts, Intangibles, Licenses and Permits in
order to facilitate Performance of the Obligations, as it may be from time to
time renewed, amended, restated or replaced.
"Collateral": the Receivables Loan Collateral, the Working Capital Loan
Collateral and the collateral pledged to Lender pursuant to the Security
Documents and all products and proceeds thereof.
"Completion" or "Completion of the Work": means completion of the
Improvements (excluding certain "punch-list" items which are not necessary for
the full operation of the Time-Share Project), substantially in accordance all
applicable zoning, building and other governmental laws, regulations and private
restrictions, sound construction, engineering and architectural principles and
commonly accepted safety standards, and free of rights of third parties and free
of defective materials and workmanship; and receipt by Lender of:
(a) A certificate of completion from Borrower and its Architect/Engineer
and, if Lender elects, from Lender's Inspector, certifying that the Work
has been so completed in accordance with the Loan Documents including,
without limitation, the Construction Contract, in a good and workmanlike
manner, all utilities necessary to serve the Real Property and Time-Share
Project have been connected and are operating, and the Improvements are
ready for occupancy;
(b) A Certificate of Completion;
(c) The "as-built survey" required pursuant to the Construction Covenants
and "as built plans" for the Time-Share Project;
(d) All licenses or approvals for operation within or on the Time-Share
Project if any; and any other applicable governmental permits, approvals,
consents, licenses and certificates for the use and operation of the Real
Property as a Time-Share Project;
(e) Evidence reasonably satisfactory to Lender that there are no material
judgments or pending litigation or, to Borrower's Knowledge, threatened
litigation of a material nature outstanding against Borrower, or the Real
Property, including but not limited to litigation or judgments which may
affect title or Lender's lien position with respect to any of the
Collateral or any litigation or judgment which might materially affect the
ability of Borrower to Perform;
(f) If applicable laws provide that the recording of a notice of completion
for the Work will cause the expiration upon a date certain of the statutory
period within which mechanics' and similar liens can be filed, verification
of the recording of such notice in the manner prescribed by such laws;
(g) The Re-Issued Title Policy required pursuant to Section S.8(M) of the
Construction Covenants; and
(h) Final lien waivers (which may be conditional on payments only with
respect to the work, material, equipment, or services to be paid from
proceeds of the final Work-Related Advance).
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"Construction Contract": means a contract (written or oral, now or
hereafter in effect) between Teton and a Contractor, or between any Contractor
and any other person or entity relating in any way to the Completion of the
Work, including the performing of labor and the furnishing of equipment,
materials or services (other than architectural or engineering services), as
approved by Lender in writing and modified from time to time with Lender's prior
written consent. "Construction Covenants": refers collectively to Sections S.6,
S.7 and S.8 of the Schedule, together with all exhibits referenced therein.
"Construction Loan": the construction loan made pursuant to paragraph
2.1(a).
"Construction Loan Borrowing Term": the period commencing on the date of
this Agreement and ending on the close of the Business Day (or if not a Business
Day; the first Business Day thereafter) on the date identified in the Schedule
as the Construction Loan Borrowing Term Expiration Date.
"Construction Loan Fee": the amount identified in the Schedule as the
Construction Loan Fee.
"Construction Loan Maturity Date": the date (or if not a Business Day, the
first Business Day thereafter) which is identified on the Schedule as the
Construction Loan Maturity Date.
"Construction Loan Note": collectively, the Construction Promissory Note,
made and delivered by Teton and Raintree, jointly and severally, to Lender
pursuant to paragraph 4.1, having a face amount equal to Eight Million Three
Hundred Twelve Thousand Five Hundred and No/100 Dollars ($8,312,500), dated as
of May 6, 1999, and made payable to order of Lender, as it may from time to time
be renewed, amended, restated or replaced, and the Construction Promissory Note,
made and delivered solely by Teton to Lender pursuant to paragraph 4.1, having a
face amount equal to Twenty-Four Million Nine Hundred Thirty-Seven Thousand Five
Hundred and No/100 Dollars ($24,937,500), dated as of May 6, 1999, and made
payable to the order of Lender, as it may from time to time be renewed, amended,
restated or replaced.
"Construction Loan Prepayment Premium": an amount to be paid pursuant to
paragraph 2.8 upon a prepayment of the Construction Loan, determined by
multiplying the amount of the prepayment by the percentage identified in the
Schedule as the Construction Loan Prepayment Premium.
"Construction Loan Release Payment": the meaning given to it in Section S.5
of the Schedule.
"Contractor": means a contractor employed by Teton to provide labor and/or
to furnish equipment, materials or services for any portion of the Work.
"Contracts, Intangibles, Licenses and Permits": all contracts, licenses,
permits, plans and other intangibles in which Teton now or hereafter has rights
and are now or hereafter used in connection with (i) the construction of the
Work; (ii) the marketing and sale of Time-Share Interests and (iii) the
management and/or operation of the Time-Share Project. Contracts, Intangibles,
Licenses, and Permits shall include, without limitation, that certain Amended
and Restated Teton Club Membership Agreement between Teton and Teton Pines
Limited Liability Company executed by the parties thereto on or about June 30,
1999, and as further modified from time to time with Lender's prior written
consent and (B) the agreements which entitle the Purchasers to use of skiing
facilities at or around the Time-Share Project and any other amenities which are
offered and represented as being available to Purchasers in connection with the
purchase of a Time-Share Interest.
"Custodial Fee": the meaning given to it in paragraph 2.9(b).
"Default Rate": the rate of interest identified in the Schedule as the
Default Rate.
"Distributions": any distribution, advance, payment or loan to any
shareholder, partner, member, officer, director or Affiliate of Borrower,
including but not limited to, dividends, bonuses, salary, other compensation and
management fee.
"Dollars" or "$": shall mean United States Dollars.
"Eligible Instrument": an Instrument which conforms to the standards set
forth in Exhibit A-1. An Instrument that has qualified as an Eligible Instrument
shall cease to be an Eligible Instrument upon the date of the first occurrence
of any of the following: (a) any installment due with respect to that Instrument
becomes more than fifty-nine (59) days past due or (b) that Instrument otherwise
fails to continue to conform to the standards set forth in Exhibit A.
"Environmental Certificate": an environmental certificate executed and
delivered to Lender by Borrower and such other persons as Lender may require and
containing representations, warranties and covenants regarding the environmental
condition of the Time-Share Project, as it may be from time to time renewed,
amended, restated or replaced.
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"Escrow": shall mean that certain account in the name of the Escrow Agent
in which cash payments and principal and interest payments that are used in
determining the Working Capital Loan Borrowing Base, together with original
Reservation Agreement, Purchaser Contracts and other similar items pertaining
thereto are deposited, pursuant to an agreement acceptable to Lender.
"Escrow Agent": shall mean the entity who is not an Affiliate of Borrower,
in whose name the Escrow is maintained, the identity of whom shall be reasonably
acceptable to Lender.
"Escrow Assignment": shall mean that certain Collateral Assignment,
Security Agreement and Account Agreement, in a form acceptable to Lender,
pursuant to which Borrower collaterally assigns to Lender all of the Borrower's
interest in the Escrow and in the agreement pursuant to which the Escrow is
maintained as security for the payment and Performance of the Obligations, which
shall be executed prior to the first Advance of the Working Capital Loan.
"Event of Default": the meaning set forth in paragraph 7.1.
"Excess Cash Flow": for the period in question, the net income of Teton
determined in accordance with GAAP, plus each of the following items to the
extent deducted from the revenues of Teton in calculating net income: (i)
depreciation; (ii) amortization; (iii) vacation interval cost of sales (as
reflected in Teton's income statement); (iv) other non-cash expenses; and (v)
decreases in net working capital during such period, plus all Advances made by
Lender during such period, less each of the following items to the extent
Teton's revenues were increased by such items in calculating net income: (x)
non-cash revenues and (xi) increases in net working capital, and less the
following items to the extent paid during such period: (xx) Capital Expenditures
and (xxi) payments made in reduction of the principal balance of any Loan.
"Force Majeure Event": means any "Act of God," governmental moratorium,
civil commotion, enemy action, fire, strike, casualty, or governmental order, or
injunction issued by a court of competent jurisdiction, which are entered for
reasons other than for Borrower's acts or omissions which would constitute a
default under this Agreement, or similar occurrences beyond Borrower's control.
"FPSI": FINOVA Portfolio Services, Inc., an Arizona corporation, and its
successors and assigns.
"GAAP": shall mean generally accepted accounting principles as in effect
from time to time in the United States of America, consistently applied,
throughout the period involved and with the prior periods, which shall include
the official interpretations thereof by the Financial Accounting Standards Board
or any successor thereto.
"General Contract": the meaning given to it in Section S.6(A)(i) of the
Construction Covenants.
"General Contractor": shall refer to Jacobsen Construction Services, Inc.,
of 25 Gros Ventre, P.O. Box 9087, Jackson, Wyoming 83002.
"Impositions": all real estate, personal property, excise, privilege,
transaction, documentary stamp and other taxes, charges, assessments and levies
(including non-governmental assessments and levies such as maintenance charges,
association dues and assessments under private covenants, conditions and
restrictions) and any interest, costs, fines or penalties with respect thereto,
general and special, ordinary and extraordinary, foreseen and unforeseen, of any
kind and nature whatsoever which at any time prior to or after the execution
hereof may be assessed, levied or imposed. Imposition shall not include taxes
payable to the United States of America or to any state or political subdivision
thereof measured by the net income payable by Lender.
"Improvements": means all improvements to be constructed upon the Real
Property as part of the Work, together with any off-site improvements which must
be completed in connection therewith, all as set forth in the Plans and the
Construction Contract(s) and as described in the Budget.
"Incipient Default": an event which after notice and/or lapse of time would
constitute an Event of Default.
"Indenture": the Indenture dated December 5, 1997, pursuant to which the
Redeemable Senior Notes were issued, by and among Raintree, CR Resorts Capital,
S. de R.L. de C.V, and IBJ Schroder Bank & Trust.
"Installment Date": the date upon which an installment of principal or
interest is due under the Construction Loan Note, the Working Capital Loan Note
or the Receivables Loan Note, as the context requires.
"Instrument": a purchase money promissory note which has arisen out of a
sale of a Time-Share Interest by Teton to a Purchaser, and is made payable by
such Purchaser to Teton, and is secured by a Purchaser Mortgage.
"Insurance Policies": the insurance policies that Borrower is required to
maintain and deliver pursuant to paragraph 6.1(c).
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"IRC": The United States Internal Revenue Code, as amended.
"Legal Requirements": (a) all present and future judicial decisions,
statutes, regulations, permits, licenses or certificates of any governmental
authority in any way applicable to Borrower or its property; and (b) all
contracts or agreements (written or oral) by which Borrower or its property is
bound or, if compliance therewith would otherwise be in conflict with any of the
Loan Documents, by which Borrower or its property becomes bound with Lender's
prior written consent.
"Lender": FINOVA Capital Corporation, a Delaware corporation, and its
successors and assigns.
"Lender's Inspector": the meaning given to it in Section S.8(c) of the
Construction Covenants.
"Loan": the Construction Loan, the Receivables Loan or the Working Capital
Loan, as the context requires.
"Loan Documents": this Agreement, the Construction Loan Note, Receivables
Loan Note, the Working Capital Loan Note, any and all Subordination Agreements,
the Lockbox Agreement, the Servicing Agreement, the Environmental Certificate,
the Security Documents, and all other documents now or hereafter executed in
connection with the Construction Loan, the Receivables Loan or the Working
Capital Loan, as they may be from time to time renewed, amended, restated or
replaced.
"Lockbox Agent": the business organization identified in the Schedule as
the Lockbox Agent, or its successor as lockbox agent under the Lockbox
Agreement.
"Lockbox Agreement": an agreement to be made among Lender, Borrower, and
Lockbox Agent, which provides for the Lockbox Agent to collect through a lockbox
payments under Instruments constituting part of the Receivables Collateral and
to remit them to Lender, as it may be from time to time renewed, amended,
restated or replaced.
"Maximum Construction Loan Amount": the amount identified in the Schedule
as the Maximum Construction Loan Amount.
"Maximum Loan Amount": the amount identified in the Schedule as the Maximum
Loan Amount.
"Maximum Receivables Loan Amount": the amount identified in the Schedule as
the Maximum Receivables Loan Amount.
"Maximum Working Capital Loan Amount": the amount identified in the
Schedule as the Maximum Working Capital Loan Amount.
"Minimum Opinion Matters": A favorable legal opinion of counsel for
Borrower which counsel must be acceptable to Lender, dated as of the day of
Required Closing Date, covering the due authorization, execution and delivery of
the Loan Documents; the enforceability, validity and binding effect of the Loan
Documents (including, choice of law, venue and jurisdiction provisions);
compliance under applicable usury laws and such other matters as the Lender may
require.
"Minimum Required Time-Share Approvals": the registration/consents to sell
and the final subdivision public reports/public offering statements/prospectuses
and/or approvals thereof required to be issued by or used in the State of
Wyoming and other jurisdictions where Eligible Instruments will be offered or
sold, together with all other approvals from regulatory agencies having
jurisdiction over the Time-Share Project.
"Mortgage": a mortgage/deed of trust/deed to secure debt recorded against
the Time-Share Project, as it may be from time renewed, amended, restated or
replaced.
"Obligations": all obligations, agreements, duties, covenants and
conditions of Borrower to Lender which Borrower is now or hereafter required to
Perform under the Loan Documents.
"Performance" or "Perform": full, timely and faithful performance of the
Obligations by Borrower.
"Permitted Debt": the meaning given to it in paragraph 6.2(b).
"Permitted Encumbrances": the rights, restrictions, reservations,
encumbrances, easements and liens of record which Lender has agreed to accept as
set forth in Exhibit B.
"Plans": the meaning given to it in Section S.8(H) of the Construction
Covenants.
"Prepayment Premium": means, collectively and individually, the
Construction Loan Prepayment Premium, Working Capital Loan Prepayment Premium or
Receivables Loan Prepayment Premium.
"Principal Work-Related Items": means the Plans and all agreements between
Teton and third parties pertaining to the Work, including, without limitation,
the Construction Contract(s) and the Architect/Engineer Agreement(s), as
approved by Lender in writing and modified from time to time with Lender's prior
written consent.
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"Project Documents": shall mean all management, shared use, access,
engineering, marketing, construction, operating, owners' association and other
agreements relating to the use, ownership, or operation of the Time-Share
Project and all of Borrower's rights, as a "declarant", "developer", "owner"
and/or otherwise under the governing documents and restrictive covenants
affecting the Real Property, including, without limitation, the deed or
declaration of division, owners' association charters or articles or
certificates of incorporation, bylaws and rules and regulations relating thereto
whether now existing or hereafter created.
"Purchase Contract": a purchase contract pursuant to which Teton has agreed
to sell and a third party has agreed to purchase a Time-Share Interest.
"Purchaser": a purchaser who has executed a Purchase Contract.
"Purchaser Mortgage": the purchase money mortgage/deed of trust/deed to
secure debt given by a Purchaser to secure an Instrument.
"Quiet Enjoyment Rights": the meaning given to it in paragraph 4.1(b).
"Real Property": refers to the land upon which the Time-Share Project is or
will be situated, legally described as set forth on the attached Exhibit F.
"Receivables": accounts receivable and other deferred payment obligations
arising from the sale of Time-Share Interests.
"Receivables Assignment": a written assignment of specific Instruments and
their proceeds, to be executed by Teton and substantially in form and substance
identical to Exhibit E-2.
"Receivables Collateral": (a) the Instruments which are now or hereafter
assigned, endorsed or delivered to Lender pursuant to this Agreement or against
which an Advance of the Receivables Loan has been made; (b) all rights under all
documents evidencing, securing or otherwise pertaining to such Instruments,
including, without limitation, Purchaser Mortgages, Purchase Contracts and
escrow agreements; (c) the Insurance Policies; (d) all collateral and other
security interests given to secure an Instrument; (e) all Borrower's rights
under all escrow agreements and accounts pertaining to any of the foregoing; (f)
all reservation systems pertaining to the use of Time-Share Interests; (g) all
computer software, files, books and records of Borrower pertaining to any of the
foregoing; and (h) the cash and non-cash proceeds of all of the foregoing,
including, without limitation (whether or not acquired with cash proceeds), all
accounts, chattel paper, contract rights, documents, general intangibles,
instruments, fixtures, equipment, inventory and other goods.
"Receivables Loan": the revolving line of credit loan made pursuant to
paragraph 2.1(b).
"Receivables Loan Borrowing Base": with respect to an Eligible Instrument,
an amount equal to the lesser of:
(a) the percentage of the unpaid principal balance of such Eligible
Instrument identified in the Schedule as the RLBB Principal Balance
Percentage; or
(b) the percentage of the present value of the unmatured installments of
principal and interest under such Eligible Instrument identified in the
Schedule as the RLBB Present Value Percentage, discounted at the then
applicable interest rate under the terms of the Receivables Loan Note.
"Receivables Loan Borrowing Base Shortfall": at any time, the amount by
which the unpaid principal balance of the Receivables Loan exceeds the aggregate
Receivables Loan Borrowing Base of all Eligible Instruments pledged to Lender.
"Receivables Loan Borrowing Term": the period commencing on the date of
this Agreement and ending on the close of the Business Day (or if not a Business
Day, the first Business Day thereafter) on the date identified in the Schedule
as the Receivables Loan Borrowing Term Expiration Date.
"Receivables Loan Collateral": the Receivables Collateral, the Insurance
Policies, and any and all other property now or hereafter serving as security
for the Performance of the Obligations, and all products and proceeds thereof.
"Receivables Loan Fee": the amount identified in the Schedule as the
Receivables Loan Fee.
"Receivables Loan Ineligibility Event": the meaning given to it in
paragraph 3.2(a).
"Receivables Loan Maturity Date": the date (or if not a Business Day, the
first Business Day thereafter) which is identified in the Schedule as the
Receivables Loan Maturity Date.
"Receivables Loan Note": collectively, the Receivables Promissory Note,
made and delivered by Teton and Raintree, jointly and severally, to Lender
pursuant to paragraph 4.1, having a face amount equal to Five Million and No/100
Dollars ($5,000,000), dated as of May 6, 1999, and made payable to order of
Lender, as
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it may from time to time be renewed, amended, restated or replaced and the
Receivables Promissory Note, made and delivered solely by Teton to Lender
pursuant to paragraph 4.1, having a face amount equal to Fifteen Million and
No/100 Dollars ($15,000,000), dated as of May 6, 1999, and made payable to the
order of Lender, as it may from time to time be renewed, amended, restated or
replaced.
"Receivables Loan Opening Prepayment Date": the date identified in the
Schedule as the Receivables Loan Opening Prepayment Date.
"Receivables Loan Prepayment Premium": an amount to be paid pursuant to
paragraph 2.8 upon a prepayment of the Receivables Loan, determined by
multiplying the amount of the prepayment by the percentage identified in the
Schedule as the Receivables Loan Prepayment Premium and determined in accordance
with provisions of the Schedule.
"Redeemable Senior Notes": those Series A and Series B thirteen percent
(13%) senior notes due December 1, 2004 in the aggregate principal amount of One
Hundred Million Dollars ($100,000,000) issued pursuant to the Indenture.
"Required Closing Date": the date identified in the Schedule as the
Required Closing Date.
"Required Completion Assurance Deposits": shall mean all amounts deposited
by Borrower with Lender pursuant to Section S.7(B) of the Construction
Covenants.
"Required Completion Date": the date which is twenty four months (24) from
and after the Required Closing Date.
"Reservation Agreement": a reservation agreement pursuant to which a
Purchaser reserves the right to purchase a particular Time-Share Interest.
"Resolution": a resolution of a corporation certified as true and correct
by an authorized officer of such corporation, a certificate signed by the
manager of a limited liability company and such members whose approval is
required, or a partnership certificate signed by all of the general partners of
such partnership and such other partners whose approval is required.
"Schedule": the Schedule of Additional Terms which follows the signature
pages of the parties.
"Security Documents": the CILP Assignment, Escrow Assignment, the
Receivables Assignments, the Assignment of Leases, this Agreement, the Mortgage
and all other documents now or hereafter securing the Obligations, as they may
be from time to time renewed, amended, restated or replaced.
"Servicing Agent": the business organization identified in the Schedule as
the Servicing Agent, or its successor as Servicing Agent under the Servicing
Agreement.
"Servicing Agreement": the agreements to be made among Lender, Borrower and
Servicing Agent, which provides for Servicing Agent to perform for the benefit
of Lender accounting, reporting and other servicing functions with respect to
the Receivables Collateral, as it may be from time to time renewed, amended,
restated or replaced.
"Subordination Agreement": a subordination agreement made by a Subordinator
subordinating indebtedness owed to it by Borrower to all or a part of the
Obligations, as it may be from time to time renewed, amended, restated or
replaced.
"Subordinator": at any time, a person or entity then required under the
terms of paragraph 6.1(e) to subordinate indebtedness owed to it by Borrower to
all or any part of the Obligations.
"Term": the duration of this Agreement, commencing on the date as of which
this Agreement is entered into and ending on the date when all of the
Obligations have been Performed and Lender has no further obligation to extend
credit in connection with the Construction Loan, the Receivables Loan or the
Working Capital Loan.
"Third Party Consents": those consents which Lender reasonably requires
Borrower to obtain, or which Borrower is contractually or legally obligated to
obtain, from others in connection with the transaction contemplated by the Loan
Documents. Such Third Party Consents shall include, without limitation, a
consent from Teton Pines Limited Liability Company as to the collateral
assignment to Lender of that certain Amended Teton Club Membership Agreement
between Teton and Teton Pines Limited Liability Company executed by the parties
thereto on or about June 30, 1999.
"Time-Share Association": the association to be established in accordance
with the Time Share Declaration to manage the Time Share Program and in which
all owners of Time-Share Interests will be members.
"Time-Share Declaration": that declaration of covenants, conditions and
restrictions which will be executed by Teton, will be recorded in the real
estate records of the county where the Time-Share Project is located, and will
establish the Time-Share Program.
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"Time-Share Interest": an undivided fractional fee simple interest as
tenant in common (or an estate for years with a remainder over in fractional fee
simple as tenant in common) either (a) in a Unit (coupled with an undivided
fractional fee simple interest as tenant in common in the common areas of the
Time Share Project) or (b) in the entire Time-Share Project, together with the
exclusive right to occupy and use a specific Unit [or an equivalent Unit] for a
period of at least seven (7) consecutive days every calendar year (on a fixed or
floating basis) and the non-exclusive right to use such common elements during
the same occupancy period.
"Time-Share Management Agreement": the management agreement from time to
time entered into between the Time Share Association and the Time Share Manager
for the management of the Time Share Program.
"Time-Share Manager": the person from time to time employed by the Time
Share Association to manage the Time Share Program.
"Time-Share Program": the program under which Purchasers may own Time-Share
Interests, enjoy their respective Time-Share Interests on a recurring basis, and
share the expenses associated with the operation and management of such program.
"Time-Share Program Consumer Documents": the Reservation Agreement,
Purchase Contract, Instrument, Purchaser Mortgage, deed of conveyance, credit
application, credit disclosures (if applicable), rescission right notices, final
subdivision public reports/prospectuses/public offering statements (if
applicable), receipt for public report, exchange affiliation agreement and other
documents used or to be used by Teton in connection with the sale of Time-Share
Interests.
"Time-Share Program Governing Documents": the Time-Share Declaration, the
Articles of Organization for the Time-Share Association, the Purchase Contracts,
the Instruments, the rules and regulations adopted from time-to-time by the
Time-Share Association, and any subsidy agreement by which Teton is obligated to
subsidize shortfalls in the budget of the Time-Share Program in lieu of paying
assessments.
"Time-Share Project" or "Project": individually and collectively, the
time-share project and related amenities constructed or to be constructed on the
Real Property and identified in the Schedule as the Time-Share Project.
"Title Insurer" or "Title Company": Lawyers Title Insurance Corporation,
through its authorized agent, Jackson Hole Title and Escrow.
"Title Policy": a Lender's policy or policies of title insurance in the
amount of Forty Two Million Dollars ($42,000,000) issued by the Title Insurer
and in form and substance and accompanied by such endorsements as may be
reasonably satisfactory to Lender wherein the insured instrument shall be the
Mortgage, which Title Policy shall assure Lender that the priority of Lender's
Mortgage is subject only to the Permitted Encumbrances.
"T-Note Yield": the rate of interest offered on a six and one-half percent
(6.5%) May, 2005 U.S. Treasury Note as shown under the column heading "Ask Yld."
for "Govt. Bonds & Notes" in the "Treasury Bonds, Notes & Bills" Section of The
Wall Street Journal - Western Edition.
"Unit": a dwelling unit in the Time-Share Project.
"Uncovered Cost of the Work": shall mean the amount equal to the excess (if
any) of (a) the remaining unpaid costs of Completion of the Work over (b) the
committed and undisbursed portion of the Construction Loan and any Required
Completion Assurance Deposits held by Lender.
"Work": means the construction of the Time-Share Project and the
installation of any and all furniture, furnishings, fixtures and/or equipment
required by this Agreement or shown as costs on the Budget, the Plans or the
construction contract(s) for the Time-Share Project.
"Work Progress Schedule": shall mean a schedule showing the planned timing,
progress of construction and completion date for the development and the
construction of the Time-Share Project in the form attached hereto as Exhibit H.
"Work-Related Advance": means any Advance from the Construction Loan made
for the purpose of paying or reimbursing Teton for the costs of the Work.
"Work-Related Advance Request": means the written application of Borrower
on Lender's standard forms made by Borrower specifying by name and amount all
parties to whom Teton is obligated for labor, materials, equipment or services
supplied for the Completion of the Work whether or not specified in the Budget,
and requesting a Work-Related Advance for payment of such items, accompanied by
an Affidavit of Borrower and such schedules, affidavits, releases, waivers,
statements, invoices, bills and other documents as Lender may request.
"Working Capital Loan": the loan made pursuant to paragraph 2.1(c).
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"Working Capital Loan Borrowing Base": shall mean an amount equal to twenty
five percent (25%) of the sum of (i) the unpaid principal balance payable under
the Working Capital Loan Eligible Instruments against which a Working Capital
Loan Advance will be made and (ii) any cash down payments then made by the
Purchaser under such Working Capital Loan Eligible Instruments at the time of
such Working Capital Loan Advance; provided that the proceeds of the cash down
payments are held and shall continue to be held in Escrow by Escrow Agent.
"Working Capital Loan Borrowing Base Shortfall": at any time, the amount by
which the unpaid principal balance of the Working Capital Loan exceeds the
aggregate Working Capital Loan Borrowing Base of all Working Capital Loan
Eligible Instruments pledged to Lender.
"Working Capital Loan Collateral": (a) the Reservation Agreements and
Purchase Contracts which are now or hereafter assigned, endorsed or delivered to
Lender pursuant to this Agreement or against which an Advance of the Working
Capital Loan has been made; (b) all rights under all documents evidencing,
securing or otherwise pertaining to such Purchase Contracts and Reservation
Agreements; (c) all Borrower's rights under all escrow agreements and accounts
pertaining to the foregoing; (d) the cash and non-cash proceeds of all of the
foregoing, including without limitation (whether or not acquired with cash
proceeds), all accounts, chattel paper, contract rights, documents, general
intangibles, instruments, fixtures, equipment, inventory and other goods.
"Working Capital Loan Eligible Instrument": a Reservation Agreement and, if
in existence, Purchase Contract, which conform to the standards set forth in
Exhibit A-2. A Working Capital Loan Eligible Instrument shall cease to be the
same on the date of the first occurrence of any of the following (a) completion
of the Unit subject to the Working Capital Loan Eligible Instrument, (b) a
termination of Reservation Agreement by a Purchaser or Teton, (c) the closing of
the purchase and sale contemplated by the Working Capital Loan Eligible
Instrument, or (d) a default by a Purchaser of its obligations under the
Reservation Agreement or Purchase Contract.
"Working Capital Loan Ineligibility Event": the meaning given to it in
paragraph 3.2(b).
"Working Capital Loan Borrowing Term": the period commencing on the date of
this Agreement and ending on the close of the Business Day (or if not a Business
Day, the first Business Day thereafter) on the date identified in the Schedule
as the Working Capital Loan Borrowing Term Expiration Date.
"Working Capital Loan Fee": the amount identified in the Schedule as the
Working Capital Loan Fee.
"Working Capital Loan Mandatory Payment": shall have the meaning given to
it in Section S.5 of the Schedule.
"Working Capital Loan Maturity Date": the date (or, if not a Business Day,
the first Business Day thereafter) which is identified in the Schedule as the
Working Capital Loan Maturity Date.
"Working Capital Loan Note": collectively, the Working Capital Promissory
Note, made and delivered by Teton and Raintree, jointly and severally, to Lender
pursuant to paragraph 4.1, having a face amount equal to One Million Eight
Hundred Seventy-Five Thousand and No/100 Dollars ($1,875,000), dated as of May
6, 1999, and made payable to order of Lender, as it may from time to time be
renewed, amended, restated or replaced and the Working Capital Promissory Note,
made and delivered solely by Teton to Lender pursuant to paragraph 4.1, having a
face amount equal to Five Million Six Hundred Twenty-Five Thousand and No/100
Dollars ($5,625,000), dated as of May 6, 1999, and made payable to the order of
Lender, as it may from time to time be renewed, amended, restated or replaced.
"Working Capital Loan Prepayment Premium": an amount to be paid pursuant to
paragraph 2.8 upon a prepayment of the Working Capital Loan, determined by
multiplying the amount of the prepayment by the percentage identified in the
Schedule as the Working Capital Loan Prepayment Premium and determined in
accordance with provisions of the Schedule.
2. LOAN COMMITMENT; USE OF PROCEEDS
2.1 Loan Commitment; Determination of Advance Amounts.
(a) Construction Loan. Lender hereby agrees, if Borrower has Performed all
of the Obligations then due, to make Advances of the Construction Loan to
Borrower in accordance with the terms and conditions of this Agreement.
(b) Receivables Loan. Lender further hereby agrees, if Borrower has
Performed all of the Obligations then due, to make Advances of the Receivables
Loan to Borrower in accordance with the terms and conditions of this Agreement
for the purposes specified in paragraph 2.4. The maximum amount of an
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Advance of the Receivables Loan shall be equal to (a) the aggregate Receivables
Loan Borrowing Base for all Eligible Instruments less (b) the then unpaid
principal balance of the Receivables Loan. Borrower shall not have the right to
request and Lender shall not have no obligation to make any so called
"Availability Advances" of the Receivables Loan.
(c) Working Capital Loan. Lender further hereby agrees, if Borrower has
Performed all of the Obligations then due, to make Advances of the Working
Capital Loan to Borrower in accordance with the terms and conditions of this
Agreement for the purposes specified in paragraph 2.4. The maximum amount of an
Advance of the Working Capital Loan shall be equal to (a) the aggregate Working
Capital Loan Borrowing Base less (b) the then unpaid principal balance of the
Working Capital Loan.
(d) Maximum Amount. At no time shall the unpaid principal balance of the
Construction Loan exceed the Maximum Construction Loan Amount. At no time shall
the unpaid principal balance of the Receivables Loan exceed the Maximum
Receivables Loan Amount. At no time shall the unpaid principal balance of the
Working Capital Loan exceed the Maximum Working Capital Loan Amount.
Furthermore, at no time shall the unpaid principal balance of the Construction
Loan, Receivables Loan and Working Capital Loan, in the aggregate, exceed the
Maximum Loan Amount. In the event at any time (a) the unpaid principal balance
of the Construction Loan exceeds the Maximum Construction Loan Amount; (b) the
unpaid principal balance of the Receivables Loan exceeds the Maximum Receivables
Loan Amount, (c) the unpaid principal balance of the Working Capital Loan
exceeds the Maximum Working Capital Loan Amount, or (d) the unpaid principal
balance of the Construction Loan, Receivables Loan and Working Capital Loan, in
the aggregate, exceeds the Maximum Loan Amount, Borrower shall make an immediate
payment to Lender in the amount equal to such excess, provided, however, that
such payment shall not require the payment of a Prepayment Premium.
2.2 Loan Revolver.
(a) The Construction Loan is a non-revolving line of credit and Borrower
shall not have the right to obtain Advances of the Construction Loan as to any
portion of the Construction Loan that has previously been repaid. Furthermore,
Borrower shall not be entitled to obtain Advances of the Construction Loan after
the expiration of the Construction Loan Borrowing Term unless Lender, at its
discretion, agrees in writing with Borrower to make such Advances thereafter on
terms and conditions satisfactory to Lender.
(b) The Receivables Loan is a revolving line of credit; however, all
Advances of the Receivables Loan shall be viewed as a single loan. Borrower
shall not be entitled to obtain Advances of the Receivables Loan after the
expiration of the Receivables Loan Borrowing Term unless Lender, in its
discretion, agrees in writing with Borrower to make such Advances thereafter on
terms and conditions satisfactory to Lender.
(c) The Working Capital Loan is a non-revolving line of credit and Borrower
shall not have the right to obtain Advances of the Working Capital Loan as to
any portion of the Working Capital Loan that has previously been repaid.
Furthermore, Borrower shall not be entitled to obtain Advances of the Working
Capital Loan after the expiration of the Working Capital Loan Borrowing Term
unless Lender, in its discretion, agrees in writing with Borrower to make such
Advances thereafter on terms and conditions satisfactory to Lender.
2.3 Continuation of Obligations Throughout Term. Whether or not Borrower's right
to obtain Advances has terminated, this Agreement and Borrower's liability for
Performance of the Obligations shall continue until the end of the Term.
2.4 Use of Advances. Borrower will use the proceeds of the Construction Loan for
the purpose of constructing the Improvements pursuant to the Plans, Construction
Contract and Budget, approved by Lender. Borrower will use the Working Capital
Loan for working capital purposes. Borrower will use the proceeds of the
Receivables Loan to repay the Construction Loan and the Working Capital Loan in
full and for working capital. An interest reserve shall be established from the
proceeds of the Construction Loan in an amount set forth in the Budget. Such
reserve shall be used by Lender to pay interest on the Construction Loan, as and
when payable, and shall not accrue interest until such reserves are drawn upon
and then only to the extent so drawn upon. Following exhaustion of such interest
reserve, interest on the Construction Loan shall be paid by Borrower from
Borrower's internally generated cash or from other sources.
2.5 Repayment. The Construction Loan shall be evidenced by the Construction Loan
Note and shall be repaid in immediately available funds according to the terms
of the Construction Loan Note and this Agreement. The Receivables Loan shall be
evidenced by the Receivables Loan Note and shall be repaid in immediately
available funds according to the terms of the Receivables Loan Note and this
Agreement. The Working Capital Loan shall be evidenced by the Working Capital
Loan Note and shall be repaid in immediately
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available funds according to the terms of the Working Capital Loan Note and this
Agreement.
2.6 Interest. Interest shall accrue on the unpaid principal balance of the
Construction Loan from time to time outstanding at the Basic Interest Rate
(Construction), on the unpaid principal balance of the Receivables Loan from
time to time outstanding at the Basic Interest Rate (Receivables) and on the
unpaid principal balance of the Working Capital Loan from time to time
outstanding at the Basic Interest Rate (Working Capital). Basic Interest shall
be calculated on the basis of the actual number of days elapsed during the
period for which interest is being charged predicated on a year consisting of
three hundred sixty (360) days. Payments of principal, Basic Interest and any
other amounts due and payable under the Loan Documents shall earn interest after
the date on which they are due at the Default Rate until paid. At the option of
Lender, while an Event of Default exists, Basic Interest shall accrue at the
Default Rate.
2.7 Minimum Required Payments.
(a) Construction Loan. Commencing on the last Business Day of the calendar
month in which the initial Advance of the Construction Loan is made and on the
last Business Day of each succeeding calendar month thereafter until the
Construction Loan Maturity Date or the date on which the Construction Loan is
paid in full, whatever date first occurs, Borrower will pay to Lender an
installment payment of interest on the outstanding unpaid principal balance of
the Construction Loan. The principal balance of the Construction Loan shall be
repaid through the payment of Construction Loan Release Payments, with the
entire unpaid principal balance of the Construction Loan Note being fully due
and payable on the Construction Loan Maturity Date.
(b) Receivables Loan.
(i) Monthly Payments. Commencing on the last Business Day of the calendar
month in which the initial Advance of the Receivables Loan is made and on
the last Business Day of each succeeding calendar month thereafter until
the Receivables Loan Maturity Date or the date on which the Receivables
Loan is paid in full, whichever date first occurs, Borrower will pay to
Lender an installment payment of principal and interest on the outstanding
unpaid principal balance of the Receivables Loan equal to one hundred
percent (100%) of all proceeds (except servicing fee payments made by
Purchasers whose principal and interest payments then due have been paid in
full and payments which are identified by such consumers as tax and
insurance impounds or maintenance and other assessment payments and are
required to be so treated by Lender) of the Receivables Collateral
collected during the month in which the payment is required to be made plus
all such proceeds collected during any preceding month during the Term and
not previously paid to Lender, including, without limitation, all payments
collected under the Instruments which constitute part of the Receivables
Collateral. Regardless of whether the proceeds of the Receivables
Collateral are sufficient for that purpose, interest on the principal
balance hereof from time to time outstanding shall be due and payable
monthly in arrears on each Installment Date.
(ii) Borrowing Base Maintenance - Receivables Loan. If there exists a
Receivables Loan Borrowing Base Shortfall for any reason other than a
Receivables Loan Ineligibility Event which is subject to the provisions of
paragraph 3.2 and Borrower knows of the occurrence of such condition or
should have known of its occurrence by virtue of reports required to be
delivered to Lender, Borrower, without notice or demand, will immediately
(a) make to Lender a principal payment in an amount equal to the
Receivables Loan Borrowing Base Shortfall plus accrued and unpaid interest
on such principal payment, (b) deliver to Lender one or more Eligible
Instruments having an aggregate Receivables Loan Borrowing Base not less
than the Receivables Loan Borrowing Base Shortfall or (c) perform a
combination of (a) and (b). Simultaneously with the delivery of Eligible
Instruments to correct a Receivables Loan Borrowing Base Shortfall,
Borrower will deliver to Lender all of the items (except for a "Request for
Receivables Advance and Certification") required to be delivered by
Borrower to Lender pursuant to paragraph 4.2, together with a "Borrower's
Certificate" in form and substance substantially identical to Exhibit C.
(c) Working Capital Loan.
(i) Monthly Payments. Commencing on the last Business Day of the
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month in which the Advance of the Working Capital Loan is made and on the
last Business Day of each succeeding calendar month thereafter until the
Working Capital Loan Maturity Date or the date on which the Working Capital
Loan has been repaid in full, whichever first occurs, Borrower shall pay to
Lender an installment of interest on the outstanding unpaid principal
balance of the Working Capital Loan. The principal balance of the Working
Capital Loan shall be repaid through the application of Working Capital
Loan Mandatory Payments. The foregoing notwithstanding the entire unpaid
balance of the Working Capital Loan Note shall be fully due and payable on
the Working Capital Loan Maturity Date.
(ii) Borrowing Base Maintenance - Working Capital Loan. If there exists a
Working Capital Loan Borrowing Base Shortfall for any reason other than a
Working Capital Loan Ineligibility Event which is subject to the provisions
of paragraph 3.2 and Borrower knows of the occurrence of such condition or
should have known of its occurrence by virtue of reports required to be
delivered to Lender, Borrower, without notice or demand, will immediately
(a) make to Lender a principal payment in an amount equal to the Working
Capital Loan Borrowing Base Shortfall plus accrued and unpaid interest on
such principal payment, (b) deliver to Lender one or more Eligible
Instruments having an aggregate Working Capital Loan Borrowing Base not
less than the Working Capital Loan Borrowing Base Shortfall, or (c) perform
a combination of (a) and (b). Simultaneously with the delivery of Eligible
Instruments to correct a Working Capital Loan Borrowing Base Shortfall,
Borrower will deliver to Lender or cause Receivables Trustee to deliver to
Lender all of the items (except for a "Request for Working Capital Loan
Advance and Certification") required to be delivered by Borrower to Lender
pursuant to paragraph 4.2, together with a "Borrower's Certificate" in form
and substance substantially identical to Exhibit C.
2.8 Prepayment.
(a) (i) Construction Loan. Without the prior written consent of Lender,
Borrower shall not be entitled to prepay the Construction Loan except in
accordance with the terms of this Agreement. The Construction Loan may be
prepaid in whole or in part by the Borrower on any Installment Date
thereof, upon thirty (30) days' prior written notice to Lender, so long as
such prepayment is accompanied by the simultaneous payment of the
applicable Construction Loan Prepayment Premium and further provided that
if the Construction Loan is prepaid in whole, such prepayment is
accompanied by a simultaneous prepayment in full of the Working Capital
Loan together with the applicable Working Capital Loan Prepayment Premium.
(ii) Receivables Loan. Without the prior written consent of Lender,
Borrower shall not be entitled to prepay the Receivables Loan except in
accordance with the terms of this Agreement. Commencing on the Receivables
Loan Opening Prepayment Date, Borrower shall have the option to prepay the
Receivables Loan in whole, but not in part, on any Installment Date
thereof, upon thirty (30) days' prior written notice to Lender, accompanied
by the simultaneous payment of the applicable Receivables Loan Prepayment
Premium.
(iii) Working Capital Loan. Without the prior written consent of Lender,
Borrower shall not be entitled to prepay the Working Capital Loan except in
accordance with the terms of this Agreement. The Working Capital Loan may
be prepaid in whole or in part by Borrower on any Installment Date thereof,
upon thirty (30) days' prior written notice, so long as such prepayment is
accompanied by the applicable Working Capital Loan Prepayment Premium and
further provided that, if the Working Capital Loan is prepaid in whole,
such prepayment is accompanied by a simultaneous prepayment in full of the
Construction Loan, together with the applicable Construction Loan
Prepayment Premium.
(b) Exceptions to Prepayment Prohibitions. Notwithstanding anything in
paragraph 2.8(a) to the contrary, the following shall not be prepayments
prohibited pursuant to paragraph 2.8(a) or require the payment of the
Construction Loan Prepayment Premium, the Receivables Loan Prepayment Premium or
the Working Capital Loan Prepayment Premium: (i) principal payments scheduled
under the Receivables Loan Note, including, without limitation, those payments
required pursuant to
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paragraphs 2.7 and 3.2 unless due to an intentional misrepresentation or breach
of warranty by Borrower concerning the Receivables Collateral qualifying as
Eligible Instruments; (ii) prepayments of the Receivables Loan resulting from
prepayments of the Receivables Collateral by Purchasers which have not been
solicited by Borrower in breach of the terms and conditions of paragraph 6.2(e),
(iii) prepayments of the Working Capital Loan through the application of Working
Capital Loan Mandatory Payments, (iv) principal payments due under the Working
Capital Loan Note required pursuant to paragraphs 2.7 and 3.2 unless due to an
intentional misrepresentation or breach of warranty by Borrower concerning the
Working Capital Loan Collateral qualifying as a Working Capital Loan Eligible
Instrument; (v) prepayment of the Construction Loan through the application of
Construction Loan Release Payments, or (vi) prepayments required pursuant to
paragraph 2.1(d).
(c) Prepayment Premium Payable for Involuntary Prepayments. Except as set
forth in paragraph 2.8(b), (i) the Construction Loan Prepayment Premium shall be
payable regardless of whether the prepayment of the Construction Loan is
voluntary or is required because repayment of the Construction Loan has been
accelerated pursuant to any of Lender's rights under the Loan Documents
(including, without limitation, any right to accelerate following casualty or
condemnation or when an Event of Default exists and continues), (ii) the
Receivables Loan Prepayment Premium shall be payable regardless of whether the
prepayment of the Receivables Loan is voluntary or is required because repayment
of the Receivables Loan has been accelerated pursuant to any of Lender's rights
under the Loan Documents (including, without limitation, any right to accelerate
following casualty or condemnation or when an Event of Default exists and
continues), and (iii) the Working Capital Loan Prepayment Premium shall be
payable regardless of whether the prepayment of the Working Capital Loan is
voluntary or is required because repayment of the Working Capital Loan has been
accelerated pursuant to any of Lender's rights under the Loan Documents
(including, without limitation, any right to accelerate following casualty or
condemnation or when an Event of Default exists and continues).
2.9 Construction Loan Fee Receivables Loan Fee; Working Capital Loan Fee;
Custodial Fee.
(a) Loan Fee. Borrower will pay to Lender the Construction Loan Fee, the
Receivables Loan Fee and the Working Capital Loan Fee in accordance with the
requirements set forth in the Schedule. The Construction Loan Fee, the
Receivables Loan Fee and the Working Capital Loan Fee have been earned and shall
be non-refundable. A deposit in the amount of Fifty Thousand Dollars ($50,000)
has been received by Lender, is non-refundable and shall be applied against the
Receivables Loan Fee.
(b) Custodial Fee. In addition to all other fees required to be paid in
connection with the Receivables Loan, Borrower shall pay to Lender the fee
("Custodial Fee") identified in the Schedule as the Custodial Fee per each
Instrument which is delivered to Lender in connection with the Receivables Loan
and is in the physical custody of Lender. The Custodial Fee for an Instrument
shall be paid by Borrower to Lender at the time the Instrument is assigned to
Lender. After the Custodial Fee is paid for an Instrument, no fee shall be
payable to Lender for any Instrument which is delivered to Lender pursuant to
paragraph 3.2 in replacement of an Instrument for which Borrower has paid the
Custodial Fee. Once a Custodial Fee has been paid to Lender, Borrower shall not
be entitled to any reimbursement of any portions thereof.
2.10 Application of Proceeds of Collateral and Payments.
(a) Construction Loan. Notwithstanding anything in the Loan Documents to
the contrary, the amount of all payments or amounts received by Lender with
respect to the Construction Loan shall be applied to the extent applicable under
the Loan Documents: (i) first, to any past due payments of interest on the
Construction Loan and to accrued interest on the Construction Loan through the
date of such payment, including any default interest; (ii) then, to any late
fees, overdue risk assessment, examination fees and expenses, collection fees
and expenses and any other fees and expenses due to Lender under the Loan
Documents in connection with the Construction Loan; and (iii) last, the
remaining balance, if any, to the unpaid principal balance of the Construction
Loan; provided, however, while an Event of Default or Incipient Default
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exists, each payment received with respect to the Construction Loan shall be
applied to such amounts owed to Lender by Borrower as Lender in its discretion
may determine. In calculating interest and applying payments as set forth above:
(x) interest on the outstanding unpaid principal balance of the Construction
Loan shall be calculated and collected through the date payment is actually
received by Lender; (y) interest on the outstanding unpaid principal balance of
the Construction Loan shall be charged during any grace period permitted under
the Loan Documents; and (z) to the extent that Borrower makes a payment or
Lender receives any payment or proceeds of the Collateral for Borrower's benefit
that is applied as a payment under the Construction Loan that is subsequently
invalidated, set aside or required to be repaid to any other person or entity,
then, to such extent, the Obligations in connection with the Construction Loan
intended to be satisfied shall be revived and continue as if such payment or
proceeds had not been received by Lender and Lender may adjust the Construction
Loan balance as Lender, in its discretion, deems appropriate under the
circumstances.
(b) Receivable Loan. Notwithstanding anything in the Loan Documents to the
contrary, the amount of all payments or amounts received by Lender with respect
to the Receivables Loan shall be applied to the extent applicable under the Loan
Documents: (i) first, to any past due payments of interest on the Receivables
Loan and to accrued interest on the Receivables Loan through the date of such
payment, including any default interest; (ii) then, to any late fees, overdue
risk assessment, examination fees and expenses, collection fees and expenses and
any other fees and expenses due to Lender under the Loan Documents in connection
with the Receivables Loan; and (iii) last, the remaining balance, if any, to the
outstanding unpaid principal balance of the Receivables Loan; provided, however,
while an Event of Default or Incipient Default exists, each payment received
with respect to the Receivables Loan shall be applied to such amounts owed to
Lender by Borrower as Lender in its discretion may determine. In calculating
interest and applying payments as set forth above: (x) interest on the
outstanding unpaid principal balance of the Receivables Loan shall be calculated
and collected through the date payment is actually received by Lender; (y)
interest on the outstanding unpaid principal balance of the Receivables Loan
shall be charged during any grace period permitted under the Loan Documents; and
(z) to the extent that Borrower makes a payment or Lender receives any payment
or proceeds of the Collateral for Borrower's benefit that is applied as a
payment under the Receivables Loan that is subsequently invalidated, set aside
or required to be repaid to any other person or entity, then, to such extent,
the Obligations in connection with the Receivables Loan intended to be satisfied
shall be revived and continue as if such payment or proceeds had not been
received by Lender and Lender may adjust the Receivables Loan balance as Lender,
in its discretion, deems appropriate under the circumstances.
(c) Working Capital. Notwithstanding anything in the Loan Documents to the
contrary, the amount of all payments or amounts received by Lender with respect
to the Working Capital Loan shall be applied to the extent applicable under the
Loan Documents: (i) first, to any past due amounts of interest on the Working
Capital Loan and to accrued interest on the Working Capital Loan through the
date of such payment, including any default interest; (ii) then, to any late
fees, overdue risk assessment, examination fees and expenses, collection fees
and expenses and any other fees and expenses due to Lender under the Loan
Documents in connection with the Working Capital Loan; and (iii) last, the
remaining balance, if any, to the outstanding unpaid principal balance of the
Working Capital Loan; provided, however, while an Event of Default or Incipient
Default exists, each payment received with respect to the Working Capital Loan
shall be applied to such amounts owed to Lender by Borrower as Lender in its
discretion may determine. In calculating interest and applying payments as set
forth above: (x) interest on the outstanding unpaid principal balance of the
Working Capital Loan shall be calculated and collected through the date payment
is actually received by Lender; (y) interest on the outstanding unpaid principal
balance of the Working Capital Loan shall be charged during any grace period
permitted under the Loan Documents; and (z) to the extent that Borrower makes a
payment or Lender receives
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any payments or proceeds of the Collateral for Borrower's benefit that is
applied as a payment under the Working Capital Loan that is subsequently
invalidated, set aside or required to be repaid to any other person or entity,
then, to such extent, the Obligations in connection with the Working Capital
Loan intended to be satisfied shall be revived and continue as if such payment
or proceeds had not been received by Lender and Lender may adjust the Working
Capital Loan balance as Lender, in its discretion, deems appropriate under the
circumstances.
(d) Other Rights. The provisions of this paragraph 2.10 are also subject to
the parties' rights and obligations under the Loan Documents as to the
application of proceeds of the Collateral following an Event of Default.
2.11 Borrower's Unconditional Obligation to Make Payments. Whether or not the
proceeds from the Collateral shall be sufficient for that purpose, Borrower will
make when due all payments required to be made pursuant to any of the Loan
Documents, Borrower's obligation to make such payments being absolute and
unconditional.
3. SECURITY
3.1 Grant of Security Interest. To secure the Performance of all of the
Obligations, Borrower hereby grants to Lender a security interest in and assigns
to Lender the Collateral. Such security interest shall be absolute, continuing,
perfected, direct, first, exclusive and applicable to all existing and future
Advances and to all of the Obligations. Borrower will unconditionally assign,
endorse and deliver to Lender, with full recourse, all Instruments, Purchase
Contracts and Reservation Agreements which are part of the Collateral. Borrower
further warrants and guarantees the enforceability of the Receivables Collateral
and the Working Capital Loan Collateral. Lender is hereby appointed Borrower's
attorney-in-fact, which appointment is coupled with an interest, to take any and
all actions in Borrower's name and/or on Borrower's behalf deemed necessary or
appropriate by Lender with respect to the collection and remittance of payments
(including the endorsement of payment items) received on account of the
Collateral; provided, however, that Lender shall not take any action which is
described in paragraph 7.2(e) unless an Event of Default exists. Lender may
notify persons bound thereby of the existence of Lender's interest as assignee
in the Collateral and request from any person bound by the Collateral any
information relating to such person.
3.2 Ineligible Instruments.
(a) If an Instrument which is part of the Receivables Collateral ceases to
be an Eligible Instrument or is determined not to be an Eligible Instrument
("Receivables Loan Ineligibility Event"), then within thirty (30) days
thereafter Borrower will (i) make to Lender a principal payment in an amount
equal to the Receivables Loan Borrowing Base of the ineligible Instrument, plus
accrued and unpaid interest on such payment, (ii) replace such ineligible
Instruments with one or more Eligible Instruments having an aggregate
Receivables Loan Borrowing Base of not less than the aggregate Receivables Loan
Borrowing Base of the ineligible Instrument or (iii) perform a combination of
(i) and (ii). Simultaneously with the delivery of the replacement Eligible
Instrument to Lender for an ineligible Instrument, Borrower will deliver to
Lender all of the items (except for a "Request for Receivables Loan Advance and
Certification") required to be delivered by Borrower to Lender pursuant to
paragraph 4.2 together with a "Borrower's Certificate" in form and substance
substantially identical to Exhibit C. Lender will reassign and/or endorse over
to Teton, without recourse or warranty of any kind, the ineligible Instrument
if: (a) no Event of Default or Incipient Default exists; (b) Borrower has made
any principal payment and Performed any replacement obligations as required
above in connection with any Receivables Loan Ineligibility Event caused by such
ineligible Instrument; and (c) Borrower has requested Lender in writing to
release the ineligible Instrument. Borrower will prepare the reassignment
document which shall be in form and substance substantially identical to Exhibit
C-1 and will deliver it to Lender for execution, and Lender will send Borrower
the re-assignment document and send to Teton, the Instrument being reassigned
within thirty (30) days after satisfaction of the conditions precedent specified
in the foregoing sentence.
(b) If a Purchase Contract or Reservation Agreement which is part of the
Working Capital Loan Collateral ceases to be a Working Capital Loan Eligible
Instrument or is determined not to be a Working Capital Loan Eligible Instrument
("Working Capital Loan Eligibility Event"), then, within thirty (30) days
thereafter Borrower will (i) make to Lender a principal payment in an amount
equal to the
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Working Capital Loan Borrowing Base of the ineligible instrument, plus accrued
and unpaid interest on such payment, (ii) replace such ineligible Purchase
Contract and Reservation Agreement with one or more Working Capital Loan
Eligible Instruments having an aggregate Working Capital Loan Borrowing Base not
less than the Working Capital Loan Borrowing Base of the ineligible instrument
or (iii) perform a combination of (i) and (ii). Simultaneously with the delivery
of the replacement Working Capital Loan Eligible Instrument to Lender for an
ineligible Purchase Contract and Reservation Agreement, Borrower will deliver to
Lender all of the items (except for a "Request for Working Capital Loan Advance
and Certification") required to be delivered by Borrower to Lender pursuant to
paragraph (4.2), together with a "Borrower's Certificate" in form and substance
substantially identical to Exhibit C. Lender will reassign and/or endorse over
to Teton, without recourse or warranty of any kind, the ineligible Purchase
Contract and Reservation Agreement if: (a) no Event of Default or Incipient
Default exists; (b) Borrower has made any principal payment and Performed any
replacement obligations as required above in connection with any Working Capital
Loan Ineligibility Event caused by such ineligible instrument; and (c) Borrower
has requested Lender in writing to release the ineligible Purchase Contract and
Reservation Agreement. Borrower will prepare the reassignment document which
shall be in form and substance substantially identical to Exhibit C-1 and will
deliver it to Lender for execution, and Lender will send Borrower the
re-assignment document within thirty (30) days after satisfaction of the
conditions precedent specified in the foregoing sentence.
3.3 Lockbox Collections and Servicing. Lockbox Agent shall be instructed and
required to collect payments on the Instruments constituting part of the
Receivables Collateral and remit collected payments to Lender on the last day
(or if such day is not a Business Day, on the preceding Business Day) of each
and every month after the date of the first Advance of the Receivables Loan,
according to the terms of the Lockbox Agreement. Payments shall not be deemed
received by Lender until Lender actually receives such payments from Lockbox
Agent. Pursuant to the Servicing Agreement, Servicing Agent shall be instructed
and required to furnish to Lender at Borrower's sole cost and expense, no later
than the tenth (10th) day of each month commencing with the first full calendar
month following the date of this Agreement, a report, in a format satisfactory
to Lender, which: (a) shows as of the end of the prior month with respect to
each Instrument which constitutes part of the Receivables Collateral (i) all
payments received, allocated between principal, interest, late charges and
taxes, (ii) the opening and closing balances, (iii) average consumer interest
rates; and (iv) extensions, refinances, prepayments and other similar
adjustments; and (b) indicates delinquencies of thirty (30), sixty (60), ninety
(90) days and in excess of ninety (90) days. Borrower will pay, without notice
or demand, any amount which was due and payable by Borrower on the last Business
Day of the preceding calendar month covered by such reports within five (5)
Business Days following Borrower's Knowledge of such amounts. If such reports
are not timely received, Lender may estimate the amount which was due and
payable. Borrower will pay upon demand the amount determined by Lender in good
faith to be due and payable. If payment is made on the basis of Lender's
estimate and thereafter reports required by this paragraph are received by
Lender, the estimated payment amount shall be adjusted by an additional payment
or a refund to the correct amount, as the reports may indicate; such additional
amount to be paid by Borrower upon demand and such refund to be made by Lender
within five (5) Business Days after the receipt by Lender of the aforementioned
reports, in accordance with the provisions of Section hereof. At the end of each
calendar quarter, Borrower will deliver or cause the Servicing Agent to deliver
to Lender a current list of the names, addresses and phone numbers of the
obligors on each of the Instruments constituting part of the Receivables
Collateral. Borrower will also deliver or cause Servicing Agent to deliver to
Lender, promptly after receipt of a written request for them, such other reports
with respect to Instruments constituting part of the Receivables Collateral as
Lender may from time to time reasonably require.
3.4 Replacement of Agents. If a default on the part of an Agent exists and
continues under the agreement to which it is a party or an Event of Default
exists and continues, Lender, subject to any additional restriction thereon
contained in the Lockbox Agreement or the Servicing Agreement, as applicable,
may at any time and from time to time, substitute a successor or successors to
any Agent acting under the Servicing Agreement or Lockbox Agreement.
3.5 Maintenance of Security. Borrower will deliver, or cause to be delivered, to
Lender and will maintain, or cause to be maintained, in full force and effect
throughout the Term (except as otherwise expressly provided in such Loan
Document), as security for the
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Performance of the Obligations, the Security Documents and all other security
required to be given to Lender pursuant to the terms of this Agreement.
4. CONDITIONS PRECEDENT TO ADVANCES; MINIMUM AMOUNT AND MAXIMUM FREQUENCY OF
ADVANCES; METHOD OF DISBURSEMENT
4.1 Delivery of Loan Documents and Due Diligence Items Prior to Initial Advance.
Lender's obligation to make the initial Advance of the Loan shall be subject to
and conditioned upon the terms and conditions set forth in the following
subparagraphs and elsewhere in this Agreement:
(a) Loan Documents. Borrower shall have delivered to Lender or caused to be
delivered to Lender the following duly executed, delivered (where appropriate)
and in form and substance satisfactory to Lender, not later than the Required
Closing Date:
(i) the Loan Documents;
(ii) UCC financing statements for filing and/or recording, as appropriate,
where necessary to perfect the security interests in the Collateral;
(iii) the Title Policy;
(iv) a favorable opinion or opinions from independent counsel for Borrower,
which counsel shall be satisfactory to Lender and which opinion shall cover
such matters as Lender may require, including, without limitation, the
Minimum Opinion Matters pertaining to Borrower and the Time-Share Project;
(v) the Third Party Consents;
(vi) such other documents as Lender may reasonably require to effect the
intent and purposes of this Agreement.
(b) Organizational, Time-Share Project and Other Due Diligence Documents.
Borrower shall have delivered to Lender prior to the earlier of (a) the date of
the initial Advance of the Loan or (b) the Required Closing Date:
(i) the Articles of Organization of Borrower and, if applicable, their
respective managers, members and partners, to the extent any such entity is
not a natural person;
(ii) the Resolutions of Borrower and, if applicable, of their respective
managers, members and partners, to the extent any such entity is not a
natural person, authorizing the execution and delivery of the Loan
Documents, the transactions contemplated thereby and such other matters as
Lender may require;
(iii) [Intentionally Omitted];
(iv) a Phase I environmental assessment of the Time-Share Project;
(v) evidence that all taxes and assessments on the Time-Share Project due
and payable as of the date of the initial Advance of the Loan have been
paid;
(vi) a 1997 ALTA/ACSM survey map of the Time-Share Project prepared by a
licensed land surveyor acceptable to Lender, certified to Lender in writing
and showing the Time-Share Project, evidence of access to the Time-Share
Project, all easements necessary for the operation and use of the
Time-Share Project, and such other details as Lender may reasonably
require; and/or at Lender's option, a condominium map if any part of the
Time Share Project has been dedicated to a condominium regime;
(vii) all permits, licenses, approvals and certificates for the occupancy,
use and operation of the Time-Share Project for time-share and other
intended uses and for the sale of Time-Share Interests, but excluding the
Minimum Required Time-Share Approvals and Certificates of Completion or
occupancy for the Time-Share Project;
(viii) evidence that the Time-Share Project is zoned for time-share and
other intended uses and that all approvals required for such uses under any
covenants, conditions and restrictions, including any necessary
architectural committee approvals, have been obtained. In addition,
evidence satisfactory to Lender that the present use of the Time-Share
Project will not violate any existing bylaws, restrictions, covenants or
regulations affecting the Time-Share Project;
(ix) the Insurance Policies;
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(x) evidence that the Time-Share Project is not located within a flood
prone area or, if within a flood zone, evidence that flood insurance has
been obtained;
(xi) evidence of the current and continued availability of utilities
necessary to serve the Time-Share Project for time-share and other intended
uses or evidence that upon the Completion of the Work the same will be
available;
(xii) evidence of access to and parking for the Time-Share Project adequate
for time-share and hotel uses;
(xiii) a copy of all marketing contracts, management contracts, service
contracts, operating agreements, equipment leases, space leases and other
agreements pertaining to the Time-Share Project and which are necessary for
the sale, operation and intended time-share use of the Time-Share Project
and are not otherwise required pursuant to another item in this paragraph;
(xiv) as a condition precedent to the first Advance of the Receivables
Loan, evidence that each owner of a Time-Share Interest will have available
to it the quiet and peaceful enjoyment of the Time-Share Interest
(including promised amenities and necessary easements) owned by it which
cannot be disturbed so long as such owner is not in default of its
obligations to pay the purchase price of its Time-Share Interest, to pay
assessments to Teton or to the Time-Share Association, and to comply with
reasonable rules and regulations pertaining to the use of the Time-Share
Interest ("Quiet Enjoyment Rights");
(xv) satisfactory evidence that upon the initial Advance, Borrower shall
have good and marketable title to the Collateral. In addition, satisfactory
evidence that the security interests to be granted to Lender have been duly
perfected as first and prior charges and security interests and that there
are no other legal charges or security interests filed against the
Collateral except for Permitted Encumbrances; and
(xvi) such other items as Lender requests which are reasonably necessary to
evaluate the request for the Advance of the Loan and the satisfaction of
the conditions precedent to the Advance.
(c) Minimum Price Schedule. Lender shall have received from Borrower a
pricing schedule for the Time-Share Interests, which schedule shall be
acceptable to Lender, which demonstrates an individual retail value of each
Time-Share Interest satisfactory to Lender and a total projected retail value of
the Time-Share Interests of not less than Sixty One Million Five Hundred
Thousand Dollars ($61,500,000). The minimum price schedule is attached hereto as
Exhibit M.
(d) Transfer Fees. Lender shall have received in form and substance
satisfactory to Lender, evidence of payment of transfer fees and taxes assessed
by applicable governmental authorities in connection with the transactions
contemplated herein.
(e) Financials. Borrower shall deliver to Lender proforma consolidated
unaudited financial statements prepared on the assumption that the full amount
of the Construction Loan, Receivables Loan and the Working Capital Loan have
been advanced to the Borrower and reflecting that the Borrower has a positive
net worth and are solvent, together with current financial statements for the
Borrower (with respect to the financial reporting period ending no earlier than
sixty (60) days prior to the Required Closing Date) in the form required by
paragraph 6.1(d)(i) together with a compliance certificate in the form required
by paragraph 6.1(d)(i). Lender shall have received the proforma operating budget
for the Time-Share Association. Lender shall have received audited financial
statements for Raintree for its fiscal year ending 1998 which shall reflect no
material adverse change from the draft fiscal year 1998 financial statements
previously received by Lender.
(f) Regulatory Scheme; Alternate Uses. Lender shall be satisfied with the
regulatory scheme having jurisdiction over the marketing and sale of Time-Share
Interests in Wyoming including, without limitation, rescission periods, the
necessity for public reports, the use by Borrower of purchaser deposits and
requirement that purchaser deposits be held within escrow accounts. In addition
Lender must be satisfied as to the financial viability of any planned uses of
the Time-Share Project which are alternative to the sale of
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fractional interests therein (e.g. hotel use, full unit condominium sale).
(g) Credit Reports; Search Reports; Site Inspections. Lender shall have
received, in form and substance satisfactory to Lender, the results of UCC
searches with respect to Borrower and (if existing) the Time-Share Association
and with respect to Borrower, lien, litigation, judgment and bankruptcy searches
for Borrower, and (if existing) the Time-Share Association conducted in such
jurisdictions as Lender deems appropriate and having a currency meeting Lender's
requirements.
(h) Organizational Structure. Lender shall be reasonably satisfied with the
organizational structure of Borrower.
(i) Broker. If the services of a broker have been utilized by Borrower to
arrange the Construction Loan, the Receivables Loan or the Working Capital Loan,
evidence that any fee due such broker or brokers has been paid or shall be paid.
In any event, such fees are to be borne solely by Borrower.
(j) Existing Debt. There shall exist no default, events of default or
incipient defaults under the Redeemable Senior Notes.
(k) Appraisal. Lender has received satisfactory evidence that the Real
Property, on the date of the first Advance, has an "as is" fair market value of
at least Four Million Dollars ($4,000,000).
(l) Minimum Equity. Borrower has demonstrated to the satisfaction of Lender
that Teton has invested at least One Million Dollars ($1,000,000) in cash in the
development of the Time-Share Project, which cash shall have been expended in
the manner set forth in the Budget approved by Lender.
(m) Title Policy. Lender shall have received the Title Policy or an
irrevocable commitment from the Title Insurer to issue the same, which
commitment shall include binding commitment from the Title Insurer to insure
Lender against any liens which may arise between the first Advance of the Loan
and the recordation of the Mortgage.
(n) Marketing Agreements. Lender shall have received and approved all
marketing agreements pertinent to the Time-Share Project, if any (which, if such
exist, shall be collaterally assigned to Lender pursuant to the Time-Share
Marketing Agreement Assignment) and which agreements shall be terminable at
Lender's option upon an Event of Default.
(o) Matters Regarding Golf and Ski Benefits. Lender is satisfied with the
terms and conditions of the agreements that entitle Purchasers to golf, ski and
other recreational benefits; the golf, ski and other recreational benefits shall
be owned by Teton, but shall be transferable to the Time-Share Association
pursuant to paragraph 6.1(p); with each payment made by Teton to the person from
whom Teton is purchasing golf, ski and other recreational benefits, Teton will
have purchased a determined number of such benefits; and Lender is satisfied
with the manner in which the purchase price for golf, ski and other recreational
benefits is paid by Teton (with Lender having the right to withhold from the
proceeds of the Receivables Loan the amount of such purchase price and remit the
same directly to the seller of such benefits).
(p) Minimum Sales. Borrower is in compliance with the Minimum Monthly Sales
Covenant contained in Section S.4(b) of the Schedule (assuming for purposes of
this condition that such covenant is tested monthly) for the period ending as of
the last day of the month previous to the first Advance.
4.2 Additional Conditions Precedent.
(a) Construction Loan. For each Advance of the Construction Loan, Lender's
obligation to make such Advance shall be subject to the terms and provisions of
the Construction Covenants.
(b) Receivables Advances. For each Advance of the Receivables Loan,
Lender's obligation to make such Advance shall be subject to the terms and
conditions set forth in Exhibit E, including delivery of the items called for
therein, at least five (5) Business Days prior to the date of an Advance of the
Receivables Loan.
(c) Working Capital Advances. For each Advance of the Working Capital Loan,
Lender's obligation to make such Advance shall be subject to the terms and
conditions set forth in Exhibit D, including delivery of the items called for
therein, at least five (5) Business Days prior
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to the date of an Advance of the Working Capital Loan.
4.3 General Conditions Precedent to All Advances. Lender's obligation to fund
any Advance is subject to and conditioned upon the additional terms and
conditions set forth in the following subparagraphs being satisfied at the time
of such Advance:
(a) No material adverse change shall have occurred in the Time-Share
Project, the Collateral, the business or financial condition of Borrower (since
the date of the latest financial and operating statements given to Lender by or
on behalf of Borrower), or the ability of Borrower to Perform the Obligations.
(b) There shall have been no material, adverse change in the warranties and
representations made in the Loan Documents by Borrower.
(c) Neither an Event of Default nor Incipient Default shall have occurred
and be continuing.
(d) The interest rate applicable to the Advance (before giving effect to
any savings clause) will not exceed the maximum rate permitted by the Applicable
Usury Law.
(e) Subject to the conditions for payment of such loan fees set forth at
S.3 of the Schedule, Borrower shall have paid to Lender the Construction Loan
Fee, the Receivables Loan Fee, the Working Capital Loan Fee and all other fees
which are required to be paid at the time of the Advance.
4.4 Receivables Loan Conditions. The parties acknowledge that those conditions
precedent to the making of the first Advance of the Receivables Loan (including,
without limitation, the execution of a satisfactory Lockbox Agreement and
Servicing Agreement) have not been satisfied as of the Required Closing Date.
Borrower acknowledges that Lender shall have no obligation to make an Advance of
the Receivables Loan until such time as all such conditions have been satisfied
to the satisfaction of Lender.
4.5 Conditions Satisfied at Borrower's Expense. The conditions to Advances shall
be satisfied by Borrower at its expense.
4.6 Minimum Amount and Maximum Frequency of Advances. Advances of the Working
Capital Loan and the Receivables Loan shall be made in amounts not less than the
amounts identified in the Schedule as the Minimum Advance Amount. Such Advances
shall be made no more frequently in any calendar month than the frequency
identified in the Schedule as the Maximum Advance Frequency. The amount and
frequency of Advances of the Construction Loan shall be as set forth in the
Construction Covenants.
4.7 Disbursement of Advances. Advances may be payable to Borrower, or, if
requested by Borrower and approved in writing by Lender, to others, either
severally or jointly with Borrower, for the credit or benefit of Borrower.
Advances shall be disbursed in Dollars by wire transfer or, at Borrower's option
exercised by written request to Lender, by check or drafts. Borrower will pay
Lender's reasonable charge in connection with any wire transfer, and Lender's
current charge is identified in the Schedule as the Wire Transfer Fee. Lender
may, at its option, withhold from any Advance any sum (including costs and
expenses) then due to it under the terms of the Loan Documents or which Borrower
would be obligated to reimburse Lender pursuant to the Loan Documents if first
paid directly by Lender. In addition, Work-Related Advances shall be made
pursuant to the Construction Covenants.
4.8 No Waiver. Although Lender shall have no obligation to make an Advance
unless and until all of the conditions precedent to the Advance have been
satisfied, Lender may, at its discretion, make Advances prior to that time
without waiving or releasing any of the Obligations.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender that:
5.1 Good Standing.
5.1.1 Teton is a duly organized, validly existing and in good standing as a
business organization of the type identified in the Schedule as Borrower's Type
of Business Organization under the laws of the state identified in the Schedule
as Borrower's State of Organization and is authorized to do business in the
state where the Time-Share Project is located and in each state where Borrower
is at any time selling Time-Share Interests or where at any time the location or
nature of its properties or its business makes such qualification necessary.
Teton has full power and authority to carry on its business and to own its
property.
5.1.2 Raintree is duly organized, validly existing and in good standing as
a
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business organization of the type identified in the Schedule as Borrower's Type
of Business Organization under the laws of the state identified in the Schedule
as Borrower's State of Organization and in each state where at any time the
location or nature of its properties or its business makes such qualification
necessary. Raintree has full power and authority to carry on its business and to
own its property.
5.2 Power and Authority; Enforceability. Borrower has full power and authority
to execute and deliver the Loan Documents and to Perform the Obligations. All
action necessary and required by Borrower's Articles of Organization and all
other Legal Requirements for Borrower to obtain the Construction Loan, the
Receivables Loan and the Working Capital Loan, to execute and deliver the Loan
Documents and to Perform the Obligations has been duly and effectively taken.
The Loan Documents are and, to Borrower's Knowledge, shall be, legal, valid,
binding and enforceable against Borrower; and do not violate the Applicable
Usury Law or constitute a default or result in the imposition of a lien under
the terms or provisions of any agreement to which Borrower is a party. Except
for the Third Party Consents delivered pursuant to paragraph 4.1(a) and the
consents evidenced by the Resolutions delivered pursuant to paragraph 4.1(b), no
consent of any governmental agency or any other person not a party to this
Agreement is or will be required as a condition to the execution, delivery or
enforceability of the Loan Documents.
5.3 Borrower's Principal Place of Business. Each Borrower's principal place of
business and chief executive office are located at the addresses identified in
the Schedule as Borrower's Principal Place of Business and Borrower's Chief
Executive Office.
5.4 No Litigation. There is no action, litigation or other proceeding pending
or, to Borrower's Knowledge, threatened before any arbitration tribunal, court,
governmental agency or administrative body against Borrower, which might
materially adversely affect the Time-Share Project, the Collateral, the business
or financial condition of Borrower, or the ability of Borrower to Perform the
Obligations. Borrower will promptly notify Lender if any such action, litigation
or proceeding is commenced or threatened.
5.5 Compliance with Legal Requirements. To Borrower's Knowledge, Borrower has
complied with all Legal Requirements in all material respects, including,
without limitation, with respect to the Time-Share Project, all Legal
Requirements of the state in which the Time-Share Project is located and all
other governmental jurisdictions in which Time-Share Interests will be sold or
offered for sale by Borrower.
5.6 No Misrepresentations. The Loan Documents and all certificates, financial
statements and written materials furnished to Lender by or on behalf of Borrower
in connection with the Construction Loan, the Receivables Loan and the Working
Capital Loan do not contain as of the date furnished to Lender any untrue
statement of a material fact or omit to state a fact which materially adversely
affects or in the future may materially adversely affect the Time-Share Project,
the Collateral, the business or financial condition of Borrower or the ability
of Borrower to Perform the Obligations; provided, however, that with respect to
written materials, certificates and financial statements furnished to Lender on
behalf of Borrower, Borrower makes the foregoing representation only to the best
of Borrower's Knowledge .
5.7 No Default for Third Party Obligations. To the best Knowledge of Borrower,
Borrower is not in default under any other agreement evidencing, guaranteeing or
securing borrowed money or a receivables purchase financing or in violation of
or in default under any material term in any other material agreement,
instrument, order, decree or judgment of any court, arbitration or governmental
authority to which it is a party or by which it is bound.
5.8 Payment of Taxes and Other Impositions. Borrower has filed all tax returns
and has paid all Impositions, if any, required to be filed by it or paid by it,
including real estate taxes and assessments relating to the Time-Share Project
or the Collateral.
5.9 Sales Activities. Prior to the date of this Agreement, Borrower has sold
Time-Share Interests and offered Time-Share Interests for sale only in the
jurisdictions identified in the Schedule as the Jurisdictions Where Sales And/or
Offers to Sell Have Occurred.
5.10 Time-Share Interest Not a Security. Borrower has not sold or offered for
sale any Time-Share Interest as an investment. To the best of Borrower's
Knowledge, neither the sale nor the offering for sale of any Time-Share Interest
will constitute the sale or the offering for sale of a security under any
applicable law.
5.11 Zoning Compliance. Neither time-share use nor other transient use and
occupancy of the Time-Share Project violates or constitutes or will violate or
constitute a non-conforming use or require a variance under any private covenant
or restriction or any zoning, use or similar law, ordinance or regulation
affecting the use or occupancy of the Time-Share Project.
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5.12 Eligible Instruments. Each Instrument which is assigned to Lender pursuant
to this Agreement and against which an Advance of the Receivables Loan is
requested or which is assigned in satisfaction of Borrower's obligations under
paragraph 2.7 or 3.2 shall be an Eligible Instrument at the time of assignment.
Borrower has Performed all of its obligations to Purchasers, and there are no
executory obligations to Purchasers to be Performed by Borrower, except for
non-delinquent and executory obligations disclosed to Purchasers in their
Purchase Contracts. Each Purchase Contract and Reservation Agreement which is
assigned to Lender pursuant to this Agreement and against which an Advance of
the Working Capital Loan is requested or which is assigned in satisfaction
Borrower's obligations under paragraph 2.7 and 3.2 shall be a Working Capital
Loan Eligible Instrument.
5.13 Assessments and Reserves. When a Purchaser closes the purchase of a
Time-Share Interest, such Purchaser automatically becomes a member of the
Time-Share Association; and will thereafter remain a member of the Time-Share
Association and be entitled to vote on the affairs thereof, subject only to
retaining ownership of a Time-Share Interest. From and after the Association and
Assessment Compliance Date: (a) the Time-Share Association will have authority
to levy annual assessments to cover the costs of maintaining and operating the
Time-Share Project; (b) to Borrower's Knowledge, the Time-share Association will
be solvent; (c) to Borrower's Knowledge, levied assessments will be adequate to
cover the current costs of maintaining and operating the Time-Share Project and
to establish and maintain a reasonable reserve for capital improvements to the
extent and as required under the Time-Share Program Consumer Documents; and (c)
to Borrower's Knowledge, there will be no events (other than inflation) which
could give rise to a material increase in such costs, except for additions of
subsequent phases of the Time-Share Project that will not materially increase
assessments.
5.14 Title to and Maintenance of Common Areas and Amenities. Except as otherwise
permitted and disclosed by the Time-Share Program Governing Documents, from and
after the Association and Assessment Compliance Date: (a) the Time-Share
Association or the owners of Time-Share Interests in common will at all times
own the furnishings in the Units and all the common areas in the Time-Share
Project and other amenities which have been promised or represented as being
available to Purchasers, free and clear of liens and security interests except
for the Permitted Encumbrances; (b) no part of the Time-Share Project is or will
be subject to partition by the owners of Time-Share Interests; and (c) all
access roads and utilities and off-site improvements necessary to the use of the
Time-Share Project will have been dedicated to and/or accepted by the
responsible governmental authority or utility company or are owned by an
association of owners of property in a larger planned development or
developments of which the Time-Share Project is a part.
5.15 [Intentionally omitted]
5.16 Year 2000. Borrower has taken all action necessary to assure that there
will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999.
5.17 Survival and Additional Representations and Warranties. The representations
and warranties contained in this Article 5 are in addition to, and not in
derogation of, the representations and warranties contained elsewhere in the
Loan Documents and shall be deemed to be made and reaffirmed prior to the making
of each Advance.
6. BORROWER'S COVENANTS
6.1 Borrower's Affirmative Covenants.
(a) Good Standing. Borrower will maintain its existence as a business
organization of the type described below when it has signed this Agreement, duly
organized and validly existing and in good standing as the type of organization
identified in the Schedule as Borrower's Type of Business Organization under the
laws of the state identified in the Schedule as Borrower's State of Organization
and with respect to Teton, remain in good standing and authorized to do business
in the state where the Time-Share Project is located and in each state where
Teton is then selling Time-Share Interests and with respect to Teton and
Raintree, where at any time the location or nature of their properties or their
business then makes such good standing and qualification necessary. Borrower
will maintain full authority to Perform the Obligations and to carry on its
business and own its property.
(b) Compliance with Legal Requirements. Borrower will comply with and
maintain in full force and effect all Legal Requirements in all material
respects, including, without limitation, all Legal Requirements of the
jurisdiction in which the Time-Share Project is located and all other
governmental jurisdictions
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in which the Time-Share Project is located or in which Time-Share Interests will
be sold or offered for sale by Borrower.
(c) Insurance. Borrower will provide and maintain at Borrower's sole cost
and expense, and deliver to Lender, such insurance as is from time to time
required by the Lender, written by such insurers, in such amounts and forms and
with such limits, deductibles and retentions as are reasonably satisfactory to
Lender, provided, however, that Lender shall not alter, amend or modify said
insurance requirements more than once during any calendar year.
(d) Reports.
(i) Financial Information. During the Term, Borrower shall be required to
furnish or cause to be furnished to Lender the following financial
statements prepared in reasonable detail, and certified as correct by the
principal financial officer of the subject of such statement: (a) within
forty five (45) days after the end of each fiscal quarter, a statement of
profit and loss, a balance sheet, and a cash flow statement as of the end
of such quarter, as to Teton and as to Raintree, showing operating results
for such quarter for the period from the beginning of the relevant fiscal
year through the end of such quarter and for the comparable period of the
preceding fiscal year, if any, together with an accounts payable aging
schedule for Teton as of the end of such quarter, aging Teton's accounts
payable on a thirty (30), sixty (60), ninety (90) and beyond a ninety (90)
day basis, from due date; and (b) within one hundred twenty (120) days
after the end of each fiscal year, a statement of profit and loss, a
balance sheet and a cash flow statement as of the end of such year, as to
each of Teton and Raintree, and as to the Time-Share Association. The
annual financial statements of Teton, Raintree and the Time-Share
Association shall be audited by a certified public accounting firm
acceptable to Lender in accordance with GAAP. Teton's, Raintree's and the
Time-Share Association's annual financial statements shall be accompanied
by a management letter from the accountants detailing any deficiencies in
accounting practices and commenting on any other accounting-related
matters. Together with Teton's and Raintree's quarterly financial
statements, Teton and Raintree will deliver to Lender a certificate signed
by Teton's and Raintree's chief executive officer and chief financial
officer stating that, as of the date of such certificate, there exists no
Event of Default or Incipient Default or, if any such Event of Default or
Incipient Default exists, specifying the nature and period of its existence
and what action Borrower proposes to take with respect thereto. Such
certificate shall state specifically that Borrower is in compliance with
paragraphs 6.1(c), 6.1(e), 6.2(b) and 6.2(c), shall demonstrate the extent
to which Borrower is in compliance with Sections S.4(a), S.4(b), S.4(c),
S.4(d) and S.4(f) of the Schedule. Together with Teton's and Raintree's
quarterly financial statements, Teton and Raintree shall also deliver to
Lender a copy of the bank statement and other reports reflecting the
balance of Cash Equivalents of Teton as of the end of such quarterly
period, required to be maintained pursuant to Section S.4(e) of the
Schedule. Raintree shall supply to Lender copies of any compliance
certificates submitted by Raintree to the holder of the Redeemable Senior
Notes concurrently with the submission of such certificate to such
holder(s) and any notices (other than notices of a routine nature) given by
the holder of the Redeemable Senior Notes to Raintree or given by Raintree
to the holder of the Redeemable Senior Notes, concurrently with such giving
or receipt. For purposes of this paragraph, in the case of a partnership or
limited liability company, "chief executive officer" of an entity shall
mean the general partner, member or manager having primary responsibility
for the operations of such entity; and "chief financial officer" of such an
entity shall mean the general partner, member or manager having primary
responsibility for the finances of such entity.
(ii) Litigation. Borrower will promptly notify Lender if any action,
litigation or other proceeding becomes pending or, to Borrower's Knowledge,
threatened before any arbitration tribunal, court, governmental agency or
administrative body against Borrower, which might materially adversely
affect the Time-Share Project, the Collateral, the business or financial
condition of Borrower, or the ability of Borrower to Perform the
Obligations.
(iii) Sales Reports. On or before the tenth day after the end of each
month, Borrower will cause to be furnished to Lender a sales report showing
the number of tours, the
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number of sales and closings of Time-Share Interests and the aggregate
dollar amount thereof, including average sales price and down payments,
during such month.
(iv) Time-Share Project and Sales Information. Borrower will deliver
current price lists for Time-Share Interests to Lender from to time to time
within ten (10) Business Days after receipt of a written request from
Lender to do so. Borrower will deliver to Lender from time to time, as
available and promptly upon amendment or effective date, sales literature,
registrations/consents to sell, and final subdivision public reports/public
offering statements/prospectuses. Borrower will deliver to Lender any
changes which Borrower proposes or any other person having the power to do
so proposes be made to the Time-Share Program Consumer Documents and/or the
Time-Share Program Governing Documents last delivered to Lender, together
with a description and explanation of the changes; and other items
requested by Lender which relate to the Time-Share Interests.
(v) Right to Inspect. Borrower will at its expense permit Lender and its
representatives at all reasonable times to inspect the Time-Share Project
and to inspect, audit and copy Borrower's books and records, provided,
however, that, so long as no Event of Default or Incipient Default has
occurred and is continuing, Lender shall provide to Borrower ten (10)
Business Days' prior written notice before conducting such inspections and
audits.
(vi) Association Budgets. Borrower will submit to Lender within ten (10)
days after each is available, proposed annual maintenance and operating
budgets of the Time-Share Association, certified to be adequate by the
Time-Share Manager (or if there is not a Time-Share Manager, by an
authorized officer of the Time-Share Association) and a statement of the
annual assessment to be levied upon the owners of Time-Share Interests; and
will use its best efforts to cause to be made available to Lender for
inspection, auditing and copying, upon Lender's request, the books and
records of the Time-Share Association.
(vii) Material Increases to Assessments. If Borrower has Knowledge or has
reason to believe that an event (other than general changes in the economy)
has occurred or could occur which could give rise to a material increase in
assessments to cover the then current costs of operating the Time-Share
Project and to establish and maintain a reasonable reserve for capital
improvements to the Time-Share Project, it will notify Lender of the
occurrence of such event.
(viii) Indenture Limitations. Attached hereto as Exhibit K is a copy of
Section 4.09 of the Indenture setting forth restrictions on the ability of
Raintree and those of its Affiliates constituting "Restricted Subsidiaries"
(as defined in the Indenture) (including Teton) to incur indebtedness.
Concurrently with the delivery to Lender of the quarterly financial
statements for Borrower (or at such more frequent times as Lender shall
request upon reasonable advanced written notice to Borrower), Raintree
shall supply to Lender a certification in the form attached hereto as
Exhibit L reflecting the extent to which Raintree and those of its
Affiliates constituting "Restricted Subsidiaries" (including Teton) are in
compliance with the borrowing limitations set forth in the Indenture.
(ix) Additional Information. Borrower will deliver to Lender the reports
and other information required pursuant to paragraph 3.3, and Borrower will
make available such further information as Lender may from time to time
reasonably request.
(e) Subordination of Indebtedness Owing to Affiliates. Borrower will cause
any and all indebtedness owing by it to its shareholders, directors, officers,
partners, members or managers, as the case may be, or to the relatives or
Affiliates of Borrower or any of the foregoing, and all liens, security
interests and other charges on the assets of Borrower in favor of the foregoing
persons to be fully subordinated in all aspects to the Obligations pursuant to
written agreements satisfactory to Lender; provided, however, that (A) if
neither an Event of Default nor an Incipient Default then exists or will exist
after giving effect to such payment, such subordination shall not extend to (i)
reasonable bonuses, salaries, other compensation and fees at normal and
customary rates for services actually rendered so long as the payment of such
salaries and fees is not prohibited or otherwise limited pursuant to any
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provision set forth in the Schedule and (ii) payments expressly permitted
pursuant to the terms of this Agreement and (B) any such subordination shall be
subject to section 4.08 of the Indenture.
(f) Payment of Taxes. Borrower will file when due all tax returns and will
pay when due all taxes, if any, required to be filed by it or paid by it,
including real estate taxes and assessments relating to the Time-Share Project
or the Collateral. Borrower will provide to Lender not more than thirty (30)
days after the date on which such Impositions were required to be paid pursuant
to the preceding sentence prior to being deemed delinquent, evidence that all
taxes required to be paid pursuant to the preceding sentence on the Units and
Time-Share Project common areas and related amenities have been paid in full.
(g) Payment of Impositions. Borrower will promptly pay upon demand all
Impositions imposed upon Lender by any state of the United States or political
subdivision thereof or the United States by reason of the Loan Documents, the
Collateral and/or any sale, rental, use, delivery or transfer of title to the
Collateral, other than any tax measured by net income payable by Lender to any
State of the United States or political subdivision thereof or to the United
States of America under Section 11 or 1201 of the Internal Revenue Code, as
amended, in consequence of the receipt of payments provided for in the Loan
Documents and other than any general franchise tax or business license taxes
measured by Lender's gross income. If it is unlawful for Borrower to pay such
Impositions, Borrower shall not be required to pay such Impositions; but Lender
may demand payment of such additional amount as is necessary to maintain
Lender's yields on the Receivables Loan, Construction Loan and Working Capital
Loan in either a single payment or at Lender's option, in installment payments,
and Borrower will pay such amount upon demand. If it is unlawful to pay such
additional amount, Borrower shall not be required to pay it; but Lender may
demand immediate payment of the Obligations in full (together with the
applicable Receivables Loan Prepayment Premium, Construction Loan Prepayment
Premium and Working Capital Loan Prepayment), and Borrower will pay the
Obligations in full within sixty (60) days after such demand. If Lender has not
received evidence satisfactory to it from Borrower that such Impositions have
been paid by Borrower within five (5) days after demand was made upon Borrower
to make such payment, Lender may, at its option, pay the same, and Borrower
shall immediately reimburse Lender for such sums so expended, together with
interest thereon at the Default Rate until paid.
(h) Further Assurance. Borrower will execute or cause to be executed all
documents and do or cause to be done all acts reasonably necessary for Lender to
perfect or evidence and to continue the perfection of the liens and security
interest of Lender in the Collateral or otherwise to effect the intent and
purposes of the Loan Documents.
(i) Fulfillment of Obligations to Purchasers. Borrower will fulfill, and
will use its best efforts cause its Affiliates, agents and independent
contractors at all times to fulfill, all their respective material obligations
to Purchasers. Borrower will Perform all of its material obligations under the
Time-Share Program Consumer Documents and the Time-Share Program Governing
Documents.
(j) Material Increases to Assessments. Borrower (i) will use its best
efforts to cause the Time-Share Association to (A) discharge its obligations
under the Time-Share Program Governing Documents and (B) maintain a reasonable
reserve for capital improvements to the Time-Share Project and (ii) so long as
Borrower controls the Time-Share Association will pay to such association not
less often than once every twelve (12) months, the difference between (A) the
cumulative total amount of the maintenance and operating expenses incurred by
the Time-Share Association, together with a reasonable reserve for capital
improvements and the amount of any installment of real property taxes currently
due and payable with respect to the Time-Share Project and related amenities,
through the end of the calendar month preceding the month in which such payment
is made and (B) the cumulative total amount of assessments payable to the
Time-Share Association by owners (other than Borrower) of Time-Share Interests
therein through the end of the calendar month preceding the month in which such
payment is made.
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(k) Maintenance of Time-Share Project and Other Property. Teton will
maintain or cause to be maintained in good condition and repair all common areas
in the Time-Share Project and other on-site amenities which have been promised
or represented as being available to Purchasers and which are not the
responsibility of the Time-Share Association to maintain and repair, to the
extent owned by Borrower or an Affiliate of Borrower, all portions of
improvements in which Units are located and are not part of the Time-Share
Project. Teton will maintain or use its best efforts to cause the Time-Share
Association to maintain a reasonable reserve to assure compliance with the terms
of the foregoing sentence.
(l) Maintenance of Larger Tract. To the extent either the Time-Share
Project is part of a larger common ownership regime or planned development or
parts of buildings in which Units are located are not part of the Time-Share
Project, Teton will pay its commercially reasonable share of common expenses to
be allocated to the Time-Share Project. Borrower will use commercially
reasonable efforts to cause all such property which is not part of the
Time-Share Project to be professionally managed in a first class manner.
(m) Collection of Receivables Collateral. Borrower will undertake the
diligent, timely and commercially reasonable collection of amounts delinquent
under each Instrument which constitutes part of the Receivables Collateral and
under each Purchase Contract and Reservation Agreement which constitute part of
the Working Capital Loan Collateral and will bear the entire expense of such
collection. Lender shall have no obligation to undertake any action to collect
under any Instrument.
(n) Notice of Lender's Interest. Borrower will deliver under its letterhead
notice of Lender's interest in the Receivables Collateral and Working Capital
Loan Collateral to persons bound thereby, if requested, and will cause such
notice to comply with applicable law.
(o) Year 2000. Borrower shall take all action necessary to assure that
there will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999. At Lender's request, Borrower
shall provide to Lender assurance reasonably acceptable to Lender that
Borrower's computer-based systems, embedded microchips and other processing
capabilities are year 2000 compatible.
(p) Transfer to the Time-Share Association. On or before the earlier of (i)
the obtaining of a certificate of occupancy for the Improvements or (ii) June
30, 2000, Borrower shall cause to be transferred to the Time-Share Association,
the golf, ski and other recreation benefits described in paragraph 4.1(o).
(q) Post Closing. Within seven (7) Business Days following the Required
Closing Date, Raintree shall deliver to Lender a favorable opinion of counsel
satisfactory in form and substance to Lender from Raintree's Texas counsel,
opining as to the enforceability of this Agreement and each of the Construction
Loan Note, Receivables Loan Note and Working Capital Loan Note made and executed
by Raintree. In the event modifications are required to be made in this
Agreement or any of the aforementioned notes in order for counsel to render a
favorable opinion to Lender, Borrower agrees to promptly make such modifications
to the satisfaction of Lender and to Raintree's opining counsel.
(r) Escrow. Unless Borrower is required pursuant to the terms of a
particular Reservation Agreement to refund monies to the Purchaser thereunder,
Borrower agrees to cause all monies paid under Working Capital Eligible
Instruments to remain within the Escrow until the closing of the sale which is
the subject matter of the Reservation Agreement. Borrower agrees to give written
notice to Lender within five Business Days after such time as any monies paid
under a Working Capital Eligible Instrument are refunded to the Purchaser
thereunder.
6.2 Borrower's Negative Covenants.
(a) Change in Borrower's Name or Principal Place of Business. Borrower will
not change its name or move its principal place of business or chief executive
office except upon not less than sixty (60) days' prior written notice to
Lender.
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(b) Restrictions on Additional Indebtedness.
(i) Subject to the additional restrictions set forth in paragraph 6.2(c)
below, Teton will not incur any additional indebtedness, including, without
limitation, any liability under any capitalized lease or any liability as a
guarantor or other contingent liability, except for the following
("Permitted Debt"): (ii) short term accounts payable incurred in connection
with the operation of the Time-Share Project in the ordinary course of
business; or (iii) indebtedness resulting from borrowings which were
obtained under financings of time-share receivables in the ordinary course
of Teton's business and Lender has elected, or is deemed to have elected,
not to provide such financing pursuant to the provisions of paragraph
6.2(b)(ii) below and provided that such indebtedness does not violate any
of the provisions of this Agreement. Without limiting the generality of the
foregoing, as a condition to approval of any third party loan or financing
which is not Permitted Debt, Lender may require that Teton deliver to
Lender copies of the financing documents and such other information as
Lender may reasonably request with respect to such third party loan and/or
financing and estoppel certificates, agreements providing notice and cure
rights and subordination agreements executed by the person providing the
financing.
(ii) If, during the Receivables Loan Borrowing Term, Teton wishes to accept
an offer from a third party for financing of time share receivables, Teton
shall give Lender written notice of its intent to do so together with a
copy of the written proposal for the financing from the prospective third
party lender. Lender shall have ten (10) Business Days from receipt of the
notice and any other items reasonably requested by Lender in connection
with such proposed financing to issue a financing proposal. Lender shall
have forty five (45) days following the receipt of the financing proposal
timely accepted by Teton within which to issue a commitment to extend such
financing upon terms substantially equivalent to the terms of the
Receivables Loan as contained in this Agreement; provided, however, Lender
shall have no obligation to issue such commitment. The failure of Lender to
issue a commitment within the foregoing period of time shall be deemed to
be an election by Lender not to extend such financing. If Lender elects not
to extend such financing, Teton shall be free to accept the proposal from
such third party lender and close such transaction. The obtaining by a
particular Purchaser of financing of the acquisition of the Time-Share
Interests purchased by such Purchaser shall not be subject to the
provisions of this paragraph 6.2(b)(ii).
(c) Restrictions on Liens or Transfers. Teton, without the prior written
consent of Lender, will not: (i) sell, convey, lease, pledge, hypothecate,
encumber or otherwise transfer any security for the Performance of the
Obligations other than the sale of Time-Share Interests in the ordinary course
of business provided that any payment due to Lender as a result of such sale is
paid to Lender. In connection with the lease of any commercial space within the
Time-Share Project, in addition to obtaining the consent of Lender as to such
lease, the lease agreement shall be collaterally assigned to Lender pursuant to
an assignment satisfactory to Lender as further security for the payment and
Performance of the Obligations and all proceeds from such lease shall be
remitted to Lender so long as there is an outstanding unpaid principal balance
due under the Construction Loan, for application against such principal balance;
(ii) permit or suffer to exist any liens, security interests or other
encumbrances on the Collateral, except for (A) the Permitted Encumbrances, (B)
the liens and security interests expressly granted to Lender, and (C) liens
against Purchasers and in favor of a Borrower or the Time-Share Association for
payment of assessments or for amounts due under any executed Time-Share Project
Consumer Documents; (iii) sell, convey, lease, transfer or dispose of all or
substantially all of its assets to another entity provided, however, that this
section (iii) shall not be any more restrictive to the Borrower than is
permitted by section 4.10 of the Indenture; or (iv) permit or suffer to exist
any change in the legal or beneficial ownership of Teton or any change in the
power to control it, Without limiting Lender's right to withhold its approval
for other reasons, as a condition to approval of any lien, security interest or
other charge upon any of the Collateral, Lender may require that the third party
execute a subordination agreement satisfactory to Lender and provide
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Quiet Enjoyment Rights to owners of Time-Share Interests.
(d) No Sales Activities Prior to Approval. Borrower will not sell any
Time-Share Interest or offer any Time-Share Interest for sale in any
jurisdiction, unless: (i) Borrower has delivered to Lender true and complete
copies of the Minimum Required Time-Share Approvals required in such
jurisdiction for its proposed conduct and all other evidence required by Lender
that Borrower has complied with all Legal Requirements of such jurisdiction
governing its proposed conduct; and (ii) Borrower has delivered to Lender the
Time-Share Program Consumer Documents and the Time-Share Program Governing
Documents which Borrower will be using in connection with the Time-Share Project
and the sale or offering for sale of Time-Share Interests in such jurisdiction
and such documents have been approved by Lender, which approval shall not be
unreasonably withheld.
(e) No Modification of Receivables Collateral or Payments by Borrower.
Borrower will not cancel or materially modify, or consent to or acquiesce in any
material modification to any Reservation Agreements which constitute Working
Capital Loan Collateral or waive the timely performance of the material
obligations of the Purchaser under such Reservation Agreement. In addition,
Borrower will not cancel or materially modify, or consent to or acquiesce in any
material modification (including, without limitation, any change in the interest
rate or amount, frequency or number of payments) to, or solicit the prepayment
of, any Instrument which constitutes part of the (i) Receivables Collateral
(except for solicitations by the Borrower which result in prepayment of a
particular Instrument in exchange for a discount not exceeding five percent (5%)
of the principal balance of such Instrument); or waive the timely performance of
the material obligations of the Purchaser under any such Instrument or its
security; or release the security for any such Instrument. Borrower will not pay
or advance directly or indirectly for the account of any Purchaser any sum
required to be deposited or owing by the Purchaser either under any Purchase
Contract or Reservation Agreement or under any Instrument which constitutes part
of the Receivables Collateral
(f) No Modification of Time-Share Documents. Borrower will not cancel or
materially modify, or consent to or suffer to exist any cancellation or material
modification of any Time-Share Program Consumer Document or any Time-Share
Program Governing Document without the prior written consent of Lender, such
consent not to be unreasonably withheld or delayed.
(g) Maintenance of Larger Tract. To the extent either the Time-Share
Project is part of a larger common ownership regime or planned development or
parts of buildings in which Units are located are not part of the Time-Share
Project, Borrower will not permit common expenses to be allocated to the
Time-Share Project in an unreasonably disproportionate manner.
(h) OPC Leases. Borrower shall not enter into any "Off-Premises Contact"
leases or other similar off-site agreements with respect to the Time-Share
Project without the prior approval of Lender as to the terms and conditions of
such leases and agreements and unless such leases and agreements are
collaterally assigned to Lender as further security for the payment and
Performance of the Obligations pursuant to a Collateral Assignment of Lessee's
Interest in Lease (the "Assignment of Leases"), in a form and substance
satisfactory to Lender and shall cause such Assignment of Leases to be recorded
in the appropriate real estate records provided that the landlord under such
lease consents to such recordation. Borrower shall use its best efforts to
obtain a consent from the landlord of such lease within thirty days (30)
following the execution of the Assignment of Leases.
(i) Minimum Sales Price. Without the prior written consent of Lender,
Borrower shall not sell the particular Time-Share Interest for an amount less
than the amount set forth in the minimum price schedule delivered to Lender
pursuant to paragraph 4.1(c), a copy of which is attached hereto as Exhibit M.
6.3 Survival of Covenants. The covenants contained in this Article 6 are in
addition to, and not in derogation of, the covenants contained elsewhere in the
Loan Documents and shall be deemed to be made and reaffirmed prior to the making
of each Advance.
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7. DEFAULT
7.1 Events of Default. The occurrence of any of the following events or
conditions shall constitute an Event of Default by Borrower under the Loan
Documents:
(a) failure of Lender to receive from Borrower within five (5) Business
Days of the date when due and payable (i) any amount payable under the
Construction Loan Note, the Receivables Loan Note or the Working Capital Loan
Note or (ii) any other payment due under the Loan Documents, except for the
payments due at the Construction Loan Maturity Date, the Receivables Loan
Maturity Date and the Working Capital Loan Maturity Date, for which no grace
period is allowed;
(b) any representation or warranty which is made by any Borrower and is
contained in the Loan Documents or in any certificate furnished to Lender under
the Loan Documents by or on behalf of any Borrower proves to be, in any material
adverse respect, false or misleading as of the date deemed made;
(c) a default in the Performance of the Obligations set forth in paragraph
3.2, 6.1(c), 6.1(e), 6.2(b), 6.2(c)(i), 6.2(c)(iii) or 6.2(c)(iv) hereof or in
Sections S.4(a), S.4(b), S.4(c), S.4(d), S.4(e) or S.4(f) of the Schedule;
(d) a default in the Performance of the Obligations or a violation of any
term, covenant or provision of the Loan Documents (other than a default or
violation referred to elsewhere in this paragraph 7.1) which continues
unremedied (i) for a period of thirty (30) days after notice of such default or
violation to Borrower in the case of a default under or violation of paragraph
6.2(c)(ii) or any default or violation which can be cured by the payment of
money alone or (ii) for a period of thirty (30) days after notice to Borrower in
the case of any other default or violation; provided, however, that, if such
default or remedy is not able to be cured within said thirty (30) day period,
Borrower must have commenced to cure such default or violation within such
thirty (30) day period and thereafter diligently pursue such cure to completion
and shall in all events effect such cure to completion within sixty (60) days
after such notice.
(e) an "Event of Default," as defined in any of the other Loan Documents;
(f) any default which continues beyond any applicable cure period, by
Raintree under the Redeemable Senior Notes or any default, which default
continues beyond any applicable cure period, by any Borrower under any other
agreement evidencing, guaranteeing or securing borrowed money or a receivables
purchase financing involving an obligation in excess of Fifty Thousand Dollars
($50,000) to make a payment of principal or interest or to repurchase
receivables; or any other material default by Borrower permitting the
acceleration of any of the payment or repurchase obligations of Borrower which,
if accelerated, will be in excess of Fifty Thousand Dollars ($50,000) in the
aggregate;
(g) any final, non-appealable judgment or decree for money damages or for a
fine or penalty against any Borrower which is not paid and discharged or stayed
within thirty (30) days thereafter and, when aggregated with all other
judgment(s) or decree(s) against such Borrower that have remained unpaid and
undischarged or are not stayed for such period, such amount is in excess of
Fifty Thousand Dollars ($50,000).
(h) any party holding a lien on or security interest in any Collateral,
other than a lien created by a Purchaser solely with respect to the Time-Share
Interest(s) owned by it, commences foreclosure or similar sale thereof;
(i) a material adverse change in the Time-Share Project, the Collateral or
the business or financial condition of any Borrower, which change is not
enumerated in this paragraph 7.1, and for which no insurance is available under
any Insurance Policy as the result of which Lender in good faith deems the
prospect of Performance of the Obligations impaired or the Collateral imperiled;
(j) Any Borrower shall (i) generally not be paying its debts as they become
due, (ii) file, or consent by answer or otherwise to the filing against it of, a
petition for relief or reorganization, arrangement or liquidation or any other
petition in bankruptcy or insolvency under the laws of any jurisdiction, (iii)
make an assignment for the benefit of its creditors, (iv) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers for itself or any substantial part of its property, (v) be adjudicated
insolvent, (vi)
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dissolve or commence to wind-up its affairs or (vii) take any action for
purposes of the foregoing; or a petition for relief or reorganization,
arrangement or liquidation or any other petition in bankruptcy or insolvency or
the appointment of a custodian under the laws of any jurisdiction is filed
against Borrower or a custodian is appointed for Borrower, the Collateral or any
material part of Borrower's property and such proceeding is not dismissed and
appointment vacated within ninety (90) days thereafter;
(k) any of the events enumerated in paragraphs 7.1(b), (f), (g), (i) or (j)
occurs with respect to any partner or manager of Borrower, if Borrower is a
partnership or limited liability company;
(l) failure of Lender to receive from any Borrower, within thirty (30) days
following the date such Borrower knows of such event, notice of any event which
renders any representation or warranty by a Borrower in any Loan Documents false
in any material, adverse respect were it made after the occurrence of such
condition;
(m) Upon (i) Borrower's failure to cause Completion to occur on or before
the Required Completion Date for reasons other than (1) failure of Lender to
provide Work-Related Advances, or (2) the occurrence of any Force Majeure Events
not to exceed ninety (90) days in the aggregate, or (ii) at any time prior to
Completion of the Work, (1) Borrower abandons the Work or (2) Borrower delays
construction of the Improvements for any period of time, for any reason
whatsoever not covered by item (1) above which in the reasonable judgment of
Lender will prevent Completion of the Work in the ordinary course of
construction on or before the Required Completion Date; or
(n) if by or under the authority of any governmental authority the
management of any Borrower or its business is curtailed to the point of making
it effectively inoperative by any seizure or intervention or proceedings of any
nature;
7.2 Remedies. At any time after an Event of Default has occurred and while it is
continuing, Lender may but without obligation, in addition to the rights and
powers granted elsewhere in the Loan Documents and not in limitation thereof, do
any one or more of the following:
(a) cease to make further Advances;
(b) declare the Construction Loan Note, together with any applicable
Construction Loan Prepayment Premium and all other sums owing by Borrower to
Lender in connection with the Construction Loan, immediately due and payable
without notice, presentment, demand or protest, which are hereby waived by
Borrower;
(c) declare the Receivables Loan Note, together with any applicable
Receivables Loan Prepayment Premium and all other sums owing by Borrower to
Lender in connection with the Receivables Loan, immediately due and payable
without notice, presentment, demand or protest, which are hereby waived by
Borrower;
(d) declare the Working Capital Loan Note, together with any applicable
Working Capital Loan Prepayment Premium and all other sums owing by Borrower to
Lender in connection with the Working Capital Loan, immediately due and payable
without notice, presentment, demand or protest, which are hereby waived by
Borrower;
(e) with respect to the Collateral, (i) after any applicable delinquency on
a Purchase Contract, institute collection, foreclosure and other enforcement
actions against Purchasers and other persons obligated on the Collateral, (ii)
enter into modification agreements and make extension agreements with respect to
payments and other performances, (iii) release persons liable for performance,
(iv) settle and compromise disputes with respect to payments and performances
claimed due, all without notice to Borrower, without being called to account
therefor by Borrower and without relieving Borrower from Performance of the
Obligations, and (v) receive, collect, open and read all mail of Borrower for
the purpose of obtaining all items pertaining to the Collateral;
(f) proceed to protect and enforce its rights and remedies under the Loan
Documents and to foreclose or otherwise realize upon its security for the
Performance of the Obligations, or to exercise any other rights and remedies
available to it at law, in equity or by statute;
(g) without notice to Borrower, have a receiver appointed for Borrower
and/or its property;
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(h) Exercise any and all remedies of a secured party under the Arizona
Uniform Commercial Code with respect to the Collateral;
(i) Take one (1) or more of the following actions in connection with the
construction of the Improvements: (a) use any funds of Borrower, and any sums
which may remain unadvanced hereunder, to continue and/or cause Completion of
the Work; (b) demand and receive performances due under the Principal
Work-Related Items and the other Contracts, Intangibles, Licenses and Permits;
(c) make such changes to the scope of the Work and to the Principal Work-Related
Items and other Contracts, Intangibles, Licenses and Permits as Lender may deem
necessary or desirable in its sole and absolute judgment; (d) file claims,
institute enforcement actions and otherwise prosecute and defend all actions or
proceedings relating to the Work, the Principal Work-Related Items and the other
Contracts, Intangibles, Licenses and Permits as Lender may deem necessary or
desirable in its sole and absolute judgment; (e) pay, settle or compromise all
existing bills and claims which are or may be legal charges against the
Collateral or any Contract, Intangibles, Licenses and Permits, or may be
necessary or desirable for the continuance or Completion of the Work related
thereto or the clearance of title, all without notice to Borrower; (f) execute
in Teton's name all applications, certificates, notices and other instruments
and give all instructions and communications which may be required or permitted
by the Principal Work-Related Items, other Contracts, Intangibles, Licenses and
Permits, as determined by Lender in its sole and absolute judgment; (g) do any
and every act with respect to the Completion of the Work, the Principal
Work-Related Items and the other Contracts, Intangibles, Licenses and Permits
which Borrower may do on its behalf; (h) employ such contractors,
subcontractors, suppliers, agents, attorneys, architects, accountants,
appraisers, security guards and inspectors as Lender may in its sole and
absolute judgment deem necessary or desirable to accomplish any of the above
purposes; and (i) receive, collect, open and read all mail of Teton for the sole
purpose of obtaining all items pertaining to the Work, the Principal
Work-Related Items and the other Contracts, Intangibles, Licenses and Permits.
In connection with the foregoing, Teton hereby appoints Lender as Teton's true
and lawful attorney-in-fact, with full power of substitution and such power of
attorney shall be deemed to be a power coupled with an interest that cannot be
revoked for any reason prior to the Performance by Teton of any and all
Obligations under the Loan Documents.
7.3 Application of Proceeds During an Event of Default. Notwithstanding anything
in the Loan Documents to the contrary, while an Event of Default exists, any
cash received and retained by Lender in connection with the Collateral may be
applied to payment of the Obligations in the manner provided in paragraph 7.5.
7.4 Uniform Commercial Code Remedies; Sale; Assembly of Collateral.
(a) UCC Remedies; Sale of Collateral. Lender shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code of the State
of Arizona and all other rights and remedies accorded to a Secured Party in
equity or at law. Any notice of sale or other disposition of the Collateral
given not less than ten (10) Business Days prior to such proposed action in
connection with the exercise of Lender's rights and remedies shall constitute
reasonable and fair notice of such action. Lender may postpone or adjourn any
such sale from time to time by announcement at the time and place of sale stated
on the notice of sale or by announcement of any adjourned sale, without being
required to give a further notice of sale. Any such sale may be for cash or,
unless prohibited by applicable law, upon such credit or installment as Lender
may determine. Borrower shall be credited with the net proceeds of such sale
only when such proceeds are actually received by Lender in good current funds.
Despite the consummation of any such sale, Borrower shall remain liable for any
deficiency on the Obligations which remains outstanding following such sale. All
net proceeds recovered pursuant to a sale shall be applied in accordance with
the provisions of paragraph 7.5.
(b) Lender's Right to Execute Conveyances. Lender may, in the name of
Borrower or in its own name, make and execute all conveyances, assignments and
transfers of the Collateral sold in connection with the exercise of Lender's
rights and remedies; and Lender is hereby appointed Borrower's attorney-in-fact
for
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this purpose, which appointment is coupled with an interest.
(c) Obligation to Assemble Collateral. Upon request of Lender when an Event
of Default exists, Borrower shall assemble the Collateral and make it available
to Lender at a time and place designated by Lender, if it is not already in
Lender's possession.
7.5 Application of Proceeds. The proceeds of any sale of all or any part of the
Collateral made in connection with the exercise of Lender's rights and remedies
shall be applied in the following order of priorities; first, to the payment of
all costs and expenses of such sale, including without limitation, reasonable
compensation to Lender and its agents, attorneys' fees, and all other expenses,
liabilities and advances incurred or made by Lender, its agents and attorneys,
in connection with such sale, and any other unreimbursed expenses for which
Lender may be reimbursed pursuant to the Loan Documents; second, to the payment
of all late charges required by the Loan Documents to be paid by Borrower, in
such order and manner as Lender shall in its discretion determine; third, to the
payment of the Obligations, in such order and manner as Lender shall in its
discretion determine, with no amounts applied to payment of principal until all
interest has been paid; fourth, to the other Obligations in such order and
manner as Lender may determine; and last, to the payment to Borrower, its
successors or assigns, or to whosoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
7.6 Lender's Right to Perform. Lender may, at its option, and without any
obligation to do so, pay, perform and discharge any and all obligations agreed
to be paid or Performed in the Loan Documents by Borrower or any surety for the
Performance of the Obligations if (a) such person fails to do so and (b) (i) an
Event of Default exists and at least five (5) Business Days' notice has been
given to such person of Lender's intention to take such action, (ii) the action
taken by Lender involves obtaining insurance which such person has failed to
maintain in accordance with the Loan Documents or to deliver evidence thereof,
or (iii) in the opinion of Lender, such action must be taken because an
emergency exists or to preserve any of the Collateral or its value. For such
purposes Lender may use the proceeds of the Collateral. All amounts expended by
Lender in so doing or in exercising its remedies under the Loan Documents
following an Event of Default shall become part of the Obligations, shall be
immediately due and payable by Borrower to Lender upon demand, and shall bear
interest at the Default Rate from the dates of such expenditures until paid.
7.7 Non-Exclusive Remedies. No remedy in any Loan Document conferred on or
reserved to Lender is intended to be exclusive of any other remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under any Loan Document or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power shall be
construed to be a waiver of or acquiescence to any default or a waiver of any
right or power; and every such right and power may be exercised from time to
time and as often as may be deemed expedient.
7.8 Waiver of Marshalling. Borrower, for itself and for all who may claim
through or under it, hereby expressly waives and releases all right to have the
Collateral, or any part of the Collateral, marshalled on any foreclosure, sale
or other enforcement of Lender's rights and remedies.
7.9 Attorney-in-Fact. For the purpose of exercising its rights and remedies
under paragraphs 7.2(e) and 7.6, Lender may do so in Borrower's name or its name
and is hereby appointed as Borrower's attorney-in-fact to take any and all
actions in Borrower's name and/or on Borrower's behalf as Lender may deem
necessary or appropriate in its discretion in the accomplishment of such
purposes, which appointment is coupled with an interest.
8. COSTS AND EXPENSES; INDEMNIFICATION
8.1 Costs and Expenses.
8.1.1 Borrower will pay on demand any and all costs and expenses incurred
by Lender (exclusive of Lender's employees' expenses other than travel expenses)
in connection with the initiation, documentation and closing of the Receivables
Loan, Construction Loan and the Working Capital Loan, the making of Advances,
the protection of the Collateral, or the enforcement of the Obligations against
Borrower, including, without limitation, all attorneys', inspecting
architect's/engineer's and other professionals' fees (including, without
limitation, reasonable out-of-pocket expenses and reasonable and normal charges
of such attorneys' and other professionals for photocopy, telecopy and computer
services, and clerical overtime), consumer credit reports, and revenue,
documentary stamp, transaction and intangible
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taxes. Without limiting the generality of the foregoing, if a bankruptcy
proceeding is commenced by or against Borrower or otherwise involving the
Collateral, Lender shall, to the extent not already provided for herein, be
entitled to recover, and Borrower shall be obligated to pay, Lender's attorneys'
fees and costs incurred in connection with: any determination of the
applicability of the bankruptcy laws to the terms of the Loan Documents or
Lender's rights thereunder; any attempt by Lender to enforce or preserve its
rights under the bankruptcy laws or to prevent Borrower or any other person from
seeking to deny Lender its rights thereunder; any effort by Lender to protect,
preserve or enforce its rights against the Collateral, or seeking authority to
modify the automatic stay of 11 U.S.C. Section 362 or otherwise seeking to
engage in such protection, preservation or enforcement; or any proceeding(s)
arising under the bankruptcy laws, or arising in or related to a case under the
bankruptcy laws.
8.2 Indemnification. Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS, and defend
Lender, FPSI and their respective successors, assigns and shareholders
(including corporate shareholders), and the directors, officers, employees,
servants and agents of the foregoing, for, from and against: (a) any and all
liability, damage, penalties, or fines, loss, costs or expenses (including,
without limitation, court costs and attorneys' fees), claims, demands, suits,
proceedings (whether civil or criminal), orders, judgments, penalties, fines and
other sanctions whatsoever asserted against it and arising from or brought in
connection with the Time-Share Project, the Collateral, Lender's status by
virtue of the Loan Documents, creation of liens and security interests, the
terms of the Loan Documents or the transactions related thereto, or any act or
omission of Borrower or an Agent, or their respective employees or agents,
whether actual or alleged unless such act or omission is caused by Lender's
gross negligence or willful misconduct or unless such act or omission occurred
at a time when Borrower did not effectively control the ownership or operation
of the Time-Share Project or the Collateral as a result of the exercise by
Lender of any of its rights or remedies hereunder; and (b) any and all brokers'
commissions or finders' fees or other costs of similar type by any party in
connection with the Receivables Loan, Construction Loan and the Working Capital
Loan. On written request by a person or other entity covered by the above
agreement of indemnity, Borrower will undertake, at its own cost and expense, on
behalf of such indemnitee, using counsel satisfactory to the indemnitee, the
defense of any legal action or proceeding to which such person or entity shall
be a party. At Lender's option, Lender may at Borrower's expense prosecute or
defend any action involving the priority, validity or enforceability of the
Collateral. FPSI is hereby expressly made a third-party beneficiary of the
indemnity obligations of Borrower contained in this paragraph 8.2 and shall have
the right to enforce such indemnity obligations against Borrower in the same
manner as if FPSI were a party to this Agreement.
9. CONSTRUCTION AND GENERAL TERMS
9.1 Payment Location. All monies payable under the Loan Documents shall be paid
to Lender at its address set forth following its signature in lawful monies of
the United States of America, unless otherwise designated in the Loan Documents
or by Lender by notice.
9.2 Entire Agreement. The Loan Documents exclusively and completely state the
rights and obligations of Lender and Borrower with respect to the Construction
Loan, the Receivables Loan and the Working Capital Loan. No modification,
variation, termination, discharge, abandonment or waiver of any of the
provisions or conditions of the Loan Documents shall be valid unless in writing
and signed by a duly authorized representative of the party sought to be bound
by such action. The Loan Documents supersede any and all prior representations,
warranties and/or inducements, written or oral, heretofore made by Lender or
Borrower and concerning this transaction, including any proposal letters.
9.3 Powers Coupled with an Interest. The powers and agency hereby granted by
Borrower are coupled with an interest and are irrevocable until the Obligations
have been paid in full and are granted as cumulative to Lender's other remedies
for collection and enforcement of the Obligations.
9.4 Counterparts; Facsimile Signatures. Any Loan Document may be executed in
counterpart, and any number of copies of such Loan Document which have been
executed by all parties shall constitute one (1) original. Delivery of an
executed counterpart of any Loan Document by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of such Loan Document.
Any party delivering an executed counterpart of any Loan Document by
telefacsimile shall also deliver a manually executed counterpart of such Loan
Document, but the failure to deliver a manually executed counterpart shall not
affect
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the validity, enforceability, and binding effect of such Loan Document.
9.5 Notices. All notices, requests or demands required or permitted to be given
under the Loan Documents shall be in writing, and shall be deemed effective (a)
upon hand delivery, if hand delivered or (b) two (2) Business Days after such
are deposited for delivery via Federal Express or other nationally recognized
overnight courier service; or (c) three (3) Business Days after such are
deposited in the United States mails, certified or registered mail, all with
delivery charges and/or postage prepaid, addressed as shown below, or to such
other address as the party being notified may have designated in a notice given
to the other party. Written notice may be given by telecopy to the telecopier
number shown below or to such other telecopier number as the party being
notified may have designated in a notice given to the other party, which notice
shall be effective on the day of receipt if received during the recipient's
normal business hours on the day of receipt or otherwise on the next Business
Day; provided that such notice shall not be deemed effective unless not later
than the next Business Day, a copy of such notice is hand delivered or deposited
for delivery via courier or in the United States mails in accordance with the
requirements set forth above. The notice addresses and telecopy numbers for
Borrower and Lender are set forth at the end of this Agreement following their
respective signatures.
9.6 Successors and Assigns. All of the covenants of Borrower and all of the
rights and remedies of the Lender contained in the Loan Documents shall bind
Borrower, and, subject to the restrictions on merger, consolidation and
assignment contained in the Loan Documents, its successors and assigns, and
shall inure to the benefit of Lender, its successors and assigns, whether so
expressed or not. Borrower may not assign its rights in the Loan Documents in
whole or in part. Except as may be expressly provided in a Loan Document, no
person or other entity shall be deemed a third party beneficiary of any
provision of the Loan Documents.
9.7 Severability. If any provision of any Loan Document is held to be invalid,
illegal or unenforceable under present or future laws, the legality, validity
and enforceability of the remaining provisions of the Loan Documents shall not
in any way be affected or impaired thereby. In lieu of each such illegal,
invalid or unenforceable provision, there shall be added to the Loan Document
affected, a provision that is legal, valid and enforceable and as similar in
terms to such illegal, invalid and unenforceable provision as may be possible.
9.8 Time of Essence. Time is of the essence in the Performance of the
Obligations.
9.9 Miscellaneous. All headings are inserted for convenience only and shall not
affect any construction or interpretation of the Loan Documents. Unless
otherwise indicated, all references in a Loan Document to clauses and other
subdivisions refer to the corresponding paragraphs, clauses and other
subdivisions of the Loan Document; the words "herein," "hereof," "hereto,"
"hereunder" and words of similar import refer to the Loan Documents as a whole
and not to any particular paragraph, clause or other subdivision; and reference
to a numbered or lettered subdivision of an Article or paragraph shall include
relevant matter within the Article or paragraph which is applicable to but not
within such numbered or lettered subdivision. All Schedules and Exhibits
referred to in this Agreement are incorporated into this Agreement by reference.
Whenever the words "including", "include", or "includes" are used in the Loan
Documents, they shall be interpreted in a non-exclusive manner as though the
words, "without limitation," immediately followed the same.
9.10 CHOICE OF LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED THEREIN, THE LOAN
DOCUMENTS AND THE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES THERETO SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ARIZONA (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND TO THE EXTENT
THEY PREEMPT THE LAWS OF SUCH STATE, THE LAWS OF THE UNITED STATES.
9.11 CHOICE OF JURISDICTION; WAIVER OF VENUE. EACH OF BORROWER AND LENDER: (A)
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS, JURISDICTION AND VENUE OF THE
COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY, AND TO THE PROCESS,
JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT OR THE SUBJECT MATTER THEREOF AND WAIVE ANY OTHER
JURISDICTION OR VENUE TO WHICH THE PARTIES MAY OTHERWISE BE ENTITLED; AND (B)
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HEREBY WAIVES AND AGREES NOT
TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
THE ABOVE-NAMED COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS
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BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH OF BORROWER AND LENDER HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER FORUM.
9.12 WAIVER OF JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER ANY LOAN DOCUMENT WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES; AND THEREFORE, THEY AGREE THAT ANY LAWSUIT ARISING
OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED BY A JUDGE SITTING WITHOUT A JURY,
AND KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY SUCH PROCEEDING.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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9.13 INDUCEMENT TO LENDER. ALL OF THE PROVISIONS SET FORTH IN THE PARAGRAPHS
REFERENCED BELOW ARE MATERIAL INDUCEMENTS FOR LENDER'S MAKING ADVANCES TO
BORROWER.
(BORROWER'S INITIALS
RE: 9.10 - 9.13 _____)
RE: 9.10 - 9.13 _____)
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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9.14 Compliance With Applicable Usury Law. It is the intent of the parties
hereto to comply with the Applicable Usury Law. Accordingly, notwithstanding any
provisions to the contrary in the Loan Documents, in no event shall the Loan
Documents require the payment or permit the collection of interest in excess of
the maximum contract rate permitted by the Applicable Usury Law.
9.15 NO RELATIONSHIP WITH PURCHASERS. LENDER DOES NOT HEREBY ASSUME AND SHALL
HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY TO PURCHASERS, LENDER'S
RELATIONSHIP BEING THAT ONLY OF A CREDITOR WHO HAS TAKEN AN ASSIGNMENT FROM
BORROWER OF THE INSTRUMENTS IN ORDER TO FACILITATE PERFORMANCE OF THE
OBLIGATIONS. EXCEPT AS REQUIRED BY LAW AND FOR FILINGS MADE WITH THE SECURITIES
& EXCHANGE COMMISSION OR ANY STOCK EXCHANGE ON WHICH BORROWER'S STOCK IS TRADED,
BORROWER WILL NOT, AT ANY TIME, USE THE NAME OF OR MAKE REFERENCE TO LENDER WITH
RESPECT TO THE TIME-SHARE PROJECT, THE SALE OF TIME-SHARE INTERESTS OR
OTHERWISE, WITHOUT THE EXPRESS WRITTEN CONSENT OF LENDER.
9.16 NO JOINT VENTURE. THE RELATIONSHIP OF BORROWER AND LENDER IS THAT OF DEBTOR
AND CREDITOR, AND IT IS NOT THE INTENTION OF EITHER OF SUCH PARTIES BY THIS OR
ANY OTHER INSTRUMENT BEING EXECUTED IN CONNECTION WITH THE CONSTRUCTION LOAN,
THE RECEIVABLES LOAN OR THE WORKING CAPITAL LOAN TO ESTABLISH A PARTNERSHIP, AND
THE PARTIES HERETO SHALL NOT UNDER ANY CIRCUMSTANCES BE CONSTRUED TO BE PARTNERS
OR JOINT VENTURERS.
9.17 Standards Applied to Lender's Actions. Unless otherwise specifically
stipulated elsewhere in the Loan Documents, if a matter is left in the Loan
Documents to the decision, right, requirement, request, determination, judgment,
opinion, approval, consent, waiver, satisfaction, acceptance, agreement, option
or discretion of Lender, its employees, Lender's counsel or any agent for or
contractor of Lender, such action shall be deemed to be exercisable by Lender or
such other person in its sole and absolute discretion and according to standards
established in its sole and absolute discretion. Without limiting the generality
of the foregoing, "option" and "discretion" shall be implied by use of the words
"if" or "may." However, whenever the Loan Documents contain the terms
"reasonably satisfactory to Lender", "reasonably determined by Lender",
"reasonably acceptable to Lender", "reasonable consent of Lender", "Lender shall
reasonably elect", "Lender shall reasonably request," "reasonably approved by
Lender" or similar terms wherein the word reasonable or a derivative thereof is
used with regard to an action of Lender; (i) such terms shall mean satisfactory
to, at the election of, determined by, acceptable to or requested by, as
applicable, Lender in its sole (but reasonably exercised) discretion under
standards applicable to commercial lenders under the laws of the State of
Arizona; and (ii) it is the intention of the parties to permit Lender a broad
latitude in which to exercise its discretion, acknowledging that, while such
discretion may not be exercised arbitrarily or capriciously, it may be exercised
conservatively for Lender's protection and benefit. By way of illustration, and
not of limitation, it shall not be unreasonable for Lender, in exercising its
discretion, to make conservative assumptions regarding the possible outcome of
future events.
9.18 Meaning of Subordination. Any subordination required to be given under the
Loan Documents to Lender shall include the subordination of and the deferral of
the right to receive payments on the subordinated obligations except to the
extent expressly permitted in this Agreement; the remittances to Lender of all
prohibited payments received by the third party; the subordination of all liens,
security interests, assignments and other encumbrances and claims held by the
subordinating party on or against any of Borrower's property to Lender's
interest (whenever acquired) in such property; and an agreement on the part of
the third party not to exercise any remedies against Borrower so long as all
obligations under the Loan Documents have not been fully satisfied.
9.19 Scope of Reimbursable Attorney's Fees. As used in the Loan Documents, the
term "attorneys' fees" includes the reasonable fees of attorneys licensed to
practice law in any jurisdiction, law clerks, paralegals, investigators and
others not admitted to the bar but performing services under the supervision of
a licensed attorney, and the expenses (including, without limitation, normal and
customary charges for telecopy and photocopy services and clerical overtime)
incurred by them in the performance of their services. As used in the Loan
Documents, attorneys' fees incurred by Lender in the enforcement of any remedy
or covenant include, without limitation, attorneys' fees incurred in any
foreclosure of the Security Documents, in protecting or sustaining the lien or
priority of the Collateral, or in any proceeding arising from or connected with
any such matter, including any bankruptcy, receivership, injunction
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or other similar proceeding, or any appeal from or petition for review of any
such matter, and with or without litigation.
9.20 Publicity. Lender is hereby authorized to issue appropriate press releases
and to cause a tombstone to be published announcing the consummation of this
transaction and the aggregate amount thereof. Borrower consents to such
advertising and authorizes Lender to use Borrower's name, logo, insignia,
descriptive art work, trade name, trademark, or other similar material, whether
or not protected by copyright (or otherwise), in any such advertisement.
Borrower shall, at its expense, erect a sign upon the Real Property within
thirty (30) days following the Closing Date indicating that Lender is the source
of the financing for the construction of the Time-Share Project which sign to
contain Lender's "Logo" and be subject to the reasonable approval of Lender.
Lender agrees to supply Borrower with "camera-ready" artwork for inclusion with
such sign.
9.21 Permitted Contests. Nothwithstanding anything in the Loan Documents to the
contrary, after prior written notice to Lender, Borrower at its expense may
contest, by appropriate legal or other proceedings conducted in good faith and
with due diligence, the amount or validity of any tax, Imposition, Legal
Requirement or any monetary lien on the Collateral, so long as: (a) in the case
of an unpaid Imposition or lien, such proceedings suspend the collection thereof
from Borrower and the Collateral, and shall not interfere with the payment of
any monies due under the Collateral in accordance with the terms of the Security
Documents; (b) none of the Collateral is, in the judgment of Lender, in any
imminent danger of being sold, forfeited or lost; (c) in the case of a Legal
Requirement, neither Borrower nor Lender is in any danger of any civil or
criminal liability for failure to comply therewith; and (d) Borrower has
furnished such security, if any, as may be required in the proceedings or as
Lender reasonably requests up to one hundred fifty percent (150%) of the amount
in controversy.
9.22 Reliance. Lender's examination, inspection, or receipt of information
pertaining to Borrower, the Collateral or the Time-Share Project shall not in
any way be deemed to reduce the full scope and protection of the warranties,
representations and Obligations contained in the Loan Documents.
9.23 Joint and Several. All of the Obligations, covenants, representations and
warranties of Borrower in any of the Loan Documents shall be the joint and
several Obligations, covenants, representations and warranties of each entity
constituting Borrower, except to the extent otherwise set forth to the contrary
including, but not limited to, Section S.9 of the Schedule. Although Lender and
Borrower intend that each entity constituting Borrower shall be jointly and
severally liable for all Obligations, to the extent that this Agreement or the
other Loan Documents may be determined to secure indebtedness of any Borrower
for which any other Borrower is not primarily liable, each Borrower expressly
waives the benefit of any and all defenses available to a guarantor, surety,
endorser or accommodation party dependent on an obligor's character as such.
Without limiting the generality of the foregoing, each such other Borrower's
liability hereunder shall not be affected or impaired in any way by any of the
following acts or things (which Lender is hereby expressly authorized to do,
omit or suffer from time to time without notice to or consent of anyone):
(i) any acceptance of collateral security, guarantors, accommodation
parties or sureties for any or all Obligations;
(ii) any extension or renewal of any Obligations (whether or not for longer
than the original period) or any modification of the interest rate,
maturity or other terms of the Obligations;
(iii) any waiver or indulgence granted to any Borrower, and any delay or
lack of diligence in the enforcement of any or all Obligations owed by any
Borrower;
(iv) any full or partial release of, compromise or settlement with, or
agreement not to sue, any Borrower or the Guarantor or other person liable
on any Obligations;
(v) any release, surrender, cancellation or other discharge of any or all
Obligations of Borrower or the acceptance of any instrument in renewal or
substitution for any instrument evidencing any Obligations;
(vi) any failure to obtain collateral security (including rights of setoff)
for any Obligations or to see to the proper or sufficient creation and
perfection thereof, or to establish the priority thereof, or to preserve,
protect, insure, care for, exercise or enforce any collateral security for
any Obligations;
(vii) any modification, alteration, substitution, exchange, surrender,
cancellation, termination, release or other change, impairment, limitation,
loss or discharge of any collateral security for any Obligations;
(viii) any assignment, sale, pledge or other transfer of any of the
Obligations owed by any Borrower; or
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(ix) any manner, order or method of application of any payments or credits
on any Obligations.
Each Borrower waives all rights that it may now have or hereafter acquire,
whether by subrogation, contribution, reimbursement, recourse, exoneration,
contract or otherwise, to recover from any other Borrower or from any property
of any other Borrower any sums paid under this Agreement. No Borrower will
exercise or enforce any right of contribution to recover any such sums from any
person who is a co-obligor with any Borrower or a guarantor or surety of the
Obligations or from any property of any such person or entity until all of the
Obligations shall have been fully paid and discharged.
9.24 Consideration. Each of the entities comprising Borrower acknowledges the
Lender would not make the Receivables Loan, the Construction Loan or the
Working-Capital Loan contemplated hereby unless each of such entities (a) became
a party to this Agreement and the other Loan Documents, (b) subject to the
provisions of Section S.9 of the Schedule became jointly and severally liable
for the payment and performance of all of the Obligations, and (c) granted to
Lender a security interest, subject to Permitted Encumbrances, in all items of
Collateral owned by each Borrower. Although each of the entities comprising
Borrower maintains its separate legal existence and operates as a distinct and
separate entity, such entities have historically engaged in substantial business
with each other and have operated, and intend to continue operating, as a joint
and consolidated entity for financial planning and cash management purposes and
for purposes of achieving certain business operation efficiencies. Each of the
entities comprising Borrower will therefore benefit from the financing
arrangement and accommodations made by Lender under this Agreement and the other
Loan Documents.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGES LOAN AND SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective name, personally or by their duly authorized
representatives as of June 29, 1999.
BORROWER THE TETON CLUB, LLC, a Delaware limited liability company
By: Raintree Resorts International, Inc., a Nevada
corporation its Member
By: /s/ BRIAN R. TUCKER
Name: Brian R. Tucker
Title: Sr. V. P. - Planning & Development
WITNESS: /s/ KAREN ERKELENS
Name:
Notice Address and Telecopy Number:
c/o Raintree Resorts International, Inc.
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
RAINTREE RESORTS INTERNATIONAL, INC., a Nevada corporation
By: /s/ BRIAN R. TUCKER
Name: Brian R. Tucker
Title: Sr. V. P. - Planning & Development
WITNESS: /s/ KAREN ERKELENS
Name:
Notice Address and Telecopy Number:
10000 Memorial Drive, Suite 480
Houston, Texas 77024
Attention: Chief Financial Officer
Telecopy No.: 713-613-2828
A copy of all notices to the Borrower shall also be sent as follows (which shall
not be deemed notice):
Battle Fowler L.L.P.
2049 Century Park East, Suite 2350
Los Angeles, California 90067
Attention: Richard F. Davis, Esq.
Telecopy No.: 310-277-0336
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STATE OF Arizona )
) ss.
COUNTY OF Maricopa )
The foregoing instrument was acknowledged before me this 29th day of June,
1999, by BRIAN R. TUCKER, as __________ of Raintree Resorts International, Inc.,
a Nevada corporation, as a Member of The Teton Club, LLC, a Delaware limited
liability company, on behalf of such limited liability company. He/She is
personally known to me or has produced Texas Driver's License as identification.
/s/ SANDRA L. IRONS
Notary Public in and for said State and County
My commission expires: January 29, 2002
STATE OF Arizona )
) ss.
COUNTY OF Maricopa )
The foregoing instrument was acknowledged before me this 29th day of June,
1999, by BRIAN R. TUCKER, as __________ of Raintree Resorts International, Inc.,
a Nevada corporation, on behalf of such corporation. He/She is personally known
to me or has produced Texas Driver's License as identification.
/s/ SANDRA L. IRONS
Notary Public in and for said State and County
My commission expires: January 29, 2002
41
<PAGE>
LENDER FINOVA CAPITAL CORPORATION, a Delaware corporation
By:
Name:
Title:
Lender's Notice Address and Telecopy Number:
FINOVA Capital Corporation
7272 East Indian School Road, Suite 410
Scottsdale, Arizona 85251
Attention: Vice President--Resort Finance
Telecopy: (602) 874-6444
with a copy to:
FINOVA Capital Corporation
7272 East Indian School Road, Suite 410
Scottsdale, Arizona 85251
Attention: Vice President-Group Counsel
Telecopy: (602) 874-6445
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<PAGE>
SCHEDULE OF ADDITIONAL TERMS
S.1 This Schedule has been incorporated by reference into and form a part of
that Loan and Security Agreement dated as of June 29, 1999, between FINOVA
Capital Corporation, The Teton Club, LLC., and Raintree Resorts International,
Inc.
S.2 To the extent of any inconsistency between this Schedule and the other
provisions of the Loan and Security Agreement, the provisions of this Schedule
shall prevail.
S.3 The provisions of the Loan and Security Agreement are supplemented as
follows (paragraph references are references to paragraphs of the Loan and
Security Agreement) which are intended to be supplemented by the following
provisions :
(a) P. 1. Association and Assessment Compliance Date: The date upon which
the Borrower relinquishes control of the owners association established in
connection with the Time-Share Project.
(b) P. 1. Basic Interest Rate (Construction): Two percent (2%) per annum in
excess of the Base Rate fluctuating monthly on the first day of each calendar
month based upon the Base Rate in effect on such date, provided, however, that
in no event shall the Basic Interest Rate (Construction) exceed the maximum
contract rate of interest permitted by the Applicable Usury Law.
(c) P. 1. Basic Interest Rate (Receivables): at the time of an Advance on
the Receivables Loan, the rate per annum equal to the T-Note Yield reported as
of the Business Day preceding the date of such Advance plus four hundred (400)
basis points, provided, however, that in no event shall the Basic Interest Rate
(Receivables) exceed the maximum contract rate of interest permitted by the
Applicable Usury Law. The Basic Interest Rate (Receivables) on the then unpaid
principal balance of the Receivables Loan shall be recalculated on a weighted
average basis with each Advance on the Receivables Loan, all as more fully set
forth in the Receivables Loan Note. Lender reserves the right to recalculate the
Basic Interest Rate (Receivables) pursuant to provisions of Section S.10 below.
(d) P. 1. Basic Interest Rate (Working Capital): Two percent (2%) per annum
in excess of the Base Rate fluctuating monthly on the first day of each calendar
month based upon the Base Rate in effect on such date, provided, however, that
in no event shall the Basic Interest Rate (Working Capital) exceed the maximum
contract rate of interest permitted by the Applicable Usury Law.
(e) P. 1. Default Rate: with respect to the Construction Loan (a) two
percent (2%) above the Basic Interest Rate (Construction) or (b) the maximum
contract rate permitted under the Applicable Usury Law, whichever of (a) or (b)
is lesser, with respect to the Working Capital Loan (m) two percent (2%) above
the Basic Interest Rate (Working Capital) or (n) the maximum contract rate
permitted under Applicable Usury Law, whichever of (m) or (n) is lesser, with
respect to the Receivables Loan (x) two percent (2%) above the Basic Interest
Rate (Receivables) or (y) the maximum contract rate permitted under the
Applicable Usury Law, whichever of (x) or (y) is lesser, and with respect to
monetary Obligations owed by Borrower to Lender other than the principal and
interest due under the Working Capital Loan, the Receivables Loan, or the
Construction Loan (i) four percent (4%) per annum in excess of the Base Rate
fluctuating monthly on the first day of each calendar month based upon the Base
Rate in effect on such date or (ii) the
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maximum contract permitted under the Applicable Usury Law, whichever of (i) or
(ii) is lesser.
(f) P. 1. Construction Loan Borrowing Term Expiration Date: the date which
is twenty-four (24) months from and after the Required Closing Date.
(g) P. 1. Construction Loan Fee: Three Hundred Thirty-Two Thousand Five
Hundred Dollars ($332,500).
(h) P. 1. Construction Loan Maturity Date: the date which is thirty-six
(36) months from the Required Closing Date.
(i) P. 1. Construction Loan Prepayment Penalty: the Construction Loan
Prepayment Premium at any time shall be an amount which is the product of the
then unpaid principal amount being prepaid multiplied by three percent (3%).
(j) P. 1. Lockbox Agent: Bank One, Arizona, N.A.
(k) P. 1. Maximum Construction Loan Amount: Thirty-Three Million Two
Hundred Fifty Thousand Dollars ($33,250,000)
(l) P. 1. Maximum Loan Amount: the lesser of (i) Forty-Two Million Dollars
($42,000,000) or (ii) the maximum amount of Indebtedness (as defined in the
Indenture) Raintree and those of its Affiliates constituting "Restricted
Subsidiaries" (as defined in the Indenture and including Teton) may incur under
the Indenture, taking into account the amount of any other Indebtedness then
owed by Raintree and those of its Affiliates constituting "Restricted
Subsidiaries", including Teton, which, by virtue of its amount or nature, is
restricted by the Indenture.
(m) P. 1. Maximum Receivables Loan Amount: Twenty Million Dollars
($20,000,000).
(n) P. 1. Maximum Working Capital Loan Amount: Seven Million Five Hundred
Thousand Dollars ($7,500,000).
(o) P. 1. Receivables Loan Borrowing Term Expiration Date: The earlier of
(i) thirty-six (36) months following the date Borrower receives a temporary
certificate of occupancy from the appropriate regulatory authorities with
respect to the Improvements, or (ii) the date which is sixty (60) months from
and after the Required Closing Date.
(p) P. 1. Receivables Loan Fee: Two Hundred Thousand Dollars ($200,000).
(q) P. 1. Receivables Loan Maturity Date: One Hundred Twenty (120) months
following the expiration of the Receivables Loan Borrowing Term.
(r) P. 1. Receivables Loan Opening Prepayment Date: The date two (2) years
from and after the date of the first Advance of the Receivables Loan.
(s) P. 1 Receivables Loan Prepayment Premium: The Receivables Loan
Prepayment Premium at any time shall be equal to an amount which is the product
of the then unpaid principal amount being prepaid times a percentage based upon
the year after the Receivables Loan Opening Prepayment Date in which the
prepayment occurs and determined in accordance with the following schedule:
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Years After Receivables Loan Applicable Receivables Loan
Opening Prepayment Date Prepayment Premium Percentage
Year 1 3 %
Year 2 2 %
thereafter none
Year 1 shall be the period of time commencing on the Receivables Loan Opening
Prepayment Date and expiring twelve months thereafter. Each Year thereafter
begins on the next succeeding anniversary date of the Receivables Loan Opening
Prepayment Date and ends twelve (12) months thereafter. If the prepayment occurs
during a period when prepayment is closed, the applicable prepayment premium
percentage (if Lender agrees to allow such prepayment) shall be five percent
(5%).
(t) P. 1. Required Closing Date: July ___, 1999.
(u) P. 1. RLBB Principal Balance Percentage: ninety-seven and one-half
percent (97.5%).
(v) P. 1. RLBB Present Value Percentage: ninety-seven and one-half percent
(97.5%).
(w) P. 1. Servicing Agent: FPSI.
(x) P. 1. Time Share Project: The Teton Club in Jackson, Wyoming.
(y) P. 1. Working Capital Loan Borrowing Term Expiration Date: The date
which is twenty-four (24) months from and after the Required Closing Date.
(z) P. 1. Working Capital Loan Fee: Seventy-five Thousand Dollars
($75,000).
(aa) P. 1. Working Capital Loan Maturity Date: the date which is
twenty-four (24) months from and after the Required Closing Date.
(bb) P. 1. Working Capital Loan Prepayment Premium: The Working Capital
Loan Prepayment Premium at any time shall be equal to an amount which is the
product of the then unpaid principal amount being prepaid multiplied by three
percent (3%).
(cc) P. 2.9(a) Payment of Construction Loan Fee: The Construction Loan Fee
shall be payable in full on the Required Closing Date
(dd) P. 2.9(a) Payment of Working Capital Loan Fee. The Working Capital
Loan Fee shall be payable in full on the Required Closing Date.
(ee) P. 2.9(a).Payment of Receivables Loan Fee: The Receivables Loan Fee
shall be payable as follows: Fifty Thousand Dollars ($50,000) of the Receivables
Loan Fee was paid prior to the date hereof. An additional Fifty Thousand Dollars
($50,000) of the Receivable Loan Fee shall be paid on or before the Required
Closing Date. The remaining balance of the Receivables Loan Fee, in the amount
of One Hundred Thousand Dollars ($100,000), is due on the earlier of (i)
Borrower's receipt of a temporary certificate of occupancy from the appropriate
regulatory authorities with respect to the Improvements, or (ii) the date which
is twenty four (24) months after the Required Closing Date.
(ff) P. 2.9(b).Custodial Fee: Ten Dollars ($10).
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(gg) P. 4.5. Minimum Advance Amount: with respect to the Receivables Loan,
One Hundred Thousand Dollars ($100,000) and with respect to the Working Capital
Loan Fifty Thousand Dollars ($50,000).
(hh) P. 4.6. Maximum Advance Frequency: with respect to the Receivables
Loan, twice per calendar month with a Five Hundred Dollar ($500) charge being
imposed in connection with the second Advance in any one (1) calendar month and
with respect to the Working Capital Loan once per calendar month, Lender shall
have the right to withhold the amount of such charges from such Advance.
(ii) P. 4.7. Wire Transfer Fee. Twenty-Five Dollars ($25).
(jj) P. 5.1, 6.1. Borrower's Type of Business Organization:
(1) Teton: Limited Liability Company
(2) Raintree: Corporation
(kk) P. 5.1, 6.1. Borrower's State of Organization:
(1) Teton: Delaware
(2) Raintree: Nevada
(ll) P. 5.3. Borrower's Principal Place of Business:
(1) Teton: 10000 Memorial Drive, Suite 480
Houston, Texas 77024
(2) Raintree: 10000 Memorial Drive, Suite 480
Houston, Texas 77024
(mm) P. 5.3. Borrower's Chief Executive Office:
(1) Teton: 10000 Memorial Drive, Suite 480
Houston, Texas 77024
(2) Raintree: 10000 Memorial Drive, Suite 480
Houston, Texas 77024
(nn) P. 5.9 Jurisdiction Where Sales and/or Offers to Sell Have Occurred.
Wyoming.
S.4 In addition to the other representations, warranties and covenants of
Borrower set forth in the Loan and Security Agreement, Borrower represents,
warrants and covenants as follows:
(a) Until such time as Borrower has fully repaid to Lender the outstanding
principal balance of the Construction Loan together with all accrued interest
thereon, Teton shall pay to Lender (i) on May 15th of each year during which
there is an outstanding balance of principal or accrued interest due under the
Construction Loan, all of Teton's Excess Cash Flow realized by Teton during the
six (6) month period ending on the most immediately preceding March 31st, less
$200,000, and (ii) on November 15th of each year during which there is an
outstanding balance of principal or accrued interest due under the Construction
Loan, all of Teton's Excess Cash Flow realized by Teton during the six (6) month
period ending on the most immediately preceding September 30th, less $200,000.
Such payments shall be made without any prepayment premium or penalty.
(b) Until such time as all Time-Share Interests have been sold, the average
number of Time-Share Interests sold by Borrower on a monthly basis, net of
rescissions and cancellations, shall not fall below ten (10). This covenant
shall be tested on a rolling and trailing twelve-month basis, quarterly
commencing on the final day of the first fiscal quarter occurring after the
Required Closing Date. Until December 31, 1999, the foregoing covenant shall be
tested based on Borrower sales activities from January 1, 1999 through the end
of the relevant quarter.
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(c) The sum of (i) the total of Teton's costs and expenses for commissions
and selling relating to the retail sales of Time-Share Interests, use rights,
memberships and fractional ownership interests and (ii) the total of Teton's
consolidated general and administrative expenses (the costs and expenses
described in clauses (i) and (ii) hereinafter the "SGA Expenses") shall not
exceed thirty percent (30%) of the sum of the gross proceeds of Teton's
processed sales of retail Time-Share Interests, use rights, memberships and
fractional ownership interests (net of cancellations of and discounts on such
sales) ("Net Sales"). The foregoing covenant shall be tested quarterly based
upon Teton's total aggregate SGA Expenses and Net Sales for the immediately
preceding twelve (12) month period; provided, however, that for purposes of
determining Teton's compliance with the covenant up through the test to be
conducted on December 31, 1999, Teton's SGA Expenses and Net Sales shall be
measured from January 1, 1999 through the relevant quarter. SGA Expenses and Net
Sales shall be as determined in accordance with GAAP.
(d) At such time as Completion of the Work has occurred, the net income of
Teton, determined in accordance with GAAP, shall not fall below One Dollar
($1.00). Compliance with this covenant shall be tested on a the final day of
each fiscal quarter of Teton, commencing on the final day of the first fiscal
quarter occurring after the Completion of the Work, on a rolling and trailing
twelve-month basis.
(e) At all times after the Construction Loan, together with all the accrued
interest thereon, has been paid in full to Lender, Teton shall maintain and
deliver to Lender an irrevocable standby letter of credit in the amount of One
Hundred Thousand Dollars ($100,000) in favor of Lender and from an issuer and in
form and substance satisfactory to Lender, as security for the payment and
performance of the Obligations. The aforementioned letter of credit shall,
without limitation, give Lender the right to draw upon the same upon the
occurrence and during the continuance of an Event of Default.
(f) (i) Raintree shall not make nor is permitted to make any Distributions,
except that in the event there exists no Event of Default or Incipient
Default, both before and after taking into account the making of such
Distribution, Raintree shall be permitted to make preferred stock dividends
on Raintree's preferred stock and pay reasonable bonuses, salary, other
compensation and fees at normal and customary rates for services actually
rendered, without the prior written consent of Lender.
(ii) Raintree shall maintain a Adjusted Net Worth of not less than the
amount set forth below, which shall be subject to a quarterly test by the
Lender; to this end, Raintree agrees to provide Lender within the time
period and in the form set forth in this Agreement, the financial
statements and other financial information and reports concerning Raintree;
for purposes of this Agreement the term Adjusted Net Worth shall mean, with
respect to any date of determination, Raintree's consolidated net worth as
determined in accordance with GAAP, minus noncash currency exchange gains
to the extent that such gains increased net worth and plus noncash currency
exchange losses to the extent that such losses reduced net worth.
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Test Date: Net Worth Covenant at all Times Following
the Closing of Raintree's Acquisition of
River Club
(In US Dollars)
9/30/99 7,300,000
12/31/99 2,000,000
3/31/00 9,300,000
6/30/00 7,300,000
9/30/00 12,300,000
12/31/00 9,900,000
3/31/01 and each 13,000,000
quarter thereafter
Test Date: Net Worth Covenant at all Times Prior to the
Closing of Raintree's Acquisition of River
Club
(In US Dollars)
9/30/99 (3,800,000)
12/31/99 (7,114,000)
3/31/00 (2,000,000)
6/30/00 (1,000,000)
9/30/00 1,400,000
12/31/00 2,000,000
3/31/01 and each 7,000,000
quarter thereafter
For purposes hereof, the River Club shall mean that certain resort known as
River Club located in Telluride, Colorado. It is understood that Raintree has no
obligation to acquire River Club.
(iii) On the final day of each fiscal quarter of Raintree, commencing with
the fiscal quarter ending September 30, 1999 and on the final day of each
fiscal year of Raintree, commencing with the fiscal year ending December
31, 1999 the sum of (i) the total of Raintree's consolidated costs and
expenses for commissions and selling relating to the retail sales of
time-share interests, use rights, memberships and fractional ownership
interests and (ii) the total of Raintree's consolidated general and
administrative expenses, (the costs and expenses described in clauses (i)
and (ii) hereinafter the "Raintree SGA Expenses") shall not exceed the
amount set forth below of the gross proceeds of Raintree's consolidated
processed sales of retail time-share interests, use rights, memberships and
fractional ownership interests for the same period (each net of
cancellations of such sales) ("Raintree Net Sales"). The foregoing covenant
shall be tested quarterly based upon Raintree's total aggregate Raintree
SGA Expenses and Raintree Net Sales for the immediately preceding three (3)
month period and annually based upon Raintree's total aggregate Raintree
SGA Expenses and Raintree Net Sales for the immediately preceding twelve
(12) month period.
Test Date: Covenant at all Times Prior to the Closing of
Raintree's Acquisition of River Club
9/30/99 through 12/31/99 68%
3/31/00 and thereafter 55%
Test Date: Covenant at all Times Following the Closing
of Raintree's Acquisition of River Club
3/31/99 and at 55%
all times thereafter
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(iv) The provisions of Sections 4.09, 4.11, 4.12, 4.17 and 4.19 of the
Indenture (the foregoing Sections are collectively called the "Financial
Covenants") are by this reference incorporated herein as if fully set forth
in this Agreement. Raintree represents, warrants and covenants to the
Lender that Raintree shall not, and shall not permit any of its Affiliates
to, directly or indirectly, take, or fail to take, any action that would
result in a violation of its Financial Covenants.
(v) Raintree on behalf of itself and its Affiliates represents and warrants
to the Lender that the Loan is a Permitted Debt (as defined in the
Indenture) and that as of the date hereof there exists no Default or Event
of Default (as the foregoing two (2) terms are defined in the Indenture)
under the Indenture. Raintree covenants with Lender that (i) as and when
required by the Indenture, Raintree shall cause the Issuers (as defined in
the Indenture) to supply the Lender with true and complete copies of all
reports, certifications, notices or demands given by the Issuers under the
Indenture (including, but not limiting the generality of the foregoing,
materials required by Sections 4.03, 4.04, 4.21, 7.06, and Article 8 of the
Indenture), and (ii) it will not amend or modify the Indenture without the
prior written consent of the Lender and any such amendment or modification
to the Indenture made without the prior written consent of Lender shall not
be binding upon Lender or affect the Financial Covenants. The Financial
Covenants shall not be deemed amended by any amendments or modifications to
the Indenture made without the prior written consent of Lender. Further,
Raintree agrees to cause the Issuer to promptly (but in any event within
three (3) days after the Issuer's receipt of the same) supply the Lender
with a true and complete copy of any notice sent to the Issuers under
Section 6.01 of the Indenture, or any other notice alleging a default by
the Issuers under the Indenture.
S.5 Lender agrees that simultaneously with the payment of a release payment (the
"Construction Loan Release Payment") in an amount equal to sixty-four percent
(64%) of the greater of: (a) the amount set forth on the attached Exhibit M, as
pertaining to such Time-Share Interest or (b) the actual sales price of a
Time-Share Interest sold, Lender will release the Time-Share interest sold and
all proceeds and products thereof, from the lien of the Mortgage. No such
release of a Time-Share Interest and the proceeds and products thereof from the
lien of the Mortgage shall impair or affect Lender's remaining lien on the
balance of the property described in the Mortgage or any term or provisions of
the Security Documents as they pertain to that portion of the property described
in the Mortgage that has not been released from the lien of the Mortgage.
Notwithstanding the foregoing, Lender shall have no obligation to release any
Time-Share Interest from the lien of the Mortgage during the continuance of an
Event of Default or Incipient Default. The cost of recording any release
document shall be borne by Borrower. A payment equal to the amount of the
Advance made against such Working Capital Loan Eligible Instrument shall be made
to Lender (the "Working Capital Loan Mandatory Payment") at such time as the
Unit which is the subject matter of the Working Capital Loan Eligible Instrument
has been Completed and the Escrow Agent has released from Escrow the cash down
payments associated with the Working Capital Loan Eligible Instrument. The
Borrower shall irrevocably instruct the Escrow Agent to remit such payment
directly to Lender.
S.6 The obligation of Lender to make advances of the Construction Loan is
subject to the fulfillment, to the satisfaction of Lender and its counsel, of
each of the following conditions, in addition to the conditions set forth in
other sections of the Loan Agreement:
A. Borrower shall have provided to Lender and Lender shall have approved in
all respects:
(i) The general Construction Contract with the General Contractor, covering
the Work (as the same may be modified from time to time with Lender's prior
written consent, the "General Contract"), which shall be a "stipulated sum"
contract reflecting a total cost of construction in an amount not greater
than the construction costs reflected in the Budget, and which shall
provide, without limitation (a) terms regarding the timing and manner of
payments to the General Contractor acceptable to Lender; (b) that the Work
shall be fully completed for the guaranteed fixed or maximum price (as
approved by Lender); and (c) that the General Contractor must begin and
complete construction by certain specified dates in accordance with the
Loan Documents;
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(ii) Consent from the General Contractor and any other Contractor to the
assignment of their contracts to Lender; and such certificates and
financial information as Lender reasonably may request from the General
Contractor and any other direct Contractors regarding their financial
viability, the adequacy of the Budget and such other matters as Lender may
deem appropriate;
(iii) A list of all Contractors and major sub-Contractors engaged by
Contractor as of the date of any particular Work-Related Advance who will
perform work (including a summary of trades for which each such
sub-Contractor shall be responsible) and a resume and client references for
the General Contractor and major sub-Contractors;
(iv) The Architect/Engineer Agreement and consent to the assignment of that
agreement to Lender; such certificates as Lender may require from the
Architect/Engineer regarding the adequacy of the Plans (including, without
limitation, their compliance with the Americans With Disabilities Act and
all other applicable laws and regulations) and the Budget and such other
matters as Lender may deem pertinent;
(v) The Plans which shall indicate that they have been approved by all
necessary governmental authorities;
(vi) The Budget;
(vii) A detailed draw schedule;
(viii) The Work Progress Schedule;
(ix) All other Principal Work-Related Items and all other Contracts,
Intangibles, Licenses and Permits in force as of the date of any particular
Work-Related Advance;
(x) A payment and performance bond or bonds which is/are issued by a surety
satisfactory to Lender and in a form satisfactory to Lender, covering
contracts for the Improvements and naming Lender as co-obligee;
(xi) A soils test report with respect to the suitability of the soils on
the Real Property for purposes of constructing the Work;
(xii) If required by Lender, a traffic study with respect to the impact of
existing and anticipated traffic upon the Real Property;
(xiii) A flood and drainage study with respect to the Real Property;
(xiv) Financial statements for the last two (2) fiscal years and federal
employer tax identification numbers for the General Contractor, any other
direct Contractors, and, if required by Lender, the major sub-Contractors;
and
(xv) Copies of all other direct contracts with Contractors and all major
sub-Contracts executed and in force as of the date of any particular
Work-Related Advance all of which shall be acceptable to Lender.
B. Lender's representatives shall have completed an inspection of the Real
Property and shall be satisfied in their discretion with the findings of such
inspection. Lender shall have received a satisfactory report from Lender's
Inspector.
C. Lender shall have received satisfactory evidence that Borrower has
obtained all necessary approvals and permits of governmental agencies having
jurisdiction over the Time-Share Project for the construction of the
Improvements.
D. Lender shall have approved the manner in which construction costs will
be paid.
E. Borrower shall not have permitted any Contractor or sub-Contractor to
commence any Work on the Real Property prior to recordation of the Mortgage, if
it would affect the priority of the Mortgage.
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S.7 In addition to all other terms and conditions set forth herein, each
Work-Related Advance shall be subject to the satisfaction of all of the
following conditions and limitations:
A. Work-Related Advances shall be made no more frequently than monthly as
the Work progresses and each such monthly disbursement shall be based upon
actual completed work in place rather than upon percentage of completion. Each
Advance shall be in an amount not to exceed ninety percent (90%) of expenditures
for labor performed and materials supplied in connection with the construction
of the Improvements for the period immediately proceeding that particular
Advance; provided, however, that "Reimbursable Costs", as set forth in the
General Contract shall be in the amount equal to one hundred percent (100%) of
such Reimbursable Costs, in accordance with Section 7.1.7.7 of the General
Contract.
B. Lender shall have no obligation to make a Work-Related Advance
(including, without limitation, the initial Work-Related Advance) if the
undisbursed portion of the Construction Loan (or, in reference to the initial
Work-Related Advance, the full Construction Loan amount) is less than the
remaining costs of Completion until Borrower has deposited with the Lender an
amount equal to the estimated Uncovered Cost of the Work (the "Required
Completion Deposit Assurances").
C. Lender shall withhold from each Work-Related Advance an amount not to
exceed ten percent (10%) of such costs, provided, that no such retainage shall
apply to any reimbursements to be paid to the General Contractor pursuant to
Section 7.1.7.7 of the General Contract. The retainage shall be funded by Lender
to, or at the direction of, Borrower upon Borrower's written certification to
Lender that all "punch list items" have been resolved to Borrower's
satisfaction, accompanied by a certificate from the Borrower's
Architect/Engineer and Lender's Inspector certifying to the same, and subject to
Lender's approval of such items.
D. Each Work-Related Advance shall be conditioned upon Lender's receipt and
approval of all items required to be delivered by Borrower pursuant to Exhibit I
hereof.
E. Work-Related Advances shall be subject to the receipt of Title Policy
endorsements required pursuant to the Construction Covenants, trailing
mechanics' and materialmen's lien waivers on a thirty (30) day basis and any
surveys required pursuant to the Construction Covenants.
F. Lender will make the initial Work-Related Advance and the final
Work-Related Advance directly to the agent of the Title Company (the "Title
Agent") if necessary in order for Lender to obtain the Title Policy or any
endorsement thereto. Other Work-Related Advances may, at Borrower's election, be
made directly to Borrower provided that all conditions precedent to the making
of an Advance have been satisfied.
G. Lender shall have the right to approve or disapprove disbursements for
stored or ordered goods. Without limiting the generality of such right, Lender
may condition its approval of disbursements of the Loan for payments of or
deposits upon stored or ordered goods upon Lender's prior receipt of the
following:
(i) Evidence reasonably satisfactory to Lender that such goods are covered
by the Insurance Policies required to be delivered pursuant to the Loan
Agreement;
(ii) Evidence reasonably satisfactory to Lender from the vendor of such
goods that, upon full payment to the vendor, ownership of such goods will
vest in the name of Borrower free and clear of any liens or claims of the
vendor or any other third party;
(iii) (a) Evidence reasonably satisfactory to Lender that the goods are and
upon disbursement shall be stored upon the Real Property in a manner which
is adequate to protect the goods against theft and damage and otherwise
satisfactory to Lender; or
(b) if the goods will not be stored upon the Real Property at disbursement,
evidence (including the original warehouse receipt) reasonably satisfactory to
Lender that the goods are being fabricated or sold by a reputable and
creditworthy vendor, that the goods are being or will be stored in a
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bonded warehouse or storage yard unless the goods are still being fabricated and
that the warehouse or storage yard has been notified of Lender's security
interest.
H. Lender shall have been provided with paid invoices relating to the
construction of the Time-Share Project for all Work through the date of the
previous Work-Related Advance.
I. No intervening matters shall have affected the priority of Lender's
Mortgage.
J. Lender shall have been provided with a certification by Borrower,
Teton's supervising architect, the General Contractor and Lender's Inspector
that: (a) all Work theretofore performed has been performed in substantial
accordance with the Plans; (b) all governmental licenses and permits required
for the Improvements as then completed have been obtained; (c) the Improvements
as then completed do not violate and if further completed in accordance with the
Plans will not violate any law, ordinance, rule or regulation or any covenant,
condition or restriction affecting the Time-Share Project; (d) the remaining
undisbursed proceeds of the Loan are sufficient to pay for the completion of the
Improvements; and (e) the Work-Related Advance is in an amount not in excess of
the value of the Work and materials for which the Work-Related Advance is
requested.
K. Lender shall have been provided with evidence that any inspections
required by any governmental authority having jurisdiction over the Time-Share
Project have been completed with results satisfactory to that authority
L. Lender shall have been provided with a certification by Borrower that to
the best of Borrower's Knowledge, there shall exist no Event of Default or
Incipient Default as of the date of any such proposed Work-Related Advance.
M. Lender shall receive copies of any building permits that are then
required to be obtained by Borrower.
S.8.A. Borrower represents and warrants to Lender that prior to that
recordation of the Mortgage, no services, work, equipment or materials of any
kind that may give rise to any mechanics or similar statutory lien, including,
without limitation, site work, clearing, grubbing, draining or fencing of the
Real Property were performed or commenced on the Real Property or otherwise
provided in connection with the Work, except to the extent that such services,
work, equipment, materials have been fully disclosed in writing to Lender and to
Title Insurer and the Title Policy insures the priority of the Mortgage over all
mechanics and similar liens.
B. Borrower represents and warrants to Lender that all utility services
(including water, storm and sanitary sewer, gas, electric and telephone
facilities and garbage removal) necessary for the Completion of the Work and the
intended use of the Real Property as a Time-Share Project are available to the
Real Property (or will be upon Completion); that, to the best of Borrower's
Knowledge, the suppliers of such utilities have the capacity to serve the Real
Property and are committed to supply such utilities in such amounts as are
required upon Completion; and all fees and deposits due to the suppliers of such
utilities have been paid current or amounts adequate for such purposes have been
reserved in the Budget.
C. Lender shall employ an independent architect or engineer ("Lender's
Inspector") to: (a) review the Plans, the Budget and the Construction Contracts;
(b) make periodic inspections of the Real Property and the Work so that Lender
may monitor whether Borrower is in compliance with the terms and conditions of
this Agreement with respect to completion of the Work; and (c) review and
approve the monthly draw request, perform an analysis of the anticipated cost of
the Work, and certify that each Work-Related Advance Request is not in excess of
the Work completed and the amount to which Borrower is entitled under the terms
and conditions of this Agreement. The cost of retaining Lender's Inspector shall
be borne by Borrower.
(1) Lender may require an inspection of the Work by Lender's Inspector (a)
prior to each Work-Related Advance; (b) monthly or more frequently if
deemed necessary by Lender during the course of construction of the Work;
(c) upon Completion of the Work; and (d) at such other time as Lender may
deem necessary due to actual or suspected non-compliance with the Plans,
Construction Contract(s), the Loan Documents,
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any law, regulation or private restriction, sound architectural,
engineering or construction principles or commonly accepted safety
standards or Borrower's failure to satisfy the requirements of the Loan
Documents.
(2) Lender shall have no duty to supervise or to review and inspect the
Plans, the Construction Contract(s), any budget proposed to be the Budget,
the construction of the Work, or any books and records pertaining thereto.
Any inspection made by Lender shall be for the sole purpose of determining
whether the Obligations are being performed and of preserving Lender's
rights under the Loan Documents. If Lender, or Lender's Inspector acting on
behalf of Lender, should review or inspect the Plans, the Construction
Contract(s), the Budget, the construction of the Work or any books and
records pertaining thereto, Lender and Lender's Inspector shall have no
liability or obligation to Borrower or any third person arising out of such
inspection; and neither Borrower nor any third person shall be entitled to
rely upon any such inspection or review. Inspection not followed by notice
of default shall not constitute (a) a waiver of any default then existing;
(b) an acknowledgment or representation by Lender or Lender's Inspector
that there has been or will be compliance with the Plans, the Construction
Contract(s), the Budget, the Loan Documents, applicable laws, regulations
and private restrictions, sound construction, engineering or architectural
principles or commonly accepted safety standards, or that the construction
is free from defective materials or workmanship; or (c) a waiver of
Lender's right to insist that Completion of the Work occur in accordance
with the Plans, Construction Contract(s), the Budget, Loan Documents,
applicable laws, regulations and restrictions of record, sound
construction, engineering or architectural principles or commonly safety
standards and free from defective materials and workmanship. Lender and
Lender's Inspector owe no duty of care to Borrower or any third person to
protect against, or inform Borrower or any third person of, the existence
of negligence, faulty, inadequate or defective design or construction of
the Work.
(3) To the extent that any construction within the Project is funded by
sources other than the Loan contemplated herein (including Borrower's
equity), Borrower shall allow Lender's Inspector (at Borrower's expense) to
review and inspect such construction work and such construction work must
meet Lender's standards and specifications.
D. Borrower shall strictly enforce all material provisions of the
Construction Contract, the Architect/Engineer Agreement and all other
contract(s) for the construction of the Time-Share Project to ensure that the
other parties thereto are required to promptly and diligently perform all of its
or their obligations thereunder and in such a manner as to preserve Lender's
security interest in the Collateral and the Time-Share Project. Borrower shall
timely perform all its obligations under the aforementioned agreements and
contracts. No material change, amendment or modification shall be made to such
contract(s) without the prior written consent of Lender.
E. No materials, equipment, fixtures or any other part of the Time-Share
Project, or articles of personal property placed in the Time-Share Project,
shall be purchased or installed under any security agreement or other
arrangements wherein the seller reserves or purports to reserve the right to
remove or to repossess any such items or to consider them personal property
after their incorporation into the Time-Share Project.
F. Borrower shall commence construction of the Improvements on or before
the date hereof, shall continue the Work without material interruption, and
shall cause Completion on or before the Required Completion Date subject to the
occurrence of Force Majeure Events not to exceed ninety (90) days in the
aggregate. Borrower shall (a) permit no material deviations to occur in the
progress, timing or completion of construction of the Time-Share Project; (b)
cause the Time-Share Project to be constructed substantially in accordance with
the Budget; (c) otherwise abide by the Work Progress Schedule and Budget in all
material respects; and (d) cause the Completion of the Work in a good and
workmanlike manner substantially according to the Plans, free from all legal
charges, encumbrances and rights of third parties (other than the Permitted
Encumbrances and the Mortgage), and in accordance with all applicable ordinances
and statutes, including zoning laws, all covenants, conditions and restrictions
running with the land, and all regulations and building codes of any
governmental or municipal agency having jurisdiction over the Time-Share
Project.
G. Borrower shall pay when due all costs, expenses and claims pertaining to
the Work and deliver to Lender during the course of the Work in order to monitor
and/or provide assurance that the Work is proceeding lien free in accordance
with the requirements of this Agreement: bills of sale, conveyances and paid
invoices pertaining to the Work; all waivers and releases of lien or claims on
the Real Property and/or the Improvements on account of the Work Lender may
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deem necessary or may request for its protection; and from persons acceptable to
Lender, additional engineering or architectural studies and reports as Lender or
Lender's Inspector may require.
H. The Time-Share Project shall be completed substantially in accordance
with the final drawings, plans and specifications which have been approved by
Lender (the "Plans") prepared by the Architect(s)/Engineer(s), as approved by
Lender, Construction Contract(s), applicable laws, regulations and private
restrictions, the Loan Documents, sound construction, engineering and
architectural principles and commonly accepted safety standards and free from
defective materials and workmanship. No material changes, alterations or
modifications shall be made in the Plans or in any of the other Principal
Work-Related Items without Lender's prior written approval. The foregoing
notwithstanding, Borrower shall be permitted to make changes in the Plans to the
extent that such change order (a) does not increase the cost of the Time-Share
Project by more than Twenty-Five Thousand Dollars ($25,000) or, with all other
changes, does not increase the cost of the Time-Share Project by more than One
Hundred Thousand Dollars ($100,000), and (b) does not materially affect the
design, structural integrity or quality of the Improvements. Borrower shall
deliver to Lender, immediately upon execution thereof, all change orders with
respect to the Work, including those within the scope of clauses (a) and (b)
above.
I. Borrower shall not enter into any Architect/Engineer Agreement or
Construction Contract (other than those contracts and agreements which Lender
approved prior to the Closing Date) with respect to the Work except upon terms
and with such parties as Lender may approve in writing.
J. Borrower shall record, or cause to be recorded, all notices of
commencement/completion and similar notices permitted by applicable laws and
regulations which have the effect of shortening periods within which mechanics
and similar liens may be filed.
K. Borrower shall deliver to Lender true and complete copies of all
Principal Work-Related Items and all other Contracts, Intangibles, Licenses and
Permits.
L. Borrower shall perform all its obligations and preserve its rights under
the Principal Work-Related Items in force and use its best efforts to secure the
performance of the other parties to the Principal Work-Related Items and all
other Contracts, Intangibles, Licenses and Permits.
M. Borrower shall deliver, or cause to be delivered, to Lender prior to or
concurrently with each Work-Related Advance, a date down endorsement in a form
acceptable to Lender issued by the Title Company insuring that the Mortgage at
the time of each Work-Related Advance, constitutes a valid first priority lien
upon the Real Property or title, subject only to the Permitted Encumbrances;
upon construction of the foundation for any building comprising part of the
Improvements deliver, or cause to be delivered, to Lender an endorsement
("foundation endorsement") insuring that the foundations, as constructed, are
located within all set-back and boundary lines of the Real Property and do not
encroach upon any easements, rights of way (public or private) or upon any other
adjoining landowner's property; and upon the final advance of the retainage,
Borrower shall deliver, or cause Title Agent to deliver, to Lender a date down
endorsement or a re-issued title policy ("Re-Issued Title Policy") meeting the
substantive requirements set forth above.
N. Borrower shall notify Lender in writing if and when the unpaid costs of
Completion of the Work exceed or appear likely to exceed the undisbursed portion
of the Loan and any undisbursed Required Completion Assurance Deposit(s) held by
Lender.
O. Borrower shall deliver to Lender promptly after the completion of the
foundation and, if required by Lender, after the pouring of a street, curbstone
or concrete slab on the Real Property, a survey prepared in accordance with the
requirements of the Loan Agreement, showing such Improvements, their location
within the boundary and set back lines of the Real Property and a lack of
encroachments, and deliver to Lender promptly upon the Completion, a survey
which is certified to Lender, showing the "as-built" Improvements and showing
all easements and other matters affecting the Time-Share Project, and otherwise
satisfying the requirements of Loan Agreement;
P. Borrower shall, after obtaining knowledge or receiving notice thereof,
correct or cause to be corrected (a) any material defect in the Work, (b) any
material departure in the completion of the Work from the Plans and the
Construction Contract(s) unless expressly permitted in this Agreement or
consented to in writing by Lender, (c) any
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failure of the Work to comply with applicable laws, regulations or restrictions
of record, sound construction, engineering or architectural principles or
commonly accepted safety standards or (d) any encroachment of any part of the
Improvements on any set-back or boundary line, easement, or other restricted
area.
S.9 (a) The Receivables Loan Note is comprised of two (2) notes, one in the
amount of Five Million and No/100 Dollars ($5,000,000) made jointly and
severally by Raintree and Teton (the "Raintree Receivables Note") and one in the
amount of Fifteen Million and No/100 Dollars ($15,000,000) made solely by Teton
(the "Teton Receivables Note"). The parties agree that Advances of the
Receivables Loan shall be deemed to made under the Raintree Receivables Note, as
to twenty-five percent (25%) of such Advance, and, under the Teton Receivables
Note, as to seventy-five percent (75%) of such Advance. In addition, to the
extent any payment under the Receivables Loan is subsequently invalidated, set
aside or required to be repaid to any other person, then to such extent, the
Obligation in connection with the Receivables Loan intended to be satisfied
shall be revived and continued under the Raintree Receivables Note, as to
twenty-five percent (25%) of such Obligation, and under the Teton Receivables
Note, as to seventy-five percent (75%) of such Obligation. Furthermore, all
payments made in satisfaction of the principal balance of the Receivables Loan
shall be applied twenty-five percent (25%) against the outstanding principal
balance due under the Raintree Receivables Note and seventy-five percent (75%)
against the outstanding principal balance under the Teton Receivables Note.
(b) The Working Capital Loan Note is comprised of two (2) notes, one in the
amount of One Million Eight Hundred Seventy-Five Thousand and No/100 Dollars
($1,875,000) made jointly and severally by Raintree and Teton (the "Raintree
Working Capital Note") and one in the amount of Five Million Six Hundred
Twenty-Five Thousand and No/100 Dollars ($5,625,000) made solely by Teton (the
"Teton Working Capital Note"). The parties agree that Advances of the Working
Capital Loan shall be deemed to made under the Raintree Working Capital Note, as
to twenty-five percent (25%) of such Advance, and, under the Teton Working
Capital Note, as a seventy-five percent (75%) of such Advance. In addition, to
the extent any payment under the Working Capital Loan is subsequently
invalidated, set aside or required to be repaid to any other person, then to
such extent, the Obligation in connection with the Working Capital Loan intended
to be satisfied shall be revived and continued under the Raintree Working
Capital Note, as to twenty-five percent (25%) of such Obligation, and under the
Teton Working Capital Note, as to seventy-five percent (75%) of such Obligation.
Furthermore, all payments made in satisfaction of the principal balance of the
Working Capital Loan shall be applied twenty-five percent (25%) against the
outstanding principal balance due under the Raintree Working Capital Note and
seventy-five percent (75%) against the outstanding principal balance under the
Teton Working Capital Note.
(c) The Construction Loan Note is comprised of two (2) notes, one in the
amount of Eight Million One Hundred Thirty-Two Thousand Five Hundred and No/100
Dollars ($8,132,500) made jointly and severally by Raintree and Teton (the
"Raintree Construction Note") and one in the amount of Twenty-Four Million Nine
Hundred Thirty-Seven Thousand Five Hundred and No/100 Dollars ($24,937,500) made
solely by Teton (the "Teton Construction Note"). The parties agree that Advances
of the Construction Loan shall be deemed to made under the Raintree Construction
Note, as to twenty-five percent (25%) of such Advance, and, under the Teton
Construction Note, as a seventy-five percent (75%) of such Advance. In addition,
to the extent any payment under the Construction Loan is subsequently
invalidated, set aside or required to be repaid to any other person, then to
such extent, the Obligation in connection with the Construction Loan intended to
be satisfied shall be revived and continued under the Raintree Construction
Note, as to twenty-five percent (25%) of such Obligation, and under the Teton
Construction Note, as to seventy-five percent (75%) of such Obligation.
Furthermore, all payments made in satisfaction of the principal balance of the
Construction Loan shall be applied twenty-five percent (25%) against the
outstanding principal balance due under the Raintree Construction Note and
seventy-five percent (75%) against the outstanding principal balance under the
Teton Construction Note.
S.10 At the election of Lender, to be given by written notice to Borrower at any
time prior to the date (the "Adjustment Date") which is sixty (60) months
following the expiration of the Receivables Loan Borrowing Term, Lender shall
have the right but not the obligation to adjust the interest rate under which
the Receivables Loan accrues to an amount equal to four hundred (400) basis
points in excess of the rate offered on a five-year U.S. Treasury Note in effect
five (5) Business Days prior to the Adjustment Date. The rate offered on a
five-year U.S. Treasury Note shall be defined as the rate shown under the column
heading "Ask Yld." for "Govt. Bonds & Notes" in the "Treasury Bonds, Notes &
Bills" Section of The Wall Street Journal - Western Edition published on the
fifth Business Day prior to the Adjustment Date for the government bond or note
with a maturity date in the same month and year as the Receivables Loan Maturity
Date, or, if there are more than one (1) government bonds or notes with a
maturity date in the same month and year as the Receivables Loan
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Maturity Date, the highest of the rates shown in the "Ask Yld." column for any
such bond or note, or, if there is no government bond or note with a maturity
date in the same month and year as the Receivables Loan Maturity Date, the
average (rounded to the next highest basis point) of the rates shown in the "Ask
Yld." column for the bonds or notes in the months preceding and following the
month in which the Receivables Loan Maturity Date falls.
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EXHIBIT A-1
CONDITIONS OF ELIGIBLE INSTRUMENT
(a) Lender has a valid, direct and perfected first lien/security interest
in the Instrument and security therefor and has a valid and perfected first
priority right to payments.
(b) The Instrument does not represent a sale directly or indirectly, to any
of Borrower's members, managers, shareholders, directors, officers, partners, as
the case may be, its agents, employees or creditors, or any relative or
Affiliate of Borrower, or of the foregoing.
(c) Teton has received from the Purchaser a minimum cash down payment of
ten percent (10%) of the total sales price (no part which has been advanced or
loaned to the Purchaser by Borrower, directly or indirectly) with such down
payment being represented by a cash or credit card payment.
(d) The Instrument must provide for level consecutive monthly installments
of principal and interest in U. S. funds over a term (from its effective date)
not exceeding two hundred forty (240) months from the date of its execution.
(e) At the time of funding of an Advance against the Instrument, no
scheduled installment payment on the Instrument is more than twenty-nine (29)
days past due or has been deferred more than twenty-nine (29) days.
(f) The Purchaser in all respects, including, without limitation, its
creditworthiness, is acceptable to Lender. Without limiting the generality of
the foregoing, if the Purchaser is a resident of the United States or Canada,
such Purchaser has a Fair Isaac Credit Bureau Score of not less than 650, and if
a resident of a county other than the United States or Canada, Lender may
determine the creditworthiness of such Purchaser based on any equivalent credit
scoring system in effect in such Purchaser's county of residence. In addition,
such Purchaser has obtained from Teton marketable rights to the purchased
Time-Share Interest and has not purchased more than two (2) Time-Share
Interests, provided, however, that Lender may consider on a case-by-case basis,
funding an Advance against an Instrument from a Purchaser who has purchased more
than two (2) Time-Share Interests.
(g) The Instrument and any security for the payment of the amount due under
the Instrument are bona fide, are in form and substance satisfactory to Lender
and are valid and enforceable in accordance with their terms; upon the obligor's
default under the Instrument, subject only to notice and a reasonable grace
period, payment of the balance of the indebtedness owing under the Instrument
may be immediately accelerated and the lien of any security may be foreclosed or
realized upon; and rights of the Purchaser to the purchased Time-Share
Interest(s) is subject only to the Permitted Encumbrances and the payment of any
and all assessments levied by the Time-Share Association.
(h) The Unit(s) in which the Time-Share Interest(s) are owned and the
amenities that have been promised to the Purchasers have been completed, fully
furnished and approved and ready for occupancy and the furnishings in those
Units are free of any lien except for the Permitted Encumbrances; no Unit or
other part of the common areas of the Time-Share Project is subject to
partition; and the time-share use of the Units and amenities conforms to all
applicable restrictions and laws, necessary approvals having been obtained.
(i) The Instrument, the Purchaser Mortgage and the related sale transaction
comply with all applicable laws; Teton has Performed all its obligations due to
the Purchaser and there are no executory obligations to the Purchaser to be
Performed by Teton; and the Purchaser does not have any right of rescission,
set-off, abatement, counterclaim or the like.
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(j) The Purchaser is a United States or Canadian resident provided,
however, that Lender may consider, on a case-by-case basis, funding an Advance
against an Instrument from a Purchaser who is not a United States or Canadian
resident.
(k) The Instrument is secured by a Purchaser Mortgage
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EXHIBIT A-2
CONDITIONS OF WORKING CAPITAL LOAN ELIGIBLE INSTRUMENTS
(a) Lender has a valid, direct and perfected first lien/security interest
in the Reservation Agreement and if and when the same comes into existence the
Purchase Contract pertaining to the same, together with the Escrow and the
Agreement creating and governing the Escrow.
(b) The Reservation Agreement does not represent a sale by Teton, directly
or indirectly, to any of its members, managers, shareholders, directors,
officers, partners, as the case may be, its agents, employees or creditors, or
any relative or Affiliate of Teton or of the foregoing.
(c) Teton has received from the Purchaser a signed Reservation Agreement
accompanied by a refundable deposit equal to five percent (5%) of the purchase
price of the Time-Share Interest which is the subject matter of the Reservation
Agreement and the original signed Reservation Agreement and such deposit is held
in Escrow by the Escrow Agent.
(d) The Reservation Agreement is bona fide, is in form and substance
satisfactory to Lender and is valid and enforceable in accordance with their
terms.
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EXHIBIT B
PERMITTED ENCUMBRANCES
1. Unpatented mining claims; reservations or exceptions in patents or in
acts authorizing the issuance thereof; surface water rights, claims or title to
surface water.
2. Ownership or title to any mineral interest and the effect on the surface
of the exercise of the mineral right.
3. Taxes for the year 1999 and subsequent years.
4. Covenants, conditions, restrictions, reservations, easements (including,
but not limited to the access, utility, tramway, skier and snowmaking easement
as shown on Plat 945), ditches, roadways, rights-of-way, common areas and
building set back requirements as delineated on the recorded Plat Number 945,
records of Teton County, Wyoming.
5. Right of Way Easement from K.L. Clatterbaugh to Lower Valley Power and
Light, Inc. appearing of record in Book 10 of Mixed Records, Page 101, records
of Teton County, Wyoming.
6. Non-Exclusive Easement from The Jackson Hole Ski Corporation to Lower
Valley Power and Light, Inc. appearing of record in Book 12 of Mixed Records,
Page 243, records of Teton County, Wyoming.
7. Easement and right-of-way from Jackson Hole Ski Corporation to Lower
Valley Power and Light, Inc. appearing of record in Book 81 of Photo, Page 221,
records of Teton County, Wyoming.
8. Compilation of Declaration of Restrictive Covenants, Jackson Hole Ski
Corporation Addition appearing of record on Book 330 of Photo, Pages 418-443,
and any amendments thereto, records of Teton County, Wyoming.
9. Affidavit Affecting Title Re: Teton Village Planned Unit Development for
Planned Resort appearing of record in Book 351 of Photo, Pages 409-573, records
of Teton County, Wyoming.
10. Easement and the terms and conditions of that beneficial Access and
Utility Easement appearing of record in Book 356 of Photo, Pages 470-472,
records of Teton County, Wyoming.
11. Access and Utility Easement appearing of record in Book 371 of Photo,
Pages 656-658, records of Teton County, Wyoming.
12. Teton Village Master Plan (PUD 97-0001) Development Exactions Agreement
of Requirements, Commitments and Outstanding Obligations appearing of record in
Book 374 of Photo, Pages 580-583, records of Teton County, Wyoming.
4
<PAGE>
EXHIBIT C
BORROWER'S CERTIFICATE
The Teton Club, LLC., a Delaware limited liability company and Raintree
Resorts International, Inc., a Nevada corporation (collectively, "Borrower")
hereby certify to FINOVA CAPITAL CORPORATION ("Lender") that (i) the total
unpaid payments due under the Instruments described in Schedule A attached
hereto and by this reference incorporated herein and the unpaid principal
balance for each such Instrument is as set forth in Schedule A; and (ii) such
Instruments are, individually and collectively, Eligible Instruments (if this
Certificate is being submitted in connection with an Advance of Receivables
Loan) or Working Capital Loan Eligible Instruments (if this Certificate is being
delivered in connection with an Advance of the Working Capital Loan).
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Loan and
Security Agreement between Borrower and Lender dated as of ______________,
199____, as it may be from time to time renewed, amended, replaced or restated.
DATED: ____________, ______.
"BORROWER" THE TETON CLUB, LLC, a Delaware limited liability company
By:
Type/Print Name:
Title:
RAINTREE RESORTS INTERNATIONAL INC., a Nevada corporation
By:
Type/Print Name:
Title:
5
<PAGE>
EXHIBIT C-1
RE-ASSIGNMENT OF INSTRUMENTS
KNOW ALL MEN BY THESE PRESENTS:
That FINOVA Capital Corporation, a Delaware corporation ("Assignor") for
Ten Dollars ($10) and other valuable consideration to it in hand, the receipt
whereof is hereby acknowledged, does by these presents grant, bargain, sell,
assign, transfer and set over unto The Teton Club, LLC, a Delaware limited
liability company ("Assignee") all of Assignor's interest in the Instruments
("Instruments") described in Schedule A attached hereto and by this reference
incorporated herein.
TOGETHER WITH all the promissory note(s) and other obligations of the
mortgagor(s) described in such Instruments, all moneys due and to become
obligations therein secured, all moneys due and to become due thereunder, and
all interest thereon, and all rights arising therefrom.
This re-assignment is made without recourse and without representation or
warranty of any kind, express and implied (except that Assignor has not sold or
assigned any interest in or otherwise encumbered the Instruments or other rights
being reassigned hereunder).
IN WITNESS WHEREOF, the Assignor has caused these presents to be executed
the ____ day of _________________, 199__.
WITNESS: "Assignor"
FINOVA CAPITAL CORPORATION, a Delaware corporation
By:
Type/Print Name:
Title:
STATE OF ___________________ )
)
County of ____________________)
I, _______________________, a notary public in and for the State and County
aforesaid, do certify that ____________________________________ whose name, as
________________________ of _____________________, is signed to the writing
above, bearing date on the ______ day of _________________, 199___, has
acknowledged the same before me in my County aforesaid.
Given under my hand and official seal this ___ day of __________________.
My term of office expires on the ____ day of ___________________.
Notary Public
6
<PAGE>
SCHEDULE A
To re-assignment of instruments
Purchaser
Date
Original Principal
Amount Secured
7
<PAGE>
EXHIBIT C-2
RE-ASSIGNMENT OF MORTGAGE(S)
FINOVA CAPITAL CORPORATION, a Delaware corporation ("Assignor"), as holder
of the mortgage(s) described on Schedule A attached hereto and by this reference
incorporated herein, for good and valuable consideration given to it by
(Borrower Name), (Type of Borrower Entity) ("Assignee"), the receipt whereof is
hereby acknowledged, hereby re-assigns and transfers unto Assignee its interest
in and to such mortgage(s);
TOGETHER WITH the promissory note(s) and other obligations of the
mortgagor(s) described in such mortgage(s), all moneys due and to become due
under such mortgage(s), promissory note(s) and other obligations, all interest
thereon, and all rights arising therefrom.
This re-assignment is made without recourse and without representation or
warranty of any kind, express and implied.
IN WITNESS WHEREOF, Assignor has caused these presents to be executed the
___ day of __________, ____.
WITNESS TO ASSIGNOR: FINOVA CAPITAL CORPORATION, a Delaware corporation
ASSIGNOR:
By:
Type/Print Name:
By: Title:
Type/Print Name:
By:
Type/Print Name:
STATE OF __________________ )
)
County of ____________________)
I, _______________________, a notary public in and for the State and County
aforesaid, do certify that ____________________________________ whose name, as
________________________ of _____________________, is signed to the writing
above, bearing date on the ___ day of ________________________, 199___, has
acknowledged the same before me in my County aforesaid.
Given under my hand and official seal this ___ day of ___________________.
My term of office expires on the ____ day of _______________________.
Notary Public
8
<PAGE>
SCHEDULE A TO RE-ASSIGNMENT OF MORTGAGE(S)
Mortgagor Real Date of Mortgage Original Principal
Property1 Mortgage Recording Amt. Secured
Information2
1 All of said time share interests being in (Real property description)
2 (Date of Recording and either Instrument Number or Adequate Recording Book and
Page References)
9
<PAGE>
EXHIBIT D
ADDITIONAL CONDITIONS
TO WORKING CAPITAL LOAN ADVANCES
(a) a completed and executed "Request for Working Capital Loan Advance
and Certification," in form and substance identical to Exhibit D-1.
(b) (i) signed Reservation Agreement and if and when available, the signed
Purchase Contract, which qualify as a Working Capital Loan Eligible Instrument,
which have been duly and unconditionally assigned to Lender by Teton, (ii)
copies of signed receipts for public offering statements/property
reports/prospectuses to the extent the same are given or are required to be
given to Purchasers in connection with the sales of Time-Share Interests giving
rise to such Instruments, and (iii) copies of credit disclosure statements and
other items requested by Lender which were signed by such Purchasers in
connection with such sales.
(c) Assignment in form and substance identical to Exhibit D-2 to the Loan
and Security Agreement, properly completed, executed and acknowledged assigning
the Instruments covered by item (b) above.
(d) if requested by Lender, evidence reasonably satisfactory to it that
there are no conflicting charges or security interests claimed in the Working
Capital Loan Collateral, other than the Permitted Encumbrances.
(e) Certification from the Escrow Agent in the form of Exhibit D-3.
(f) if requested by Lender, such other items which are reasonably necessary
to evaluate the request for the Working Capital Loan Advance and the
satisfaction of the conditions precedent thereto.
10
<PAGE>
EXHIBIT D-1
REQUEST FOR WORKING CAPITAL LOAN ADVANCE
AND CERTIFICATION
The undersigned ("Borrower") requests FINOVA CAPITAL CORPORATION ("Lender")
to make a Working Capital Loan Advance in the sum of
_____________________________ ______________ UNITED STATES DOLLARS (U.S.
$_____________) upon receipt hereof, pursuant to the Loan and Security Agreement
between such parties dated as of _______________, 19____ (with any amendments,
"Agreement").
Borrower hereby certifies to Lender that (i) the total deposit made and
unpaid payments due under the Reservation Agreement for which the requested
disbursement of the Working Capital Loan is sought is as set forth on Schedule A
attached hereto and by this reference incorporated herein; (ii) the Reservation
Agreement and, if in existence, the Purchase Contract pertaining thereto against
which the requested disbursement of the Working Capital Loan is sought are,
individually and collectively, a Working Capital Loan Eligible Instrument; (iii)
no material adverse change has occurred in the financial condition or in the
business and operations of Borrower since _______________, _____, the date of
the last financial statements delivered to Lender; (iv) all representations and
warranties contained in the Agreement are true and correct as of the date
hereof; (v) neither an Event of Default nor an Incipient Default exists; and
(vi) Borrower has Performed and complied with all agreements, covenants and
conditions required by the Agreement to be Performed and complied with prior to
or at the date of the requested disbursement of an Advance of the Working
Capital Loan.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Agreement.
DATED: ________________, ______.
"BORROWER" THE TETON CLUB, LLC, a Delaware limited liability company
By:
Type/Print Name:
Title:
RAINTREE RESORTS INTERNATIONAL, INC., a Nevada corporation
By:
Type/Print Name:
Title:
11
<PAGE>
EXHIBIT D-2
ASSIGNMENT
ASSIGNMENT
(Borrower Name), (Type of Borrower Entity) ("Assignor"), as owner and
holder of the Reservation Agreement(s) described in Schedule A attached hereto
and by this reference incorporated herein, for good and valuable consideration
given to it by FINOVA CAPITAL CORPORATION, a Delaware corporation ("Assignee"),
the receipt whereof is hereby acknowledged, hereby grants, bargains, sells,
assigns, transfers and sets over unto Assignee all of Assignor's rights, title
and interest in and to such Reservation Agreement(s) and if and when in
existence, the Purchase Contract(s) pertaining thereto, but excepting Assignors'
obligations to the Purchasers under such Reservation Agreement(s) and Purchase
Contract(s);
TOGETHER WITH the obligations of the Purchasers described in such
Reservation Agreement(s) and Purchase Contract(s), all moneys due and to become
due under such Reservation Agreement(s) and Purchase Contract(s), and other
obligations, all interest thereon, and all rights arising therefrom.
IN WITNESS WHEREOF, Assignor has caused these presents to be executed the
____ day of __________, ____.
WITNESSES AS TO ASSIGNOR: (Borrower Name),(Type of Borrower Entity)
ASSIGNOR
Type/Print Name: By:
Type/Print Name:
Title:
Type/Print Name:
COMMONWEALTH/STATE OF )
)
County of )
[APPROPRIATE FORM OF ACKNOWLEDGMENT]
12
<PAGE>
SCHEDULE A
TO
ASSIGNMENT
Purchaser Time-Share Unit Date of Reservation Cash Payments Made Under
Agreement Reservation Agreement
13
<PAGE>
EXHIBIT D-3
CERTIFICATION
The undersigned, constituting the Escrow Agent under that certain Escrow
Agreement dated June 23, 1999, between The Teton Club, LLC and the undersigned,
hereby certifies that FINOVA Capital Corporation that the undersigned is in
possession of the original of each of the Reservation Agreements described on
the attached Schedule and has received and is in possession of the cash payments
in the amounts set forth on the attached Schedule. The undersigned agrees to
hold the Reservation Agreements and cash payments described on the attached
Schedule strictly in accordance with that certain Collateral Assignment,
Security Agreement and Account Agreement dated __________________, 1999 between
the undersigned and FINOVA Capital Corporation.
The undersigned acknowledges that FINOVA Capital Corporation is making loan
advances in express reliance upon the accuracy of this certification.
JACKSON HOLE TITLE AND ESCROW COMPANY
By:
Print Name:
Title:
14
<PAGE>
ATTACHMENT TO CERTIFICATION *
Purchaser Time-Share Date of Cash Payment Made Under
Unit Reservation Agreement Reservation Agreement
- -------------------------
* Note to Preparer: This should be cumulative list of all Reservation Agreements
and cash payments held on escrow
15
<PAGE>
EXHIBIT E
ADDITIONAL CONDITIONS
TO RECEIVABLES LOAN ADVANCES
(a) a completed and executed "Request for Receivables Loan Advance and
Certification," in form and substance identical to Exhibit E-1.
(b) (i) signed original Instruments which qualify as Eligible Instruments
and have been duly and unconditionally endorsed to Lender by Teton, (ii) the
recorded original Purchaser Mortgages which secure such Instruments, (iii)
copies of signed receipts for public offering statements/property
reports/prospectuses to the extent the same are given or are required to be
given to Purchasers in connection with the sales of Time-Share Interests giving
rise to such Instruments, (iv) the original Purchase Contracts and copies of
credit disclosure statements and other items requested by Lender which were
signed by such Purchasers in connection with such sales, and (v) evidence that
all rescission rights have expired and Teton has Performed all its statutory and
contractual obligations with respect thereto.
(c) a Receivables Assignment in recordable form and otherwise in form and
substance identical to Exhibit E 2 to the Loan and Security Agreement, properly
completed, executed and acknowledged assigning the Instruments covered by item
(b) above.
(d) if not previously furnished, evidence satisfactory to Lender that: (i)
all Time-Share Interests which are the subject of the Instruments covered by
item (b) above have all necessary and promised on-site and off-site improvements
thereto and necessary and promised utilities are available; (ii) all Units and
amenities which are to be available to Purchasers obligated on the Instruments
covered by item (b) above have been completed in accordance with all applicable
building codes and are fully furnished, necessarily equipped and will be
available for use by Purchasers without disturbance or termination of their use
rights so long as they are not in default of their obligations under the
Instruments; and (iii) all furnishings in the Units and amenities are owned by
an owners' association or associations in which the Purchasers are members, free
of charges, liens and security interests other than the Permitted Encumbrances.
(e) if requested by Lender, written confirmation from the Servicing Agent
that it has not received notice of any complaint, demand, set-off, or claim by
any person, including, without limitation, any Purchaser, with respect to the
Instruments covered by item (b) above (other than as to routine matters
involving the servicing of an Instrument) and certifying the unpaid total
payments due under the unpaid principal balance of such Instruments.
(f) a Title Policy with respect to each Purchaser Mortgage covered by item
(b) above.
(g) if requested by Lender in accordance with its normal underwriting
procedures, a credit report from a recognized consumer credit reporting agency
on each Purchaser obligated under an Instrument covered by item (b) above.
(h) if requested by Lender, evidence reasonably satisfactory to it that
there are no conflicting charges or security interests claimed in the
Receivables Collateral.
(i) if requested by Lender following a material change of circumstances or
not more often than annually at Lender's discretion, an opinion from independent
counsel to Borrower satisfactory to Lender with respect to the continued
compliance of the Time-Share Project and Borrower's sales and marketing
activities with applicable laws, the enforceability of the Instruments and such
other matters as Lender shall reasonably require.
(j) if requested by Lender following a material change of circumstances or
not more often than annually at Lender's discretion, an opinion letter from
independent counsel to Lender with respect to the continued compliance of the
Time-Share Project and Borrower's sales and marketing activities with applicable
laws, the enforceability of the Instruments and such other matters as Lender
shall reasonably require.
16
<PAGE>
(k) if requested by Lender, such other items which are reasonably necessary
to evaluate the request for the Receivables Loan Advance and the satisfaction of
the conditions precedent thereto.
17
<PAGE>
EXHIBIT E-1
REQUEST FOR RECEIVABLES LOAN ADVANCE
AND CERTIFICATION
The undersigned ("Borrower") requests FINOVA CAPITAL CORPORATION ("Lender")
to make a Receivables Loan Advance in the sum of _____________________________
______________ UNITED STATES DOLLARS (U.S. $_____________) upon receipt hereof,
pursuant to the Loan and Security Agreement between such parties dated as of
_______________, 19____ (with any amendments, "Agreement").
Borrower hereby certifies to Lender that (i) the total unpaid payments due
under the Instruments for which the requested disbursement of the Receivables
Loan is sought and the unpaid principal balance for each such Eligible
Instrument is as set forth on Schedule A attached hereto and by this reference
incorporated herein; (ii) the Instruments against which the requested
disbursement of the Receivables Loan is sought are, individually and
collectively, Eligible Instruments; (iii) no material adverse change has
occurred in the financial condition or in the business and operations of
Borrower since _______________, _____, the date of the last financial statements
delivered to Lender; (iv) all representations and warranties contained in the
Agreement are true and correct as of the date hereof; (v) neither an Event of
Default nor an Incipient Default exists; and (vi) Borrower has Performed and
complied with all agreements, covenants and conditions required by the Agreement
to be Performed and complied with prior to or at the date of the requested
disbursement of the Receivables Loan.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Agreement.
DATED: ________________, ______.
"BORROWER" THE Teton CLUB, LLC, a Delaware limited liability company
By:
Type/Print Name:
Title:
RAINTREE RESORTS INTERNATIONAL, INC., a Nevada corporation
By:
Type/Print Name:
Title:
18
<PAGE>
EXHIBIT E-2
RECEIVABLES ASSIGNMENT
when recorded, mail to:
FINOVA Capital Corporation
7272 East Indian School road, Suite 410
Scottsdale, Arizona 85251
Attention: Manager, Real Estate Finance Division
ASSIGNMENT OF MORTGAGE(S)
(Borrower Name), (Type of Borrower Entity) ("Assignor"), as owner and
holder of the mortgage(s) described in Schedule A attached hereto and by this
reference incorporated herein, for good and valuable consideration given to it
by FINOVA CAPITAL CORPORATION, a Delaware corporation ("Assignee"), the receipt
whereof is hereby acknowledged, hereby grants, bargains, sells, assigns,
transfers and sets over unto Assignee its rights, title and interest in and to
such mortgage(s), but excepting its obligations to the mortgagor(s) under such
mortgage(s);
TOGETHER WITH the promissory note(s) and other obligations of the
mortgagor(s) described in such mortgage(s), all moneys due and to become due
under such mortgage(s), promissory note(s) and other obligations, all interest
thereon, and all rights arising therefrom.
IN WITNESS WHEREOF, Assignor has caused these presents to be executed the
____ day of __________, ____.
WITNESSES AS TO ASSIGNOR: (Borrower Name), (Type of Borrower Entity)
ASSIGNOR
Type/Print Name: By:
Type/Print Name:
Title:
Type/Print Name:
COMMONWEALTH/STATE OF )
)
County of )
[APPROPRIATE FORM OF ACKNOWLEDGMENT]
19
<PAGE>
SCHEDULE A
TO
ASSIGNMENT OF MORTGAGE(S)
Mortgagor Real Date of Mortgage Original Principal
Property3 Mortgage4 Recording Amt./Secured
Information
- -------------------------
3 All of said time share interests being in (real property description)
4 (Date of Recording andeither Instrument Number or Adequate Recording Book and
Page References)
20
<PAGE>
EXHIBIT F
LEGAL DESCRIPTION OF REAL PROPERTY
Parcel 1 (Fee Simple): Lot 199 of Jackson Hole Ski Corporation Addition,
Sixteenth Filing, Teton County, Wyoming, according to that plat recorded in the
Office of the Teton County Clerk on February 16, 1999 as Plat No. 945.
Parcel 2 (Easement Estate): A nonexclusive roadway and underground utility
line easement as created by that instrument recorded in Book 371 of Photo, Pages
656-658, records of Teton County, Wyoming, excepting therefrom Parcel 1 as
described therein.
PIN Number for Mortgaged Property: 22-42-17-24-4-00-002 (includes
additional real property).
21
<PAGE>
EXHIBIT G
BUDGET
22
<PAGE>
EXHIBIT H
WORK PROGRESS SCHEDULE
23
<PAGE>
EXHIBIT I
FINOVA CAPITAL CORPORATION ("Lender")
STANDARD CONSTRUCTION LOAN
ADMINISTRATIVE PROCEDURES
INITIAL AND SUBSEQUENT LOAN ADVANCE
REQUIREMENTS AND EVENTS
A. With each Work-Related Advance Request Borrower must complete, execute and
deliver to Lender:
1. An Application and Certificate For Payment (AIA Document G702) and
Continuation Sheet(s) (AIA Document G703) for all direct costs
(Exhibit I-1).
2. Affidavit of Borrower for Advance (Exhibit I-2).
3. Waiver of Liens (Exhibit I-3) or such form as is required by law for
previous payment.
4. Change Order Approval Request (AIA Document G713) when applicable
(Exhibit I-4).
5. Invoices supporting all amounts shown in columns E and F of AIA
Document G702 and G703.
6. Any required surveys.
7. Such other items as Lender requests which are necessary to evaluate
the request for the Work-Related Advance and the satisfaction of the
conditions precedent thereto.
B. The following events must take place prior to each Work-Related Advance:
1. Contractor requests site inspection from Lender's Inspector.
2. Contractor provides Lender's Inspector with a copy of the AIA Document
G702 and G703.
3. Lender's Inspector will perform a physical inspection to review the
work in place and make a certification and recommendation to Lender.
Lender's Inspector forwards his report, certification and
recommendation to Lender.
4. Lender will request that the Title Agent review the public records,
advise Lender of the same, and forward to Lender endorsement(s) as
required pursuant to the Loan Agreement dated as of the date of the
Work-Related Advance.
5. Lender will review the Work-Related Advance Request and the input of
Lender's Inspector and/or of the Title Agent. The Work-Related Advance
Request must be appropriate, complete and in proper order. The order
of the Work-Related Advance Request package will determine the
processing time needed.
24
<PAGE>
6. Borrower shall have all applicable licenses, permits and certificates
for all Work under construction at the time the Work-Related advance
was requested.
7. All other conditions of the Loan Documents required to be satisfied as
of the date of any such Work-Related Advance are satisfied.
C. Upon receipt from Lender (or Title Agent, if applicable), Borrower will
execute and deliver to Lender a funding letter in connection with the
Work-Related Advance.
D. All items, except for the escrow funding letter required to be delivered to
Lender pursuant to this Exhibit, shall be delivered to Lender and the Lender's
Inspector at least ten (10) Business Days prior to the requested Work-Related
Advance.
25
<PAGE>
EXHIBIT I-1
AIA 702 AND 703 FORMS
26
<PAGE>
EXHIBIT I-2
BORROWER'S AFFIDAVIT FOR ADVANCE
Borrower: Date:
Time-Share Project:
Request No.:
Loan No.: Period to
Amount:
In connection with and in order to induce FINOVA Capital Corporation
("Lender"), to advance the amount requested above, Borrower hereby represents,
warrants and stipulates as follows:
1. The work listed in this Work-Related Advance Request Package ("Request")
has been completed in accordance with that certain Loan and Security Agreement
dated ____________________ between the undersigned and Lender (with any
amendments, "Agreement"); all obligations for work submitted and received on
previous Borrower's Work-Related Advance Request have now been paid in full
(except for retainage); the funds requested at this time shall be applied only
to the obligations for work set forth in this Request and that all Insurance
Policies (including without limitation, Builder's Risk and General Liability
Coverage policies) required by the Loan Agreement are in full force and effect.
2. Attached hereto are the names of all contractors, subcontractors,
suppliers and materialmen who have performed or who will be performing Work and
whose names have not been previously delivered to Lender in writing. Copies are
attached hereto of contracts with all such contractors, subcontractors,
suppliers and materialmen whose contracts are required to be, but have not yet
been, delivered to Lender pursuant to the terms of the Agreement.
3. All Work performed is in substantial accordance with the approved Plans
and no changes have been made in the approved Plans, except as are permitted
pursuant to the Agreement or have been previously approved in writing by Lender.
4. The amounts and percentages set forth on the attached schedules, along
with supporting documentation for each budgeted item and the Balance To Finish
in accordance with the AIA Document G702 and G703 are true and correct to the
best of Borrower's Knowledge.
5. The following are included as part of this Request:
Application and Certificate for Payment (AIA G702)
Continuation Sheets (AIA G703)
Request for Advance - Indirect Costs
Check Sheet Form
6. No material adverse change has occurred in the Improvements or, since
the date of the latest financial statements given by or on behalf of Borrower to
Lender, in the financial condition of Borrower or in Borrower's business or
operations.
7. All representations and warranties by Borrower contained in the Loan
Documents are true and correct as of the date hereof.
27
<PAGE>
8. No Event of Default, or no act or event which after notice and/or lapse
of time would constitute an Event of Default, has occurred and is continuing.
9. Borrower has complied with all other agreements or conditions required
by the Agreement to be performed or complied with prior to or at the date of the
requested Advance.
10. Capitalized terms not otherwise defined herein shall have the meaning
given to them in the Loan Agreement.
Very truly yours,
By:
Name:
Title:
28
<PAGE>
EXHIBIT I-3
RELEASE OF LIEN
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
________________________________ for and in consideration of the sum of
___________________ Dollars (US $___________) lawful money of the United States
of America, to the undersigned in hand paid, the receipt whereof is hereby
acknowledged, does hereby waive, release, remise and relinquish the
undersigned's right to claim, demand, impress or impose a lien or liens in the
sum of ___________________ Dollars ($__________) for materials furnished (or any
other kind or class of lien whatsoever) up to the _____ day of
__________________, 199__, on the following described property:
[Legal Description]
Dated this ______ day of ______________, 199__, at ______________________
County, Wyoming.
LIENOR'S NAME
By:_______________________________
Authorized Representative
29
<PAGE>
EXHIBIT I-4
Change Order Approval Request AIA G713
30
<PAGE>
EXHIBIT J
INITIAL ADVANCE DISBURSEMENT SCHEDULE
31
<PAGE>
EXHIBIT K
EXCERPTS FROM INDENTURE
32
<PAGE>
EXHIBIT L
CERTIFICATION re: INDENTURE
_________, 199__
FINOVA Capital Corporation
7272 East Indian School Road, Suite 410
Scottsdale, Arizona 85251
The undersigned hereby certifies to you the following pursuant to the Loan and
Security Agreement dated as of ____________, 1999, among The Teton Club, LLC,
Raintree Resorts International, Inc. and FINOVA Capital Corporation (the "Loan
Agreement"). Unless otherwise defined herein, all capitalized terms used herein
shall have the same meaning as set forth in the Loan Agreement. The Loan
Agreement requires that Raintree certify to the Lender the extent to which
Raintree and those of its Affiliates that are "Restricted Subsidiaries" pursuant
to the Indenture, including, but not limited to Teton, are in compliance with
the borrowing limitations set forth in the Indenture. This Certification is
being delivered to you in satisfaction of that requirement.
Paragraph reference Existing indebtedness Compliance?
from Indenture allocated to this paragraph
4.09(a) $_________________ Yes ____ No _____
4.09(b)(i) $_________________ Yes ____ No _____
4.09 (b)(ii) $_________________ Yes ____ No _____
4.09(b)(iii) $_________________ Yes ____ No _____
4.09(b)(iv) $_________________ Yes ____ No _____
4.09(b)(v) $_________________ Yes ____ No _____
4.09(b)(vi) $_________________ Yes ____ No _____
4.09(b)(vii) $_________________ Yes ____ No _____
4.09(b)(viii) $_________________ Yes ____ No _____
4.09(b)(ix) $_________________ Yes ____ No _____
4.09(b)(x) $_________________ Yes ____ No _____
4.09(b)(xi) $_________________ Yes ____ No _____
Raintree Resorts International, Inc., a Nevada corporation
By:
Name:
Title: Chief Financial Officer
33
<PAGE>
EXHIBIT M
MINIMUM PRICE SCHEDULE
34
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
RAINTREE RESORTS INTERNATIONAL, INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE
PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
(B) FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1999.
</LEGEND>
<CIK> 0001058736
<NAME> RAINTREE RESORTS INTERNATIONAL, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1.000
<CASH> 2,857
<SECURITIES> 0
<RECEIVABLES> 67,005
<ALLOWANCES> (8,016)
<INVENTORY> 1,023
<CURRENT-ASSETS> 92,983
<PP&E> 4,441
<DEPRECIATION> (1,144)
<TOTAL-ASSETS> 134,001
<CURRENT-LIABILITIES> 22,806
<BONDS> 92,760
0
1,578
<COMMON> 11
<OTHER-SE> (2,564)
<TOTAL-LIABILITY-AND-EQUITY> 134,001
<SALES> 32,300
<TOTAL-REVENUES> 42,419
<CGS> 8,609
<TOTAL-COSTS> 38,183
<OTHER-EXPENSES> 8,921
<LOSS-PROVISION> 2,518
<INTEREST-EXPENSE> 8,723
<INCOME-PRETAX> (4,877)
<INCOME-TAX> 726
<INCOME-CONTINUING> (5,603)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,603)
<EPS-BASIC> (0.56)
<EPS-DILUTED> (0.56)
</TABLE>
