CONSTRUCTION LOAN AGREEMENT
commonly known as
LOAN AGREEMENT (this “Agreement”) is made as of July 14, 2006, by and
between KAPALUA BAY, LLC, a Delaware limited liability company, (“Borrower”),
and XXXXXX BROTHERS HOLDINGS INC., a Delaware corporation (together with its
successors and/or assigns, “Lender”).
A. Borrower is the fee owner of that certain tract of land
located in Lahaina, Maui, Hawaii, and being more fully described in Exhibit
A-1 attached hereto (the “Development Land”).
B. Borrower is the owner of a leasehold interest in that
certain tract of land located in Lahaina, Maui, Hawaii, and being more fully
described in Exhibit A-2 attached hereto (the “Spa Land”; and
collectively with the Development Land, the “Land”).
C. Borrower intends to develop a residential development on
the Development Land and has submitted the Development Land to a condominium
property regime which includes for-sale Residential Condominium Units and
Fractional Ownership Units. The Spa Land
will be developed as a Spa for the benefit of the guests and residents of the
Project. The Land, the Spa, the
Improvements and Personal Property (each as hereinafter defined) located
thereon are collectively sometimes referred to as the “Project”.
D. Borrower has applied to Lender for a construction loan in
an aggregate principal amount of up to Three Hundred Seventy Million and 00/100
Dollars ($370,000,000.00) (the “Loan”).
The Loan shall be used to fund costs of Construction and such other
costs as are set forth in the Construction Budget (each as hereinafter
NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained, the
parties hereto agree as follows:
INCORPORATION OF RECITALS AND EXHIBITS
Section 1.1 Incorporation
preambles and all other recitals set forth herein are made a part hereof by
Section 1.2 Incorporation
The Exhibits to
this Agreement are incorporated in this Agreement and expressly made a part
hereof by this reference.
Section 2.1 Defined
terms as used herein shall have the following meanings:
Rate: A rate per annum
equal to the LIBOR Rate (determined as herein set forth) plus two hundred
twenty (220) basis points (2.2%).
Rate: A rate per annum
equal to the sum of (a) the Prime Rate Margin and (b) the greater of (i) the
Prime Rate and (ii) one percent (1%) in excess of the Federal Funds Effective
Rate. Any change in the Adjusted Prime
Rate shall be effective immediately from and after a change in the Prime Rate
(or the Federal Funds Effective Rate, as applicable).
Affiliate: With respect to a specified Person, any
Person which, directly or indirectly, through one or more intermediaries,
Controls or is Controlled by or is under common Control with such Person,
including, without limitation, any limited liability company in which such
Person is a member.
Agreement: This Construction Loan Agreement.
Applicable Rate: A rate per annum equal to either the Adjusted
LIBOR Rate or the Adjusted Prime Rate, as determined in accordance with the
provisions of Article V hereof.
Appraisal: An MAI-certified appraisal of the Project,
performed, at Borrower’s expense, in accordance with FIRREA and Lender’s
appraisal requirements by an appraiser selected and retained by Lender.
Architect: WCIT Architecture, or such other licensed,
reputable architect as Borrower selects and Lender, acting reasonably,
approves. In making the determination as
to whether to approve an architect other than WCIT Architecture, Lender may
take into account any prior dealings it or its co-lenders may have had with the
Agreement: That certain
Agreement dated December 10, 2004, by and between Borrower and Architect, for
the design of the Improvements, as same may be amended from time to time,
subject to Lender’s reasonable prior approval.
certificate by Architect, substantially in the form attached hereto as Exhibit
I, in favor of Lender to the effect that the Project complies with Laws,
and as to such other matters as Lender shall reasonably require.
Leases and Rents: The
Assignment of Leases and Rents, dated as of the date hereof, by Borrower in
favor of Lender.
Purchase Contracts: The Assignment of Purchase Contracts,
dated as of the date hereof, by Borrower in favor of Lender, assigning all of
Borrower’s rights under
of Sale and Contract Deposits in connection with a sale of any Unit or any
portion of the Project, in existence as of the Effective Date, and subsequent
Xxxxxxxxx and/or Xxxxx Xxxxxx.
Deposit: A Contract
Deposit that is permitted and available to be applied to Hard Costs and Soft
Costs in accordance with applicable Laws, the applicable Contract of Sale, and
against which there are no pending or threatened claims, actions, proceedings.
Bankruptcy Code: Title 11 of the United States Code, entitled “Bankruptcy”,
as now or hereafter in effect, or any successor thereto or any other present or
future bankruptcy or insolvency statute.
Beach Club CA: As defined in the Condominium Documents.
Bond: A payment and performance bond, in a form
approved by Lender, with the General Contractor or Subcontractor (as
applicable), as principal, and a surety company acceptable to Lender and
licensed to do business in the State, as surety, with a dual obligee rider in
favor of Lender.
Borrower: As defined in the opening paragraph of this
Breakage Costs: As defined in Section 5.1(g).
Item(s): As defined in
Business Day: Any day other than a Saturday, Sunday or day
on which banks are required or authorized to be closed in New York, New York,
or Honolulu, Hawaii.
Occupancy: A temporary
or permanent certificate issued by the appropriate Governmental Authority
certifying that a Unit or Units, as constructed, may be legally occupied.
Change Order: Any change in the Plans and Specifications
(other than minor field changes involving no extra cost).
The Initial Maturity Date.
Completion Guaranty, dated as of the date hereof, by Guarantor in favor of
Condominium Act: Means Chapter 514A, Hawaii Revised Statutes,
condominium declaration creating the Residential Condominium.
documents, as required by the Condominium Act and otherwise, relating to the
submission of the Condominium Project and the Units to be located on the two
fee simple parcels, Tax map Key Nos. (2) 4-2-4-28 and 29 to the provisions of
Act or to the regulation, operation, administration or sale thereof after such
submission, including, but not limited to, a declaration of condominium,
offering circular, articles of incorporation, if applicable, by-laws and rules
and regulations of a condominium association, management agreement, plats and
the contracts of sale and deed forms to be used in connection with the sale of
Opinion: As defined in
Deposit Account: A
deposit account opened and maintained by Borrower with First American Title
Insurance Company, to be utilized in the manner set forth in Section 15.1(b)
Project: Means the “Kapalua Bay Condominium” project, created
by the Declaration of Condominium Property Regime dated April 18, 2006,
recorded in the Bureau of Conveyances of the State of Hawaii as Document No.
Release Payment Account:
A deposit account opened and maintained by Borrower with Depositary
Bank, on behalf of Lender, to be utilized in the manner set forth in Section
Construction: The construction of the Improvements in
accordance with the Plans and Specifications.
Budget: A budget for
the Project, satisfactory to Lender, specifying the categories of all costs and
expenses to be incurred by Borrower in connection with the Project prior to the
completion of the Construction, including Hard Costs and Soft Costs, together
with the changes or modifications thereto hereafter made by Borrower with
Lender’s prior written approval. The
Construction Budget in effect as of the date hereof, which has been reviewed
and approved by Lender, is annexed hereto as Exhibit G.
Means October 31, 2006.
contracts between General Contractor and third parties for the design,
engineering and construction of the Project.
Contracts Effectiveness Schedule:
Contracts representing 55% of all costs anticipated in the General Contract
shall be binding and in effect by no later than the Construction Commencement
Date, inclusive of all Construction Contracts for steel/reinforcing, site work,
mechanical work, framing and drywall, electrical, formwork, tile and flooring,
finished carpentry, and elevators.
Contracts representing 85% of all costs anticipated in the General Contract
shall be binding and in effect by no later than December 31, 2006.
Contracts representing 100% of all costs anticipated in the General Contract
shall be in effect by no later than February 28, 2007.
schedule shall not include those Construction Contracts related to the Spa
Improvements. Construction Contracts for
the Spa Improvements shall be in effect by no later than August 1, 2007.
Schedule: A schedule, reasonably
satisfactory to Lender, establishing a timetable for completion of the
Construction, showing, on a monthly basis, the anticipated progress of the
Construction, and confirming that the Improvements can be completed on or
before the Completion Date, as same may be amended from time to time, subject
to Lender’s approval. The initial
approved Construction Schedule is attached hereto as Exhibit H.
Reserve: As defined in
Contract Deposit: A deposit (including a reservation deposit)
or down payment under a Contract of Sale.
Contract of Sale: An executed contract of purchase and sale
pursuant to which Borrower agrees to sell any Unit (or any part thereof,
including interval, fractional ownership interests) (collectively, “Contracts
Control: As such term is used with respect to any
Person, including the correlative meanings of the terms “controlled by” and “under
common control with”, the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
Debt: The outstanding principal balance of the Note
from time to time, together with all accrued and unpaid interest thereon, and
all other sums now or hereafter due under the Loan Documents.
Default or default: Any event, circumstance or condition, which,
if it were to continue uncured, would, with notice or lapse of time or both,
constitute an Event of Default.
Default Rate: A rate per annum equal to five hundred (500)
basis points in excess of the Applicable Rate, but not at any time in excess of
the highest rate permitted by law.
Deficiency Deposit: As such term is defined in Section 12.1.
Depositary Bank: Bank of Hawaii or another bank reasonably
acceptable to Lender.
Determination Date: With respect to any Interest Period, the day
which is two (2) LIBOR Business Days prior to the Business Day on which such
Interest Period commences.
Documents: As defined in Section 8.1
As defined in Section 8.1.
Development Land: As defined in the Recitals.
defined in Section 8.1.
Collectively, the Development Land and the Improvements thereon.
Disclosure Document: As defined in Section 25.6(a).
Effective Date: The date hereof.
Engineers: Any electrical, civil, structural,
mechanical, plumbing and other engineers engaged by Borrower to perform
material engineering services for the Project.
A discretionary approval by a Governmental Authority that provides the right
for the Project to proceed with the permitting and construction process. The Entitlements for the project are: the
Special Management Area Use Permit, Shoreline Setback Variance and Planned
Development Approval. Entitlements
provide evidence that Project is in substantial compliance with zoning and
land-use law, and that Borrower has a legal right to construct the Project
subject to applicable law and the conditions of the Entitlements.
Environmental Indemnity dated as of the date hereof by Borrower and Guarantors
in favor of Lender.
Proceedings: Any environmental proceedings, whether civil
(including actions by private parties), criminal, or administrative
proceedings, relating to the Project.
environmental report prepared at Borrower’s expense by an environmental
consultant approved by Lender, dated not more than six (6) months prior to the
Effective Date and addressed to Lender (or subject to a separate “reliance
Equity Requirement: The requirement that Borrower contribute One Hundred Thirty
One Million Two Hundred Sixty Thousand and 00/100 Dollars ($131,260,000.00)
of equity to the Project, which shall be contributed pursuant to Sections 9.1
and 13.1. The Equity Requirement shall
not include equity provided by Borrower to keep the Loan In Balance, the
Contingency Reserve, or sums provided by any Guarantor under the Completion
Guaranty. The Equity Requirement
calculation does, however, include certain contributions made by Borrower prior
to the Effective Date and more particularly set forth on Schedule D hereto.
Agreement: As defined
in Section 8.1.
ERISA: The Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder from time to
Event of Default: As such term is defined in Article XX.
Exchange Act: As defined in Section 25.6(a).
Exclusive Resorts: Shall mean Exclusive Resorts, LLC, a Delaware
limited liability company.
Extension Notice: As defined in Section 4.3(b)(i).
Extension Period: As defined in Section 4.3(b).
Facility: Shall mean each of (i) the Spa and Borrower’s
leasehold interest in the Spa Land; (ii) the Beach Club CA; and (iii) the
Kapalua General Store (collectively, the “Facilities”).
Effective Rate: Shall
mean, for any day, the rate per annum (rounded upward to the nearest one
one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve
Bank of New York on such day as being the weighted average of the rates on
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
FIRREA: The Financial Institutions Reform, Recovery
And Enforcement Act of 1989, as amended from time to time.
Fitch: Fitch, Inc.
Delays: Delays due to
strike, governmental restrictions, unavailability or shortage of labor and/or
materials, enemy or terrorist action, hurricane, civil commotion, fire or other
causes beyond the control of Borrower, provided, however, that (i) the
aggregate of all such time periods shall not exceed one hundred fifty (150)
days, and an additional one hundred twenty (120) days permitted with respect to
a tropical storm or hurricane and (ii) neither the failure of Borrower to qualify
for an advance hereunder nor the lack of Borrower’s own funds shall constitute
a Force Majeure Delay. In no event shall
Force Majeure Delays be deemed to extend the Completion Date beyond the Initial
Maturity Date of the Loan.
Interest: Means a
fraction of ownership interest in a Fractional Ownership Unit and the
corresponding use rights associated therewith.
Ownership Act: Means
Chapter 514E, Hawaii Revised Statutes, as amended.
Means The Kapalua Bay Vacation Ownership Project Declaration of
Covenants, Conditions and Restrictions creating the Fractional Ownership Units.
Means all documents, as required by the Fractional Ownership Act
relating to the registration of the Fractional Ownership Units and to the
regulations, operation and administration or sale thereof after such
registration, including, but not limited to, a disclosure statement,
declaration of covenants, conditions and restrictions, contract with the plan
manager, articles of incorporation and by-laws of the fractional
ownership association, rules and regulations for the fractional ownership plan,
and form of sales contract and apartment deed to be used in connection with the
sale of the Fractional Ownership Units.
Ownership Units: Means
the 62 fractional ownership units operated as a “Xxxx-Xxxxxxx Club” to be sold
in 1/12 intervals identified in the Condominium Documents as “Club Units” which
have been submitted to a timeshare plan pursuant to the Fractional Ownership
Act, together with the undivided percentage ownership interests in the common
elements of the condominium project.
General Contract: A guaranteed maximum price general contract,
between Borrower and General Contractor, for the construction of the
Improvements, in such form as Lender shall approve in its sole discretion, as
same may be amended from time to time.
Such general contract shall require completion of the Improvements prior
to the Completion Date.
General Contractor: Nordic/PCL Construction or such other
licensed, reputable general contractor as Borrower selects and Lender, acting
reasonably, approves. In making the
determination as to whether to approve a general contractor other than
Nordic/PCL Construction, Lender may take into account any prior dealings it or
its co-lenders may have had with such proposed general contractor.
consents, licenses, permits, and other authorizations or approvals required
from any Governmental Authority for the Construction, including, without
limitation, the Entitlements and Permits.
federal, state, county or municipal governmental authority, agency, department,
commission, board, bureau or instrumentality having jurisdiction over the
Gross Sales Price: The purchase price for
each Unit, as well as special assessments (including any items contained in the
Construction Budget referenced as “Hospitality Start-Up Recovery”), amounts
allocable to personal property, and all amounts
paid for extras and the like.
Ground Lease: Means that certain Ground Lease dated August
31, 2004, by and between Maui Land & Pineapple Company, Inc., a Hawaii
corporation, as ground lessor, and Borrower, as ground lessee, as amended by
the Ground Lessor Consent, Estoppel Certificate and Amendment.
Consent, Estoppel Certificate and Amendment: Means that
certain Ground Lessor Consent, Estoppel Certificate and Amendment dated as of
the date hereof by and among Maui Land & Pineapple Company, Inc, as ground
lessor under the Ground Lease, Borrower, as ground lessee, and Lender.
Guarantor: Each of Maui Land & Pineapple Company,
Inc., a Hawaii corporation; The Xxxx-Xxxxxxx Development Company, Inc., a
Delaware corporation; and Exclusive Resorts Development Company, LLC, a
Delaware limited liability company, severally.
Hard Costs: All costs for labor, materials or equipment
supplied to or incorporated in the Project.
Hazardous Material: Any hazardous or toxic material, substance or
waste (including, without limitation, gasoline, petroleum, asbestos-containing
materials and radioactive materials)
is regulated under any Law of any Governmental Authority, including: (i) any “hazardous
substance” as defined in the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C.A. § 9601(14), or any so called “superfund” or “superlien”
Law, including the judicial interpretation thereof; (ii) any “pollutant or
contaminant” as defined in 42 U.S.C.A. § 9601(33); (iii) any material now
defined as “hazardous waste” pursuant to 40 C.F.R. Part 260; (iv) any
petroleum, including crude oil or any fraction thereof; (v) natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel;
(vi) any “hazardous chemical” as defined pursuant to 29 C.F.R. Part 1910;
and (vii) any other toxic substance or
contaminant that is subject to any other Law or other past or present
requirement of any Governmental Authority.
Improvements: Improvements for the Project as more particularly
described in the Plans and Specifications, which consist generally of a mixed
use condominium development consisting of (i) 84 (unbranded) whole ownership
Residential Condominium Units (28 of which shall be purchased by Exclusive
Resorts, its Affiliates and their permitted assigns), (ii) 62 fractional
ownership units operated as a “Xxxx-Xxxxxxx Club” to be sold in 1/12 intervals
under a fractional ownership plan in accordance with the Fractional Ownership
Act, (iii) the Facilities and improvements and amenities contemplated to be
located thereon, and (iv) certain additional common facilities, amenities,
appurtenances, fixtures, equipment, entry and exit areas, parking areas and
other areas for the benefit of the Condominium Project, including the Fractional
In Balance: As defined in Section 12.1.
Indemnified Party: As defined in Section 16.1(v).
Director: As defined
in Section 16.3(p).
Initial Advance: Forty Million One Hundred Twenty-Nine
Thousand One Hundred Forty-Five and 76/100 Dollars ($40,129,145.76).
requirement, as a condition to the disbursement of the Initial Advance, that
Borrower contribute $54,194,781 of
equity to the Project.
Date: August 1, 2009,
or such earlier date on which the final payment of the principal of the Note
becomes due and payable as therein or herein provided, whether at such stated
maturity date, by acceleration or otherwise.
Shall mean any one or more of the following other entities, provided
that for any such other entity to qualify as an Institutional Lender hereunder,
such other entity, together with its affiliates, must have total assets of at
least One Billion and 00/100 Dollars ($1,000,000,000.00) and stockholders’
equity or net worth of at least Two Hundred Fifty Million and 00/100 Dollars
($250,000,000.00) (or, in either case, the equivalent thereof in a foreign
currency) as of the date the loan is made: a savings bank, a savings and loan
association, a commercial bank or trust company, an insurance company subject
to regulation by any governmental authority or body, a real estate investment
trust, a union, a governmental or secular employees’ welfare, benefit, pension
or retirement fund, a pension fund property unit trust (whether authorized or
unauthorized), an investment company or trust, a merchant or investment
any other entity generally viewed as an institutional lender. In each of the foregoing cases, such
affiliate or other entity shall constitute an Institutional Lender whether (1)
acting for itself or (2) as trustee, as a general partner of a partnership, in
a fiduciary, management or advisory capacity or, in the case of a bank, as
agent bank, for any number of lenders, so long as in the case of clause (2)
the day-to-day management decisions relating to the loan are either exercised
by or recommended by such Institutional Lender and, during the life of the
loan, such Institutional Lender shall only be removed from its clause (2). Notwithstanding the first sentence of this
paragraph, a real estate investment trust that invests primarily in mortgage
loans and investment securities, is taxed as a real estate investment trust
and, if unaffiliated, has total assets of at least Six Hundred Fifty Million and 00/100 Dollars
($650,000,000.00) and a net worth of at least One Hundred Million and 00/100
Dollars ($100,000,000.00), shall qualify as an Institutional Lender despite its
failure to meet the total asset and net worth tests set forth in such first
Fund: As defined in Section
Insurance Premiums: As defined in Section 16.2(b).
Interest Period: A period of 30, 60, 90 or 180 days, to the
extent deposits with such maturities are available to Lender, commencing on a
LIBOR Business Day as selected by Borrower in accordance with Section 5.1(c);
provided, however, that (i) any Interest Period that would otherwise end on a
day that is not a LIBOR Business Day shall continue to and end on the next
succeeding LIBOR Business Day, unless the result would be that such LIBOR Rate
Interest Period would be extended to the next succeeding calendar month, in
which case such LIBOR Rate Interest Period shall end on the next preceding
LIBOR Business Day, and (ii) no Interest Period may extend beyond the Maturity
Date. The initial Interest Period shall
commence on the date hereof and end on July 31, 2006, and the last Interest
Period shall commence on the day following the expiration of the last full
calendar month occurring during the term of the Loan and end on the Maturity
Interest Reserve: As defined in Section 11.4.
Code: The Internal
Revenue Code of 1986, as amended from time to time.
Entitlements: Shall be
defined as the Special Management Area Use Permit, Shoreline Setback Variance
and Planned Development Approval which provide the right to construct the
Store: As defined in
the Condominium Documents.
Keep Whole Letters:
Those certain “Keep Whole Letters” by each of ML&P, Exclusive Resorts and
MII, respectively, each dated the date hereof concerning the funding of their
respective Affiliates in order to meet their funding requirements under the
Guaranties contemplated hereunder and to enable such Affiliates to comply with
their equity obligations under the Limited Liability Operating Agreement of
Land: As such term is defined in the Recitals to
Laws: All federal, state and local laws, statutes,
codes, ordinances, orders, rules and regulations.
Leases: All leases, licenses and occupancy agreements
(including any licenses for parking spaces or storage spaces) affecting the
Project or any part thereof now or hereafter existing.
Xxxxxx: As defined in Section 25.6(b).
Xxxxxx Group: As defined in Section 25.6(b).
Lender: As defined in the opening paragraph of this
independent consulting architect, inspector, and/or engineer designated by
Lender in Lender’s sole discretion.
Liabilities: As defined in Section 25.6(b).
LIBOR Business Day: A Business Day on which dealings in U.S.
dollars are conducted in the London interbank market.
LIBOR Rate: For any Interest Period, the rate (expressed
as a percentage per annum and rounded upward, if necessary, to the next nearest
1/1000 of 1%) for deposits in U.S. dollars, for a one-month period, that
appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m.,
London time, on the related Determination Date.
If such rate does not appear on Telerate Page 3750 as of 11:00 a.m.,
London time, on such Determination Date, LIBOR shall be the arithmetic mean of
the offered rates (expressed as a percentage per annum) for deposits in U.S.
dollars for the number of days of the applicable Interest Period that appear on
the Reuters Screen Libor Page as of 11:00 a.m., London time, on such
Determination Date, if at least two such offered rates so appear. If fewer than two such offered rates appear
on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such
Determination Date, Lender shall request the principal London office of any
four major reference banks in the London interbank market selected by Lender to
provide such bank’s offered quotation (expressed as a percentage per annum) to
prime banks in the London interbank market for deposits in U.S. dollars for the
number of days of the applicable Interest Period as of 11:00 a.m., London time,
on such Determination Date for the amounts of not less than U.S.
$1,000,000.00. If at least two such
offered quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such
quotations are so provided, Lender shall request any three major banks in New
York City selected by Lender to provide such bank’s rate (expressed as a
percentage per annum) for loans in U.S. dollars to leading European banks for
the number of days of the applicable Interest Period as of approximately 11:00
a.m., New York City time on the applicable Determination Date for amounts of
not less than U.S. $1,000,000.00. If at
least two such rates are so provided, LIBOR shall be the arithmetic mean of
such rates. LIBOR shall be determined by
Lender, which determination shall be binding and conclusive absent manifest
Lien: shall mean any mortgage, deed of trust, lien,
pledge, hypothecation, assignment, security interest, or any other encumbrance,
charge or transfer of, on or affecting the Property, or any portion thereof, or
Borrower, including, without limitation, any conditional sale or other title
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic’s,
materialmen’s and other similar liens and encumbrances against the Project or
any portion thereof or Borrower.
Loan: As defined in the Recitals to this Agreement.
Loan Fee: As defined in Section 4.1(f).
Loan Documents: Collectively, this Agreement, the documents
and instruments listed in Section 4.2 and all other documents and
instruments entered into by Borrower and/or Guarantor from time to time which
evidence or secure the Debt.
Ratio: The ratio obtained by dividing the outstanding principal balance due on
the Loan by the fair market value of the Project, as determined by an
Major Contract: A Construction Contract which provides for a
contract price equal to or greater than Two Million Five Hundred Thousand and
00/100 Dollars ($2,500,000.00).
Collectively, (i) Marketing and Sales Services Agreement, dated August
31, 2004, between Borrower and Xxxx-Xxxxxxx; (ii) Marketing and Sales Services
Agreement, dated June 19, 2006, by and between Borrower, Xxxx-Xxxxxxx and
ML&P; and (iii) Marketing and Sales Services Agreement, dated June 19,
2006, by and between Borrower and Kapalua Realty Company, Ltd., a Hawaii
Change or material adverse change: If, in Lender’s reasonable determination, the
business prospects, operations or financial condition of a Person or property
has changed in a manner which actually impairs the value of Lender’s security
for the Loan, prevent timely repayment of the Loan or otherwise prevent the
applicable Person from timely performing any of its obligations under the Loan
Maturity Date: The Initial Maturity Date; provided, however,
that if Borrower exercises its right to extend the term of the Loan for the
Extension Period and, in accordance with the terms of this Agreement, the term
of the Loan is so extended, from and after such extension of the term of the
Loan “Maturity Date” shall mean the first day of the twelfth (12th) month following the Initial Maturity
Date (the “First Extension Maturity Date”), the first day of the twelfth
following the First Extension Maturity Date (the “Second Extension Maturity
Date”), as the case may be, or such earlier date on which the final payment
of principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by acceleration, or otherwise.
Member: Kapalua Bay Holdings, LLC, a Delaware limited
MII: Marriot International, Inc., a Delaware
ML&P: Maui Land & Pineapple Company, Inc., a
Collectively, that certain: (i) Agreement of Purchase and Sale dated as
of June 19, 2006, between Borrower and ML&P (the “Spa Agreement”)
for the purchase by
of the Spa Land and Spa; (ii) Agreement of Purchase and Sale dated as of June
19, 2006, between Borrower and ML&P (the “Beach Club Agreement”) for
the purchase by ML&P of the Beach Club CA (as defined in the Condominium
Documents); and (iii) Agreement of Purchase and Sale dated as of June 19, 2006,
between Borrower and ML&P (the “General Store Agreement”) for the
purchase by ML&P of the Kapalua General Store (as defined in the
certain Consent to Assignment of Agreements dated as of the date hereof, by ML&P.
Moody’s: Xxxxx’x Investors Service, Inc.
Mortgage: The Fee and Leasehold Mortgage, Security
Agreement and Fixture Filing, dated as of the date hereof, by Borrower in favor
of Lender securing the payment of the Debt and constituting a first priority
mortgage lien against the Project.
Net Sale Proceeds: In
respect of the sale of a Unit, the Gross Sales Price, less Transaction Costs
and any portion of the Contract Deposit related to a particular Unit that
was utilized in accordance with
applicable Laws and the Loan Documents to develop the Unit, as determined by
Lender acting reasonably.
An opinion letter by DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, dated as of the
Effective Date, in form and substance satisfactory to Lender.
Note: a promissory note, dated as of the date
hereof, by Borrower to the order of Lender, in the principal amount of Three
Hundred Seventy Million and 00/100 Dollars ($370,000,000.00) as may be amended
from time to time.
OFAC: Office of Foreign Asset Control of the
Department of the Treasury of the United States of America.
Office: Department of Commerce and Consumer Affairs
in Hawaii and the Bureau of Conveyances of the State of Hawaii, as the case may
Operating Account: A deposit account opened and maintained by
Borrower with Depositary Bank, on behalf of Lender, to be utilized in the
manner set forth in Section 4.1(g).
defined in Section 16.1(a).
Payment Date: The first (1st) day of each calendar month
(or such other day of a calendar month selected by Lender to collect debt
service payments under loans which it makes and securitizes) or, if such day is
not a Business Day, the immediately preceding Business Day.
PDP: As defined in Section 8.1(i).
Permits: An administrative approval by a government
agency that the Project complies with law and Entitlements, which allow the
Project to proceed with certain specific scopes of
work; which includes any
building permit, excavation permit, foundation permit, environmental permit,
utility permit, or other permit required in respect of the Construction or the
matters listed on Exhibit C annexed hereto.
following transfers shall be deemed “Permitted Transfers” and Borrower shall
not be required to obtain Lender’s prior written consent to such transfers: (i)
a transfer made in accordance with the buy-sell provisions of the Member’s
Limited Liability Company Agreement approved by Lender; (ii) a transfer of
direct or indirect interests in Member or in any entity owning a direct or
indirect interest in Member; provided the transferee shall be a MII/MLP
Affiliate; (iii) a transfer of direct or indirect interests in Member or
in any entity owning a direct or indirect interest in Member in connection with
a public offering or a “privatization,” including, without limitation,
interests in ML&P or MII in connection with a publicly traded stock or any
public offering of equity ownership interests; and (iv) a one-time transfer of
the managing member interest in Borrower to an entity that is a MII/MLP
Affiliate or to another Person provided that the other Person has
financial capability and creditworthiness comparable to the financial
capability and creditworthiness of Member, as reasonably determined by Lender
and each Rating Agency (if applicable).
For purposes hereof, the term “MII/MPL Affiliate” shall mean an entity
in which MII and/or ML&P manages, directly or indirectly, the affairs and
decisions of the MII/MLP Affiliate, including, without limitation, the
day-to-day and major management and operations decisions.
Any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
Personal Property: All personal property, fixtures and equipment
required or beneficial for the operation of the Land or the Improvements.
sets of design plans and specifications for the Project prepared by the
Architect and its consultants that have been reviewed and approved by Lender in
connection with making the Initial Advance, and if and when in effect on which
the Construction Contract is based. The
term also includes (a) any material modification of any of those plans, maps,
sketches, diagrams, surveys, drawings, specifications or lists of materials
that Lender has previously reviewed and approved if the modification is in
writing and is initialed by the Lender and the Borrower or the Architect, and
(b) any plans, maps, sketches, diagrams, surveys, drawings, specifications or
lists of materials to be utilized for development of the Project that are
created subsequent to the Initial Advance that have been reviewed and approved
Accounts, Security Agreement and Rights to Payment: Means that certain Pledge of Accounts,
Security Agreement and Rights to Payment dated as of the date hereof by and
between Borrower, as debtor, and Lender.
Policy: As defined in Section 15.2(b).
Costs: The pay off of
existing debt which is secured by the Development Land, pre-development Soft
Costs, Pre-Development Hard Costs, interest expenses, and closing costs
associated with the Loan.
Hard Costs: Hard Costs
that Lender agrees may be funded as a Pre-Development Cost and with respect to
which Borrower has delivered a fully executed copy of the General Contract and
fully executed copies all Construction Contracts required in connection with
such Hard Cost.
Prime Rate: The interest rate per annum publicly
announced by Citibank, N.A. in New York City as its base rate, as such rate
shall change from time to time. If
Citibank, N.A. ceases to announce a base rate, “Prime Rate” shall mean the
interest rate per annum published in the Wall Street Journal
from time to time as the “Prime Rate”.
If more than one “Prime Rate” is published in the Wall Street
Journal for a day, the average of such “Prime Rates” shall be used,
and such average shall be rounded up to
the nearest one-eighth of one percent (0.125%). If the Wall Street Journal
ceases to publish a “Prime Rate”, Lender shall select an equivalent publication
that publishes a “Prime Rate”, and if a “Prime Rate” is no longer generally
published or are limited, regulated or administered by a governmental or
quasi-governmental body, then Lender shall select a comparable interest rate
Prime Rate Margin: In respect of each portion of the Loan
bearing interest at an Adjusted Prime Rate, the difference (expressed as the
number of basis points) between (a) the Adjusted LIBOR Rate on the date the
Adjusted LIBOR Rate was last applicable to such portion of the Loan and (b) the
Prime Rate on the date that the Adjusted LIBOR Rate was last applicable to the Loan.
Proceeding: As defined in Section 22.11.
Proceeds: As defined in Section 17.1.
Project: The collective reference to (i) the Land,
(ii) the Facilities, (iii) the Improvements and (iv) the Personal Property,
excluding such portion of the Project that has been released pursuant to the
terms of this Agreement.
defined in Section 25.1.
Public Report of Kapalua Bay Condominium prepared by Borrower and designated
Registration No. 5900.
PUD: As defined in Section 8.1(i).
Contract of Sale: A
legally enforceable Contract of Sale between Borrower and an unaffiliated
third-party purchaser for the sale and purchase of an individual Unit. Each Qualifying Contract of Sale must (i)
require the payment upon execution of a Contract Deposit equal to no less than ten percent
(10%) of the Purchase Price, (ii) require the payment of a Gross Sales Price
which will yield Net Sale Proceeds not less the applicable Release Price, (iii)
be expressly subordinate to the lien of the Mortgage, (iv) comply with the
requirements of Section 15.1(a) hereof, (v) comply with all Laws and
(vi) be subject to no contingencies, so that, other
reason of a default by Borrower thereunder, the purchaser thereunder may not
rescind the same without forfeiting its Contract Deposit. A Qualifying Contract of Sale may be assigned
by such a purchaser to a third-party purchaser who is not an Affiliate of
Borrower, Guarantor, Member, ML&P, MII , an MLP/MII Affiliate or otherwise
under the Control of any such entity.
Rating Agencies: Each of S&P, Xxxxx’x and Fitch or any
other nationally recognized statistical rating agency which has been approved
Recourse Guaranty: The Guaranty, dated as of the date hereof, by
Guarantor in favor of Lender, pursuant to which Guarantor guarantees to Lender
the payment of the Recourse Obligations.
defined in the Note.
Statement: As defined
in Section 25.6(b).
Related Parties: As defined in Section 16.3(d).
Release Payment: Any payment required to be made under Section
15.4(h) or Section 15.5(e) (such payments shall collectively be
referred to as “Release Payments”).
Release Price: In respect of each Unit and each Facility,
the amount set forth on Schedule A attached hereto.
Requisition: A requisition, in the form of Exhibit D
annexed hereto, for disbursement of a portion of the Loan.
Reserve Percentage: For any Interest Period, that percentage
which is specified on the Determination Date by the Board of Governors of the
Federal Reserve System (or any successor) or any other governmental authority
with jurisdiction over Lender for determining the maximum reserve requirement
(including, but not limited to, any marginal reserve requirement) for the
holder of the Note with respect to liabilities constituting or including
Eurocurrency liabilities in an amount equal to that portion of the Loan
affected by such Interest Period and with a maturity equal to such Interest
defined in Section 15.2(a).
Condominium Unit: Each
individual condominium unit (including, but not limited to, any appurtenant
interest in the common elements) in the Residential Property created by the submission thereof to
the provisions of the Condominium Act (all such condominium units shall be
referred to collectively as the “Residential Condominium Units”).
Property: That portion
of the Development Land designated in the
Plans and Specifications for the Residential Condominium and the
Improvements to be constructed thereon.
Xxxx-Xxxxxxx: The Xxxx-Xxxxxxx Development Company, Inc., a
Xxxx-Xxxxxxx Consent Agreement: That certain Consent to Assignment of
Agreements dated as of the date hereof, by Xxxx-Xxxxxxx.
Standard & Poor’s Ratings Group, a division of XxXxxx-Xxxx, Inc.
Securities: As defined in Section 25.1.
Securities Act: As defined in Section 25.6(a).
Securitization: As defined in Section 25.1.
Servicer: As defined in Section 19.1.
Servicing Agreement: As defined in Section 19.1.
Servicing Fees: As defined in Section 19.1.
Soft Costs: All costs, other than Hard Costs, to be
incurred in respect of the Project prior to completion of Construction,
including, without limitation, sales and marketing costs and expenses,
architects’ fees, engineers’ fees, interest on the Note, real estate taxes,
insurance premiums and bond fees.
Spa: The improvements and amenities intended to be
constructed on the Spa Land.
Spa Land: As such term is defined in the Recitals to
SPC Party: As defined in Section 16.3(o).
Standard Consent: means a consent that Borrower is required to
receive from Lender in the Loan Documents but that relate strictly to de
minimis matters that are operational in nature and not material to the Project
(examples of matters that would be too material for application of a “deemed
consent” include among, among other things,
matters that would effect: the Budget, completion by the Completion
Date, insurance coverage or settlement, eminent domain, the Ground Lease, the
Development Documents, environmental matters, zoning or other land use
entitlement, or rights of purchasers under Contracts of Sale that could lead to
a right of rescission or other action concerning same).
State: The State of Hawaii.
Subordinate Loan: As defined in Section 25.5.
Subcontractor: Any party furnishing labor, services or materials
to the Project under a Construction Contract.
Tax Escrow Fund: As defined in Section 16.1(m).
Tax and Insurance Escrow Fund: As defined in Section 16.1(m).
Tax and Insurance Reserve: As defined in Section 11.5.
Title Insurer: First American Title Insurance Company and
Fidelity Title Insurance Company.
Title Policy: An ALTA Mortgagee’s Loan Title Insurance
Policy, issued by Title Insurer, insuring the first lien priority of the
Mortgage, subject only to the Permitted Exceptions, and otherwise in form
satisfactory to Lender.
costs payable by Borrower in respect of a sale of a Unit or Fractional
Interest, including brokerage fees, sales commissions, royalty fees, any fees
payable to Xxxx-Xxxxxxx (excluding if payable to Xxxx-Xxxxxxx any items
contained in the Construction Budget referenced as “Hospitality Start-Up
Recovery”), any fees payable to Kapalua Realty Company, Ltd., membership
deposits for the Kapalua Club payable to Kapalua Land Company, Ltd. (all such fees
paid to Affiliates as expressly provided in the Affiliate Agreements referenced
in Schedule B and as in effect as of the date hereof), and customary closing
costs (whether customarily payable by either seller or purchaser) not to exceed
in the aggregate two percent of the Gross Sales Price of the Unit or Fractional
Interest, and other costs approved by Lender.
Transfer: Any sale, transfer, lease, conveyance,
alienation, pledge, assignment, mortgage, encumbrance, hypothecation or other
disposition of (i) all or any portion of the Project, (ii) all or any portion
of Borrower’s right, title and interest (legal or equitable) in and to the
Project or (iii) any interest in Borrower or any Controlling interest in any
member in Borrower and which is not a Permitted Transfer. Notwithstanding the foregoing, the sale of
any Unit or Facility in accordance with the terms of Article XV hereof
shall not constitute Transfers hereunder.
Underwriter Group: As defined in Section 25.6(b).
Unit: Any individual condominium unit created at
the Project, including, without limitation, Residential Condominium Unit or
Fractional Ownership Unit (all such condominium units shall collectively be
referred to as the “Units”).
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties.
To induce Lender to execute this Agreement and perform
its obligations hereunder, Borrower hereby represents and warrants to Lender as
of the Effective Date (and as of each date of a Requisition and disbursement,
with updates of such facts and circumstances that are reasonably necessary to
include in such Requisition to render the representations set forth therein
true and correct in all material respects) as follows:
(a) Borrower has good and
marketable fee simple title to the Development Land free and clear of all
liens, encumbrances and charges whatsoever, except for the Permitted
Exceptions. Borrower has the right to
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey
the Development Land.
(b) Borrower has good and
marketable leasehold title to the Spa Land, pursuant to the Ground Lease, free
and clear of all liens, encumbrances and changes whatsoever, except for the
Permitted Exceptions. Borrower has the right to mortgage its leasehold estate
in the Spa Land. The certified copy of
the Ground Lease provided to Lender by Borrower is true, correct and complete
in all respects. The Ground Lease is in
full force and effect and has not been amended, except as amended by the Ground
Lessor Consent, Estoppel Certificate and Amendment. All rents, additional rents and other sums
due and payable under the Ground Lease have been paid in full. Neither Borrower, as ground lessee under the
Ground Lease, nor ground lessor under the Ground Lease has received or given
any notice of a default under the Ground Lease which has not been cured.
(c) Except as otherwise
disclosed in writing by Borrower to Lender, no material litigation or
proceedings are pending, or, to the best of Borrower’s knowledge, threatened,
against Borrower, Guarantor, Member or the Project or any portion thereof. There are no pending, or, to Borrower’s
knowledge, threatened, Environmental Proceedings in respect of the Project or
any portion thereof. Neither Borrower
nor Member has ever been party to any lawsuit, arbitration, summons or legal
(d) Borrower, Guarantor and
Member have or will upon request provide Lender and S&P with complete
financial statements that reflect a fair and accurate view of their respective
financial conditions. Borrower has no
contingent liabilities, other than those related to its ownership of the Land
and its preparation for the development of the Project. Member has no contingent obligations other
than capital funding obligations to Borrower.
(e) Borrower and Member
complied and will comply in all material respects with the assumptions made
with respect thereto in the Non-Consolidation Opinion;
(f) Borrower is and always
has been a duly organized and validly existing limited liability company, duly
organized under the laws of the State of Delaware. Member is and always has been a duly
organized and validly existing limited liability company, duly organized under
the laws of the State of Delaware.
Borrower has full power and authority to execute, deliver and perform
all Loan Documents to which it is a party, and such execution, delivery and
performance have been duly authorized by all requisite action on the part of
(g) The Property is not
encumbered or subject to any capital leases, liens or judgments, other than,
with respect to Borrower, liens for real estate taxes which are not yet due.
(h) To the best knowledge of
the Borrower and Member, each of Borrower and Member is in compliance with all
Laws applicable to it and has obtained all permits required for it to operate
as a limited liability company.
(i) Neither Borrower nor
Member is involved in any dispute with any taxing authority. Neither Borrower nor Member is in default of
any obligation to pay taxes to any taxing authority.
(j) Borrower has never owned
any property, other than the Land, and has never engaged in any business, other
than the ownership of the Land, operation of the hotel previously located on
the Land, and preparation for the development of the Project. Member has never owned any property, other
than its interest in Borrower, and has never engaged in any business, other
than business incidental to its ownership of an interest in, and as member of,
(k) To the knowledge of
Borrower, no consent, approval or authorization of or declaration, registration
or filing with any Governmental Authority or nongovernmental Person, including
any creditor, partner, or member of Borrower or Guarantor, is required in
connection with the execution, delivery and performance of this Agreement or
any of the Loan Documents, other than such consents, approvals or
authorizations which have been obtained, and the recordation of the Mortgage
and the Assignment of Leases and Rents and the filing of UCC financing
(l) The execution, delivery
and performance of this Agreement, the execution and payment of the Note and
the granting of the Mortgage and other security interests under the other Loan
Documents will not constitute a breach or default under any other agreement to
which Borrower, Member or any Guarantor is a party or may be bound, or a
violation of any law or court order which may affect the Project.
(m) To the knowledge of
Borrower, there is no default under this Agreement, any of the other Loan
Documents, or any other document or instrument to which Borrower is bound, nor
any condition which, after notice or the passage of time or both, would
constitute a default or an Event of Default under said documents.
(n) [Intentionally Deleted].
(o) Borrower has no knowledge
of and has not received written notice of any pending or threatened,
condemnation or eminent domain proceedings in respect of the Land or any part
(p) As of the date hereof,
the amounts set forth in the Construction Budget represent a full and complete
itemization by category of all costs, expenses and fees which Borrower
reasonably expects to pay or reasonably anticipates becoming obligated to pay
to complete the Construction.
(q) To the knowledge of
Borrower, neither the construction of the Improvements nor the use of the
Project when completed will violate (i) any Laws (including, without
limitation, zoning ordinances, building codes, land use and environmental laws
and laws relating to the disabled) or (ii) any restrictions, covenants or
conditions of record or agreements affecting the Project. Neither the zoning authorizations, approvals
or variances nor any other right to construct or to use the Project is to any
extent dependent upon or related to any real estate other than the Land. All Governmental Approvals required for the
Construction in accordance with the Plans and Specifications have been obtained
or will be obtained prior to the commencement of Construction, and, to the
knowledge of Borrower, all Laws relating to the Construction and operation of
the Improvements have been complied
with. To the extent such Governmental Approvals
have been issued or obtained, as the date hereof, Borrower has delivered true,
complete and correct copies of same to Lender.
(r) Except for retainage
amounts, all costs and expenses incurred for any and all labor, materials,
supplies and equipment used in the development of the Project or the
construction or demolition of any improvement on the Land have been paid in
full as of the date hereof or will be paid in full from proceeds of the Loan
following the closing of the Loan.
(s) The Project will have
adequate water, gas and electrical supply, storm and sanitary sewerage
facilities, other required public utilities, fire and police protection, and
means of access between the Project and public streets.
(t) Except as shown on the
Survey submitted to Lender in connection with the Loan, no portion of the
Project and no building or any other portion of the Improvements is located in
an area identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973, as amended, or any successor law, or, if located within any such area,
Borrower has obtained and will maintain the insurance prescribed in Section
(u) Borrower has dealt with
no broker or finder in connection with this Agreement or the Loan.
(v) All financial statements
and other information previously furnished by both Borrower and Guarantor in
connection with the Loan are true, complete and correct in all material
respects and fairly present the financial conditions of the subjects thereof as
of the respective dates thereof and do not fail to state any material fact
necessary to make such statements or information not misleading, and no
Material Adverse Change with respect to Borrower or Guarantor has occurred
since the respective dates of such statements and information. Neither Borrower nor Guarantor has any
material liability, contingent or otherwise, not disclosed in such financial
(w) Borrower and Guarantor are
solvent, and no bankruptcy, reorganization, insolvency or similar proceeding
under any state or federal law with respect to Borrower or Guarantor or any
Affiliate thereof has been initiated.
(x) Except as disclosed in
the Environmental Report: (i) the Project is free of Hazardous Material and is
in compliance with all Laws; (ii) neither Borrower nor, to the best knowledge
of Borrower, any other Person, has ever caused or permitted any Hazardous
Material to be placed, held, located or disposed of on, under, at or in a
manner to affect the Project and the Project has never been used (whether by
Borrower or, to the best knowledge of Borrower, by any other Person) for any
activities involving, directly or indirectly, the use, generation, treatment,
storage, transportation, or disposal of any Hazardous Material; and (iii) there
are no underground tanks, vessels, or similar facilities for the storage or
containment of Hazardous Materials of any sort on, under or affecting the
(y) The Development Land and
Spa Land are each taxed separately without regard to any other property and for
all purposes the Development Land and Spa Land may be mortgaged, conveyed and
otherwise dealt with as an independent parcel.
(z) There are no Leases,
subleases or other arrangements for occupancy of space within the Project, and
no person or entity has any possessory interest in, or right to occupy, the
Project or any portion thereof, except for the leases and month-to-month rental
agreements listed on Schedule C attached hereto and pursuant to
Qualifying Contracts of Sale entered into after the date hereof.
(aa) Except pursuant to the
ML&P Agreements, the ER Purchase Agreement,
and Qualifying Contracts of Sale that will be entered into after the date
hereof, neither the Project nor any portion thereof is subject to any purchase
option, buy-sell right (except as provided in the limited liability company agreement
of Member), right of first refusal, right of first offer or other similar right
to acquire same.
(bb) Upon completion of the
Construction, no building or other improvement will encroach upon any property
line, building line, setback line, side yard line or any recorded or visible
(cc) The Loan is not being made
for the purpose of purchasing or carrying “margin stock” within the meaning of
Regulation G, T, U or X issued by the Board of Governors of the Federal Reserve
System, and Borrower agrees to execute all instruments necessary to comply with
all the requirements of Regulation U of the Federal Reserve System.
(dd) The Loan evidenced by the
Note is solely for the business purpose of Borrower, and is not for personal,
family, household or agricultural purposes.
(ee) No portion of the Project
has been or, to the knowledge of Borrower, will be purchased with proceeds of
any illegal activity.
(ff) Borrower is not a party
in interest to any plan defined or regulated under ERISA, and the assets of
Borrower are not “plan assets” of any employee benefit plan covered by ERISA or
Section 4975 of the Internal Revenue Code.
(gg) Borrower is not a “foreign
person” within the meaning of Section 1445 or 7701 of the Internal Revenue
(hh) Neither Borrower, Member,
Guarantor nor any Person holding a direct or indirect interest in Borrower is
(or will be) a person with whom Lender is restricted from doing business under
OFAC (including Persons named on OFAC’s Specially Designated and Blocked
Persons list) or under any statute, executive order (including the September
24, 2001, Executive Order Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism), or other
governmental action and is not intentionally or with knowledge, and shall not
intentionally or with knowledge engage in any dealings or transactions or
otherwise be associated with such Persons.
In addition, Borrower hereby agrees to provide Lender with any
additional information that Lender deems
reasonably necessary from time to time in order to ensure compliance
with all Laws concerning money laundering and similar activities.
(ii) Borrower has disclosed
to Lender all material facts regarding the Project and Borrower and has not
failed to disclose any material fact that could cause any representation or
warranty made herein to be materially misleading.
(jj) Each of the
representations and warranties made by Guarantor herein or in any of the other
Loan Documents is true, complete and correct in all material respects.
(kk) Borrower possesses or will
possess prior to construction all franchises, patents, copyrights, trademarks,
trade names, servicemarks, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of Borrower’s businesses substantially as
now conducted and to be conducted at the Project without conflict with any
rights of others.
(ll) A true and correct
organizational chart outlining the percentage of ownership and capital
structure of Borrower and the direct and indirect owners of Borrower is
attached hereto as Exhibit F.
(mm) Borrower has delivered to
Lender true, correct and complete copies of the ER Purchase Agreement and the
ML&P Agreements. Each such agreement
is in full force and effect and has not been amended. Borrower, Exclusive Resorts and ML&P have
not received or given any notice of a default under such agreements which has
not been cured. Attached hereto as Schedule
B is a complete list of all agreements entered into by, between or among Borrower
and any Affiliate of ML&P, Exclusive Resorts, LLC, a Delaware limited
liability company, MII and MLP/MII Affiliate.
Amendments to the ER Purchase Agreement and any individual purchase
agreements entered into pursuant thereto may be amended as permitted by Section
(nn) Borrower has satisfied the
Initial Equity Requirement or the Equity Requirement, as the case may be.
(oo) Borrower represents that to
the best of its knowledge, it is in compliance with all of the requirements of
state, local and municipal requirements for the construction of the Project,
including but not limited to, the requirements of the State of Hawaii
Department of Land and Natural Resources (Historical Preservation Division).
Section 3.2 Survival of Representations and Warranties.
Borrower agrees that all of the representations and
warranties set forth in Section 3.1 and elsewhere in this Agreement are
true as of the Effective Date and, except for matters which have been disclosed
by Borrower in writing, will be true at all times thereafter. Each request for a disbursement under the
Loan Documents shall constitute a reaffirmation of such representations and
warranties, as deemed modified in accordance with the disclosures made and approved
as aforesaid, as of the date of such request.
It shall be a condition precedent to the making of the Initial Advance
and each subsequent disbursement of the Loan that each of said representations
and warranties is true and correct as of the date of such requested
disbursement, except as aforesaid. In
addition, at Lender’s request, Borrower shall reaffirm such representations and
warranties in writing
prior to each disbursement hereunder; subject to updating same to include those
facts and circumstances that are reasonably necessary to include to render the
representations true and correct in all material respects. In the event that a representation and/or
warranty given to Lender on the Effective Date is updated such that a material
adverse fact is disclosed to Lender then Lender shall be permitted to withhold
disbursement of an advance under the Loan until the fact or circumstance no
longer exists or Lender otherwise waives same.
LOAN AND LOAN DOCUMENTS
Section 4.1 Agreement to Borrow and Lend;
Lender’s Obligation to Disburse.
Subject to the terms, provisions and conditions of
this Agreement and the other Loan Documents, Borrower agrees to borrow from
Lender and Lender agrees to lend to Borrower the Loan, for the purposes and
subject to all of the terms, provisions and conditions contained in this
(a) The Loan shall be made to
Borrower on the terms and conditions hereinafter set forth. The Loan will bear interest at the rate or
rates, and will be repaid, as set forth in this Agreement and in the Note. Borrower shall use the proceeds of the Loan
solely for the purposes specified herein.
(b) The aggregate amount of
the Loan shall not exceed the lesser of (i) Three Hundred Seventy Million and
00/100 Dollars ($370,000,000.00) and (ii) 61.6% of the total cost of the Project
as set forth in the Construction Budget.
The Loan is not revolving in nature, and amounts repaid may not be
(c) Provided that Borrower
satisfies the conditions to the making of the Loan set forth in Article VIII
hereof, Lender shall disburse the Initial Advance to Borrower on the Effective
Date. Borrower shall use the Initial
Advance to pay Pre-Development Costs
encumbering the Land and for such other purposes as the parties shall
(d) After the disbursement of
the Initial Advance, Lender shall make successive disbursements of the Loan to
Borrower, but not more than once per calendar month, provided that (i) there
shall then exist no Default or Event of Default, (ii) no Material Adverse
Change shall have occurred with respect to Borrower, Guarantor or the Project,
(iii) the Loan remains In Balance, (iv) all required Governmental Approvals are
in full force and effect as needed for the then-current stage of Construction,
and (iv) Borrower satisfies the conditions to the disbursement of the Loan set
forth in Articles VIII, IX, X, XIII and XIV hereof, as
(e) To the extent that Lender
may have acquiesced in noncompliance with any requirements precedent to the
disbursement of any portion of the Loan, such acquiescence shall not constitute
a waiver by Lender, and Lender may at any time after such acquiescence require
Borrower to comply with all such requirements.
(f) On or before the
Effective Date, Borrower shall pay to Lender a loan fee in the amount of Three
Million Seven Hundred Thousand and 00/100 ($3,700,000.00) (the “Loan Fee”)
payable from the Initial Advance. The
Loan Fee has been fully earned by Lender and is non-refundable to Borrower,
regardless of when the Loan is repaid or whether any further advances of the
Loan are made;
(g) Borrower shall, prior to
the Effective Date, open the Operating Account.
Borrower authorizes Lender to disburse the Loan proceeds by crediting
the Operating Account; provided, however, that Lender shall not
be obligated to use such method. Lender
may pay interest due on the Note when and as the same shall become due by
debiting funds on deposit in the Operating Account and charging the interest
line item of the Construction Budget.
Section 4.2 Loan Documents.
On the Effective Date, Borrower shall execute and
deliver (and cause any party thereto other than Borrower or Lender to execute
and deliver) to Lender the following:
(a) The Note;
(b) The Mortgage;
(c) The Assignment of Leases
(d) The Assignment of
(e) The Recourse Guaranty;
(f) The Completion Guaranty;
(g) The Environmental
(h) The Assignment of
Membership Interests and Security agreement dated the date hereof, made by
Member for the benefit of Lender;
(i) The Xxxx-Xxxxxxx Consent
(j) The ML&P Consent
(k) The Assignment of
(l) Ground Lessor Consent,
Estoppel Certificate and Amendment;
(m) Pledge of Accounts,
Security Agreement and Rights to Payment;
(n) Assignment of Contracts,
Licenses, Permits, Agreements, Warranties and Approvals;
(o) The Keep Whole Letters;
(p) Such UCC financing
statements as Lender determines are advisable or necessary to perfect or notify
third parties of the security interests intended to be created by the Loan
(q) Such other documents,
instruments or certificates as Lender or its counsel may reasonably require,
including such documents as Lender in its sole discretion deems necessary or
appropriate to effectuate the terms and conditions of this Agreement and the
Loan Documents and to comply with Laws.
Section 4.3 Term of the Loan.
(a) All principal, interest
and other sums due under the Loan Documents shall be due and payable in full on
the Maturity Date.
(b) Borrower may elect to
extend the Maturity Date for two (2) additional terms of twelve (12) months
each (each, an “Extension Period”; respectively, the “First Extension
Period” and the “Second Extension Period”; and collectively, the “Extension
Periods”), subject to the satisfaction of each of the following conditions
prior to the Initial Maturity Date and First Extension Period Maturity Date, as
the case may be:
furnishes Lender with not less than thirty (30), but not more than ninety (90),
days’ advance written notice of its election to extend the Maturity Date (the “Extension
Notice”), which Extension Notice may be rescinded or withdrawn by Borrower;
provided that such rescission notice is deliver to Lender at least five (5)
days prior to the Initial Maturity Date and First Extension Period Maturity
Date, as the case may be. In the event
that Borrower elects to rescind its Extension Notice, Borrower shall pay by all
of Lender’s actual costs and expenses (including reasonable attorneys’ fees and
expenses) incurred in connection with such rescission;
shall be no uncured Default of which notice has been previously given to
Borrower or Event of Default that exists under this Agreement or any of the
other Loan Documents either at the time the Extension Notice is given or on the
Initial Maturity Date or First Extension Maturity Date, as applicable;
shall have established with Lender sufficient reserves for the payment of such
Taxes, Insurance Premiums, interest due on the Loan during the Extension Period
and other expenses as Lender reasonably anticipates will be incurred by
Borrower in excess of any unexpended amounts remaining in Budget Line Items for
the payment of such Taxes, Insurance Premiums, interest and other expenses
during the Extension Period pursuant to this Agreement;
shall have theretofore substantially completed the Improvements in accordance
with the Plans and Specifications;
shall have theretofore obtained the approval of the Office to the Condominium
Documents, Residential Condominium and made all filings requisite to the
creation of the Residential Condominium;
Borrower shall have delivered a certificate to Lender
that (A) there exists no Event of Default at the time the Extension Notice is
given and on the Initial Maturity Date or First Extension Period Maturity Date,
as the case may be, and (B) the representations and warranties contained herein
are true and correct in all material respects at the time the Extension Notice
is given and on the Initial Maturity Date or First Extension Period Maturity
Date, as the case may be; but subject to update to include those facts and
circumstances that are reasonably necessary to include to render the
representations true and correct in all material respects. In the event that a representation and
warranty given to Lender is updated such that a material adverse fact is
disclosed to Lender then Lender shall not be obligated to extend the term of
executes and delivers to Lender a reaffirmation of the Recourse Guaranty;
shall have delivered to Lender a reaffirmation of each existing Contract of
Sale that such Contract of Sale is in full force and effect. The reaffirmations shall be dated not earlier
than sixty (60) days prior to the Initial Maturity Date or First Extension
Period Maturity Date, as the case may be;
causes Title Insurer to deliver to Lender an endorsement to the Title Policy,
insuring the priority of the lien of the Mortgage; and
shall have paid all costs and expenses actually incurred by Lender in
connection with such extension, including, without limitation, underwriting,
title and reasonable legal fees and costs.
(c) Borrower shall not be
entitled to any further disbursements of Loan proceeds during the Extension
Period except to the extent there are unexpended amounts of the Loan remaining
in Budget Line Items for the payment of Taxes, Insurance Premiums, interest and
other unapplied Budget Line Items.
Section 4.4 Prepayments.
Except as required by Sections 15.4(h), 15.5(e),
and 17.1(a) hereof, Borrower may not prepay the Loan at any time prior
to the second anniversary of the Effective Date (the “Lockout Date”). Thereafter, except as provided in Section
4.5, Borrower may prepay the Loan in whole only upon not less than thirty
(30) days’ written notice to Lender. No
such prepayment of the Loan shall be permitted unless the same is accompanied
by (i) all interest accrued on the Loan through the date of prepayment, (ii)
Breakage Costs incurred by Lender as a result of the prepayment, and (iii)
reasonable attorneys’ fees incurred by Lender as a result of the
prepayment. A prepayment notice may be
rescinded or withdrawn by Borrower provided that such rescission notice is
deliver to Lender at least five (5) days prior to the prepayment date and
Borrower shall pay by all of Lender’s actual costs and expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with such
Section 4.5 Required Principal Payments.
(a) Borrower shall make
payments on account of the principal amount of the Loan upon the release of the
lien of the Mortgage in respect of a Unit, as provided in Section 15.4(h)
(b) On the Maturity Date,
Borrower shall pay the entire amount of the Debt.
Section 5.1 Interest Rate.
(a) Interest shall accrue on
the Loan at the Applicable Rate. Subject
to the provisions hereinafter set forth, the Applicable Rate shall be the
Adjusted LIBOR Rate.
(b) Interest in arrears at
the Applicable Rate shall be payable on each Payment Date.
(c) As long as no Event of
Default has occurred and is continuing, Borrower may elect from time to time
(each, a “LIBOR Rate Election”), but no more frequently than once in any
calendar month, to have the Adjusted LIBOR Rate apply to any portion of the
principal amount of the Loan (including any disbursement of Loan proceeds about
to be made) by giving Lender irrevocable written notice of such election
designating the Interest Period for which such LIBOR Rate Election is to
apply. Such written notice shall be
given to Lender at its New York office by no later than 11:00 A.M. New York
time at least three (3) LIBOR Business Days prior to the date on which the
applicable Interest Period will commence.
If a LIBOR Rate Election is then in effect with respect to any portion
of the Loan, then no Interest Period for such portion (or any part thereof) of
the Loan may be designated which commences prior to the last day of the then
current and applicable Interest Period for such portion of the Loan. In no event may Borrower elect an Interest
Period which extends beyond the Maturity Date.
Notwithstanding anything to the contrary, (i) the LIBOR Rate Election may
be exercised from time to time only as to a minimum amount of $53,000,000, and
(ii) in no event shall more than seven (7) Interest Periods be in effect at any
time for the Loan. If Borrower does not
select an Interest Period at least three (3) LIBOR Business Days prior to the
last day of the applicable Interest Period, then the Applicable Rate for such
amount following the end of such Interest Period shall be based on a thirty
(30) day Interest Period.
(d) All payments (whether of
principal or interest) shall be deemed credited to Borrower’s account only if
received by 3:00 p.m. (New York time) on a Business Day; otherwise, such
payment shall be deemed received on the next Business Day.
(e) If Lender determines
(which determination shall be conclusive and binding upon Borrower, absent
manifest error) (i) that dollar deposits in respect of any portion of the Loan
bearing interest at the Adjusted LIBOR Rate are not generally available at such
time in the London Interbank market, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender of
maintaining a LIBOR Rate on such portion of the Loan or of funding the same due
to circumstances affecting the London
interbank market generally, (iii) that reasonable means do not exist
for ascertaining a LIBOR Rate or (iv) that an Adjusted LIBOR Rate would be in
excess of the maximum interest rate which Borrower may by law pay, then, in any
such event, Lender shall so notify Borrower and all portions of the Loan
bearing interest at the Adjusted LIBOR Rate that are so affected shall, as of
the date of such notification with respect to an event described in clauses
(ii) or (iv) above, or as of the expiration of the Applicable Rate Interest
Period with respect to an event described in clauses (i) or (iii) above, bear
interest at the Adjusted Prime Rate until such time as the situations described
above are no longer in effect.
(f) If the introduction of
(or any change in) any Law, regulation or treaty, or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof, shall make it unlawful for Lender to maintain the
Applicable Rate at an Adjusted LIBOR Rate with respect to the Loan or any
portion thereof, or to fund the Loan or any portion thereof in dollars in the
London interbank market, then (i) Lender shall notify Borrower that Lender is
no longer able to maintain the Applicable Rate at an Adjusted LIBOR Rate, (ii)
the Applicable Rate shall automatically be converted to the Adjusted Prime Rate
and (iii) Borrower shall pay to Lender the amount of Breakage Costs (if any)
incurred by Lender in connection with such conversion. Lender shall use reasonable efforts to avoid
incurring any Breakage Costs but shall have no liability if any Breakage Costs
are incurred. Thereafter, interest shall
accrue on the Loan or the applicable portion thereof at the Adjusted Prime Rate
until such time as the situation described herein is no longer in effect.
(g) Interest on the
outstanding principal balance of the Loan shall be calculated by multiplying
(i) the actual number of days elapsed in the period for which the calculation
is being made by (ii) a daily rate based on a three hundred sixty (360) day
year by (iii) the outstanding principal balance of the Loan.
(h) Borrower shall indemnify
Lender and hold Lender harmless from any loss or expense which Lender sustains
or incurs as a consequence of (i) any default by Borrower in payment of the
principal of or interest on any portion of the Loan bearing interest at an
Adjusted LIBOR Rate, including, without limitation, any such loss or expense
arising from interest or fees payable by Lender to lenders of funds obtained by
it in order to maintain such portion of the Loan at an Adjusted LIBOR Rate,
(ii) any prepayment (whether voluntary or mandatory) of any portion of the Loan
bearing interest at an Adjusted LIBOR Rate on a day that (A) is not the Payment
Date immediately following the last day of an Interest Period with respect
thereto or (B) is the Payment Date immediately following the last day of an
Interest Period with respect thereto if Borrower did not give the prior written
notice of such prepayment required pursuant to the terms of this Agreement,
including, without limitation, such loss or expense arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain
such portion of the Loan at an Adjusted LIBOR Rate and (iii) the conversion
(for any reason whatsoever, whether voluntary or involuntary) of the Applicable
Rate from an Adjusted LIBOR Rate to the Adjusted Prime Rate with respect to any
portion of the Loan on a date other than the Payment Date immediately following
the last day of an Interest Period, including, without limitation, such loss or
expenses arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain such portion of the Loan at an Adjusted
LIBOR Rate (the amounts referred to in clauses (i), (ii) and (iii) are herein
referred to collectively as the “Breakage Costs”). This provision shall survive payment
of the Note in full and the satisfaction of all other obligations of
Borrower under this Agreement and the other Loan Documents.
Lender shall make reasonable efforts to avoid incurring any Breakage
Costs in connection with the application of the Release Prices in reduction of
(i) The outstanding
principal balance of the Loan shall bear interest at the Default Rate at any
time during which an Event of Default exists.
COSTS OF MAINTAINING LOAN
Section 6.1 Increased Costs and Capital
(a) Borrower recognizes that
the cost to Lender of maintaining the Loan or any portion thereof may fluctuate
and Borrower agrees to pay Lender additional amounts to compensate Lender for
any increase in costs incurred in maintaining the Loan or any portion thereof
or for the reduction of any amounts received or receivable from Borrower as a
change after the date hereof in any Law, regulation or treaty, or in the
interpretation or administration thereof, or by any domestic or foreign court,
(x) changing the basis of taxation of payments under this Agreement to Lender
(other than taxes imposed on all or any portion of the overall net income or
receipts of Lender), (y) imposing, modifying or applying any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, credit extended by, or any other acquisition of funds for loans by
Lender or (z) imposing on Lender, or the London interbank market generally, any
other condition affecting the Loan, provided that the result of the foregoing
is to increase the cost to Lender of maintaining the Loan or any portion
thereof or to reduce the amount of any sum received or receivable from Borrower
by Lender under the Loan Documents; or
maintenance by Lender of reserves in accordance with reserve requirements
promulgated by the Board of Governors of the Federal Reserve System of the
United States with respect to “Eurocurrency Liabilities” of a similar term to
that of the Loan (without duplication for reserves already accounted for in the
calculation of a LIBOR Rate pursuant to the terms hereof).
(b) If the application of any
Law, rule, regulation or guideline adopted or arising out of the report of the
Basle Committee on Banking Regulations and Supervisory Practices entitled “International
Convergence of Capital Measurement and Capital Standards”, or the adoption
after the date hereof of any other Law, rule, regulation or guideline regarding
capital adequacy, or any change after the date hereof in any of the foregoing,
or in the interpretation or administration thereof by any domestic or foreign
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, has the effect of reducing the rate of return on Lender’s capital to a
level below that which Lender would have achieved but for such application,
adoption, change or compliance
(taking into consideration the policies of Lender with respect to
capital adequacy), then, from time to time Borrower shall pay to Lender such
additional amounts as will compensate Lender for such reduction with respect to
any portion of the Loan outstanding.
(c) Any amount payable by
Borrower under subsection (a) or subsection (b) of this Section 6.1 shall be
paid within five (5) days of receipt by Borrower of a certificate signed by an
authorized officer of Lender setting forth the amount due and the basis for the
determination of such amount, which statement shall be conclusive and binding
upon Borrower, absent manifest error.
LOAN EXPENSE AND ADVANCES
Section 7.1 Loan and Administration Expenses.
Borrower shall reimburse Lender, from time to time
upon five (5) days’ demand therefor, for reasonable, out-of-pocket expenses
incurred by Lender in connection with the administration of the Loan (excluding
Lender’s general overhead expenses), including all amounts payable pursuant to Sections
7.2 and 7.3 hereof and any and all other fees owing to Lender
pursuant to the Loan Documents, and also including, without limitation, all
recording, filing and registration fees and charges, mortgage or documentary
taxes, insurance premiums, title insurance premiums and other charges of the
Title Insurer, survey fees and charges, cost of certified copies of
instruments, cost of premiums on surety company bonds and the Title Policy,
charges of Title Insurer or other escrowee for administering disbursements, all
fees and disbursements of Lender’s Consultant, all fees and disbursements of
servicer, appraisal fees, syndication fees, insurance consultant’s fees,
environmental consultant’s fees, travel related expenses and all costs and
expenses incurred by Lender or Servicer in connection with the determination of
whether or not Borrower has performed the obligations undertaken by Borrower
hereunder or has satisfied any conditions precedent to the obligations of
Lender hereunder. Further, if any Default or Event of Default occurs or if
the Loan is not paid in full when and as due, Borrower shall pay to Lender upon
five (5) days’ demand therefor, all costs and expenses of Lender (including,
without limitation, reasonable attorneys’ fees and court costs) incurred in
attempting to enforce payment of the Loan or to realize upon the security
therefor. Borrower agrees to pay Lender’s
fees and disbursements incurred in connection with title updates and title endorsements
ordered by the Lender (a) in connection with each disbursement of Loan
proceeds, (b) to be ordered every six (6) months if construction ceases and (c)
after completion of construction every six (6) months thereafter throughout the
term of the Loan, or more often if an Event of Default has occurred or if
required by examiners.
Section 7.2 Brokerage Fees.
Borrower shall pay all brokerage, finder or similar
fees or commissions payable in connection with the transactions contemplated
hereby and shall indemnify and hold Lender harmless against all claims,
liabilities, costs and expenses (including attorneys’ fees and expenses)
incurred in relation to any claim by any broker, finder or similar person
claiming that they represented Borrower; provided however, that
as an inducement to Borrower to make the
Lender represents and warrants to Borrower that Lender has not dealt with any
broker, finder or similar person in connection with this Loan.
Section 7.3 Right of Lender to Make Advances
to Cure Borrower’s Defaults.
If Borrower fails to perform any of Borrower’s
covenants, agreements or obligations contained in this Agreement or any of the
other Loan Documents (after the expiration of applicable grace periods, except
in the event of an emergency or other exigent circumstances), Lender may (but
shall not be required to), after written notice to Borrower and the expiration
of any applicable cure periods, perform any of such covenants, agreements and
obligations, and any amounts expended by Lender in so doing shall be added to
the Debt and bear interest at the Default Rate.
TO THE MAKING OF THE LOAN
Section 8.1 Non-Construction Conditions
Lender’s obligation to fund the Initial Advance and thereafter
to make any further disbursements of the Loan is conditioned upon Borrower’s
delivery, performance and satisfaction of the following conditions precedent in
form and substance satisfactory to Lender.
(a) Borrower shall have
furnished duly executed copies of the documents listed in Section 4.2;
(b) There shall exist no
Default of which Borrower has received notice from Lender or Event of Default;
(c) Borrower has paid the
Loan Fee to Lender;
(d) Borrower shall have
satisfied the Initial Equity Requirement;
(e) Borrower shall have
furnished Lender with evidence (also satisfactory to the Title Insurer) that
all pre-closing development costs on the Project have been paid or will be paid
as of Closing;
(f) Borrower shall have
furnished Lender with evidence that all taxes then due and payable, including
without limitation, real estate taxes, with respect to the Property have been
paid or will be paid as of Closing;
(g) Borrower shall have
furnished to Lender the Title Policy, together with legible copies of all title
exception documents cited in the Title Policy and all other legal documents
affecting the Project or the use thereof;
(h) Borrower shall have
furnished to Lender an ALTA/ACSM Land Title Survey of the Project and any and
all existing plats regarding the Project;
(i) Borrower shall have
furnished Lender with evidence of zoning or a copy of the final approved
Planned Unit Development (“PUD”) map, preliminary development plan (“PDP”)
or other development plan for the Project permitting the construction of the
Improvements and containing all use or building conditions or restrictions
affecting the Project and approved by the appropriate Governmental Authority;
(j) Borrower shall have
furnished to Lender certified copies of the Issued Entitlements and all other
Governmental Approvals and Permits then required for the Project;
(k) Borrower shall have
furnished Lender with policies or binders evidencing that Borrower has obtained
and maintains insurance coverage in respect of Borrower and the Project in
accordance with the provisions of Section 16.2 below, and paid all
Insurance Premiums in respect thereof;
(l) All of the
representations of Borrower and Guarantor set forth in the Loan Documents shall
be true and correct in all material respects;
(m) Borrower shall have
furnished Lender with an opinion(s) from counsel to Borrower, Member and
Guarantor as to due formation, valid existence and good standing of Borrower,
Member and Guarantor, authorization, due execution and delivery of the Loan
Documents, enforceability and perfection of the Loan Documents, and security
interests, usury, zoning and land use entitlements, marketing and sale of Units
in accordance with applicable law, and such other matters as Lender may
(n) Borrower shall have
furnished Lender with the Non-Consolidation Opinion;
(o) Borrower shall have
furnished Lender with an zoning report from PBR Hawaii as to violations and
zoning, and use of property and other non-zoning land use permits.
(p) Borrower shall have
furnished Lender with current bankruptcy, federal tax lien, litigation,
judgment and UCC searches in respect of Borrower, Member and Guarantor;
(q) Borrower shall have
furnished Lender with current annual financial statements of Member and
Guarantor, each in form satisfactory to Lender and each certified as being
true, complete and correct by the party to which it relates;
(r) Borrower shall have
furnished Lender with proof satisfactory to Lender of its authority, formation
and good standing in the state of its formation and qualification in the State
(s) Borrower shall have
furnished Lender with (i) certified copies of all action taken by Borrower,
Member and any other principal of Borrower to authorize the execution, delivery
and performance, in accordance with its terms, of this Agreement, the Mortgage,
the Note, each of the other Loan Documents and any other documents required or
contemplated hereunder or thereunder to which it is a party; (ii) a certificate
of incumbency with respect to the representatives of each Borrower, Member and
any other principal of Borrower authorized and directed to execute and deliver
each of the Loan Documents to which it is a party;
(iii) certificates of good standing for Borrower, Member and any other
principal of Borrower from the appropriate authority in their jurisdictions of
formation, and (iv) certified copies of all organizational documents,
including, without limitation, formation and corporate governance documents,
for Borrower, Member and any other principal of Borrower;
(t) Guarantor shall have
furnished Lender with (i) certified copies of all action taken by Guarantor to
authorize the execution, delivery and performance, in accordance with its
terms, of the Recourse Guaranty, the Completion Guaranty, the Environmental
Indemnity and any other documents required or contemplated hereunder or
thereunder to which it is a party (the “Guarantor Documents”); (ii) a
certificate of incumbency with respect to the representatives of each Guarantor
authorized and directed to execute and deliver each of the Guarantor Documents
to which it is a party; and (iii) certificates of good standing for Guarantor
from the appropriate authority in their jurisdictions of formation;
(u) Borrower shall have
furnished Lender with evidence of the availability to the Improvements of all
utilities utilized or to be utilized at the Project in compliance with the
requirements of the Plans and Specifications.
Such evidence may be in the form of letters from utility companies or
local authorities, that (a) telephone service, cable, telecommunications,
electric power, natural gas, storm sewer, sanitary sewer and water facilities
are available to the Project; (b) such utilities are adequate to serve the
Project and exist at the boundary of the Project; and (c) no conditions exist
to affect Borrower’s right to connect into and have unlimited use of such
utilities except for the payment of a normal connection charge and except for
the payment of subsequent charges for such services to the utility supplier;
(v) Lender shall have
reviewed and approved the Appraisal;
(w) Lender shall have reviewed
and approved the Environmental Report;
(x) Borrower shall have
furnished Lender with copies of all engineering reports, land planning maps, or
plats, soils tests, environmental reports, surveys prepared for the orderly
planning of the Improvements, marketing materials and brochures, building
permits or licenses, utility taps or supply agreements, governmental or private
agreements, indemnities, waivers, rights to reimbursements, abatements or
benefits of whatsoever nature regarding the Property, to the extent assignable,
and other documents prepared and existing for the construction of the
Improvements, available on the Effective Date, with subsequent submissions to
Lender of reports and studies not required to be available on the Effective
Date, if requested by Lender (collectively, the “Development Items”).
(y) Borrower shall have
furnished Lender with copies of any agreements, existing or proposed, with any
Governmental Authority, in the nature of a subdivider’s agreement, public
improvements agreement, or annexation agreement affecting the development of
the Project or requiring cash equivalent collateral, or imposing building
restrictions in lieu of collateral, as a condition to development of the
Project (collectively, the “Development Documents”).
Section 18.2 Prohibition of Transfers in
Violation of ERISA.
In addition to the prohibitions set forth in Section
18.1 above, Borrower shall not assign, sell, pledge, encumber, transfer,
hypothecate or otherwise dispose of its interest or rights in this Agreement or
in the Project, or attempt to do any of the foregoing or suffer any of the
foregoing, nor shall any party owning a direct or indirect interest in Borrower
assign, sell, pledge, mortgage, encumber, transfer, hypothecate or otherwise
dispose of any of its rights or interest (direct or indirect) in Borrower,
attempt to do any of the foregoing or suffer any of the foregoing, if such
action would cause the Loan, or the exercise of any of Lender’s rights in
connection therewith, to constitute a prohibited transaction under ERISA or the
Internal Revenue Code or otherwise result in Lender being deemed in violation
of any applicable provision of ERISA.
Borrower agrees to indemnify and hold Lender free and harmless from and
against all losses, costs (including attorneys’ fees and expenses), taxes,
damages (including consequential damages) and expenses Lender may suffer by
reason of the investigation, defense and settlement of claims and in obtaining
any prohibited transaction exemption under ERISA necessary or desirable in
Lender’s sole judgment or by reason of a breach of the foregoing
prohibitions. The foregoing
indemnification shall be a recourse obligation of Borrower and shall survive
repayment of the Note, notwithstanding any limitations on recourse contained
herein or in any of the Loan Documents.
Section 18.3 Successors and Assigns.
Subject to the foregoing restrictions on transfer and
assignment contained in this Article XVIII, this Agreement shall
inure to the benefit of and shall be binding on the parties hereto and their
respective successors and permitted assigns.
Section 19.1 Servicer.
At the option of Lender, the Loan may be serviced by a
servicer or trustee (the “Servicer”) selected by
Lender and Lender may delegate all or any portion of its responsibilities under
this Agreement and the other Loan Documents to the Servicer pursuant to a
servicing agreement (the “Servicing Agreement”)
between Lender and Servicer. Borrower
shall not be responsible for any reasonable set-up fees or any other initial
costs relating to or arising under the Servicing Agreement. Thereafter, Borrower shall reimburse Lender
for the monthly servicing fees payable under the Servicing Agreement (“Servicing
Fees”). Servicing Fees, along with
the Tax and Insurance Escrow Fund, shall be added together with monthly
installments of principal and interest payable under the Note and paid as an
aggregate sum by Borrower to Lender on each Payment Date. Borrower shall further reimburse Lender upon
demand for reasonable out-of-pocket costs and expenses incurred by Servicer in
(i) reviewing Borrower’s requisitions for advances of the Loan, (ii) reviewing
proposed Leases and subordination, non-disturbance and attornment agreements,
(iii) conducting inspections of the Project, (iv) applying the provisions of
this Agreement to any casualty or condemnation proceeding affecting the
Project, (v) responding to any Default or Event of Default or (vi) otherwise
connection with this
Agreement, including, without limitation, in connection with the administration
of the Loan.
Section 19.2 Servicer Fees.
Borrower shall pay, monthly, all fees to the Servicer
in respect of servicing the Loan in the amount of twelve and three tenths
(12.3) basis points per annum on the then outstanding Loan amount. Such fees shall be added to the Monthly
Interest Payment (as defined in the Note) due on the Loan. In addition, Borrower shall pay all of Servicer’s
out-of-pocket costs and expenses (including, without limitation, legal fees)
incurred in connection with its review of any construction advances or draws,
change orders, construction progress reports, leases, subordination and
non-disturbance agreements, property and construction inspections, casualty or
condemnation matters or loan defaults
EVENTS OF DEFAULT
Section 20.1 Events of Default.
The occurrence of any one or more of the following
shall constitute an “Event of Default” as said term is used herein:
(a) Failure of Borrower: (i)
to make any principal or interest payment when due, (ii) to observe or perform
any of the other covenants or conditions by Borrower to be performed under the
terms of this Agreement or any other Loan Document concerning the payment of
money within ten (10) days after notice, or (iii) for a period of thirty (30)
days after written notice from Lender, to observe or perform any non-monetary
covenant or condition contained in this Agreement or any other Loan Documents;
provided that if any such failure concerning a non-monetary covenant or condition
is susceptible to cure and cannot reasonably be cured within said thirty (30)
day period, then Borrower shall have an additional sixty (60) day period to
cure such failure and no Event of Default shall be deemed to exist hereunder so
long as Borrower commences such cure within the initial thirty (30) day period
and diligently and in good faith pursues such cure to completion within such
resulting ninety (90) day period from the date of Lender’s notice; and provided
further that if a different notice or grace period is specified under any other
subsection of this Section 20.1 with respect to a particular breach, or
if another subsection of this Section 20.1 applies to a particular
breach and does not expressly provide for a notice or grace period, the
specific provision shall control;
(b) The disapproval by Lender
or Lender’s Consultant at any time of any construction work due to such work
being defective or deviating from the approved Plans and Specifications, and
failure of Borrower to cause the same to be corrected to the reasonable
satisfaction of Lender within the cure period provided in Section
(c) A delay or discontinuance
in the Construction for a period of fifteen (15) days for reasons within the
control of Borrower, or up to seventy-five (75) days if occasioned by Force
Majeure Delays, provided that the aggregate of all such time periods shall not
one hundred fifty (150) days, and an additional one hundred twenty
(120) days permitted with respect to a tropical storm or hurricane;
(d) If Borrower fails to
complete the Construction in substantial accordance with the Plans and
Specifications on or before the Completion Date;
(e) If Borrower fails to
satisfy the final disbursement conditions under Article XIV on or before
the Completion Date;
(f) If Borrower defaults,
beyond any applicable notice or cure period, under the General Contract, the
Architect’s Agreement, any Major Contract, any of the Marketing Agreements, any
of the ML&P Agreements, the Ground Lease, or the ER Purchase Agreement;
(g) The bankruptcy or
insolvency of the General Contractor and failure of Borrower to procure a
contract with a new contractor reasonably satisfactory to Lender within ninety
(90) days from the occurrence of such bankruptcy or insolvency;
(h) Any Transfer or other
disposition in violation of Sections 18.1 or 18.2;
(i) If any warranty,
representation, statement, report or certificate made now or hereafter by
Borrower or Guarantor is untrue or incorrect in any material respect at the time
made or, subject to the provisions of Section 3.2 hereof, deemed remade;
(j) Borrower or Guarantor
shall commence a voluntary case concerning Borrower or Guarantor under the
Bankruptcy Code; or an involuntary proceeding is commenced against Borrower or Guarantor
under the Bankruptcy Code and relief is ordered against the applicable party,
or the petition is controverted but not dismissed or stayed within sixty (60)
days after the commencement of the case, or a custodian (as defined in the
Bankruptcy Code) is appointed for or takes charge of all or substantially all
of the property of Borrower or Guarantor; or Borrower or Guarantor commence any
other proceedings under any reorganization, arrangement, readjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar Law of any
jurisdiction whether now or hereafter in effect relating to Borrower or
Guarantor; or there is commenced against Borrower or Guarantor any such
proceeding which remains undismissed or unstayed for a period of sixty (60)
days; or Borrower or Guarantor fails to controvert in a timely manner any such
case under the Bankruptcy Code or any such proceeding, or any order of relief
or other order approving any such case or proceeding is entered; or Borrower or
Guarantor by any act or failure to act indicates its consent to, approval of,
or acquiescence in any such case or proceeding or the appointment of any
custodian or the like of or for it for any substantial part of its property or
suffers any such appointment to continue undischarged or unstayed for a period
of sixty (60) days;
(k) Borrower or Guarantor
shall make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due, or shall
consent to the appointment of a receiver or trustee or liquidator of all of its
property or the major part thereof or if all or a substantial part of the
assets of Borrower or Guarantor are
attached, seized, subjected to a writ or distress warrant, or are
levied upon, or come into the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors;
(l) Any court enjoins
Borrower from performing Construction, and such injunction is not removed for a
period of twenty (20) days;
(m) Borrower fails to make any
Deficiency Deposit with Lender within the time and in the manner required by Article
(n) One or more final,
unappealable judgments are entered (i) against Borrower in amounts aggregating
in excess of $500,000.00; (ii) against Exclusive Resorts Development Company,
LLC in amounts aggregating in excess of $250,000.00; (iii) against ML&P or
Xxxx-Xxxxxxx in amounts aggregating in excess of $2,500,000.00 and said
judgments are not satisfied, stayed or bonded over within thirty (30) days after
(o) If Borrower or Guarantor
shall fail to pay any debt owed by it or is in default (beyond any applicable
notice, cure or grace period) under any Loan Document with Lender and such
failure or default continues after any applicable grace period specified in the
instrument or agreement relating thereto;
(p) If a Material Adverse
Change occurs with respect to Borrower, the Project or Guarantor; or
(q) The occurrence of any
other event or circumstance denominated as an Event of Default in this Agreement
or under any of the other Loan Documents and the expiration of any applicable
grace or cure periods, if any, specified for such Event of Default herein or
therein, as the case may be.
LENDER’S REMEDIES IN EVENT OF DEFAULT
Section 21.1 Remedies Conferred Upon Lender.
Upon the occurrence of any Event of Default, Lender
may pursue any one or more of the following remedies concurrently or
successively, it being the intent hereof that none of such remedies shall be to
the exclusion of any other:
possession of the Project and complete the Construction in accordance with the
Plans and Specifications and do anything which is necessary or appropriate in
its sole judgment to fulfill the obligations of Borrower under this Agreement
and the other Loan Documents, including either the right to avail itself of and
procure performance of existing contracts or let any contracts with the same
contractors or others. Without
restricting the generality of the foregoing and for the purposes aforesaid, Borrower
hereby appoints and constitutes Lender its lawful attorney in fact with full
power of substitution in the Project to complete the Construction in the name
of Borrower; to use unadvanced funds remaining under the Note or which may be
reserved, escrowed or set aside for any purposes hereunder at any time, or to
advance funds in excess of the face amount of the Note, to complete the
Construction; to make changes in the Plans and Specifications which
shall be necessary or desirable to complete the Construction in
substantially the manner contemplated by the Plans and Specifications; to
retain or employ new general contractors, subcontractors, architects, engineers
and inspectors as shall be required for said purposes; to pay, settle or
compromise all existing bills and claims which are, or which may become, liens
against the Project; to execute all applications and certificates in the name
of Borrower, prosecute and defend all actions or proceedings in connection with
the Improvements or Project; to take action and require such performance as it
deems necessary under the Bond(s) and to make settlements and compromises with
the surety thereunder, and in connection therewith, to execute instruments of
release and satisfaction; and to do any and every act which Borrower might do
in its own behalf, it being understood and agreed that this power of attorney
shall be a power coupled with an interest and cannot be revoked;
(b) Withhold further
disbursement of the proceeds of the Loan and/or terminate Lender’s obligations
to make further disbursements hereunder;
(c) Declare the Note to be
immediately due and payable;
(d) Sell Units pursuant to
Contracts of Sale;
(e) Exercise all of Borrower’s
rights under the Condominium Documents; and
(f) Exercise or pursue any other
remedy or cause of action permitted under this Agreement or any other Loan
Documents, or conferred upon Lender by Law.
Section 22.1 Captions.
The captions and headings of various Articles,
Sections and subsections of this Agreement and Exhibits pertaining hereto are
for convenience only and are not to be considered as defining or limiting in
any way the scope or intent of the provisions hereof.
Section 22.2 Modification; Waiver.
No modification, waiver, amendment or discharge of
this Agreement or any other Loan Document shall be valid unless the same is in
writing and signed by the party against which the enforcement of such
modification, waiver, amendment or discharge is sought.
Section 22.3 Governing Law.
THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE AND WILL BE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY. IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITATION, MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND APPLICABLE LAW OF THE UNITED
STATES OF AMERICA. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT,
AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW. NOTWITHSTANDING THE FOREGOING,
PROVISIONS IN THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS WITH RESPECT TO
THE CREATION, PERFECTION, PRIORITY, ENFORCEMENT AND FORECLOSURE OF THE LIENS
AND SECURITY INTERESTS CREATED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROJECT IS LOCATED.
Section 22.4 Acquiescence Not to Constitute
Waiver of Lender’s Requirements.
Each and every covenant and condition for the benefit
of Lender contained in this Agreement may be waived by Lender, provided,
however, that to the extent that Lender may have acquiesced in any
noncompliance with any construction or nonconstruction conditions precedent to
the Initial Advance under the Loan or to any subsequent disbursement of Loan
proceeds, such acquiescence shall not be deemed to constitute a waiver by
Lender of such requirements with respect to any future disbursements of Loan
Section 22.5 Disclaimer by Lender.
(a) This Agreement is made for
the sole benefit of Borrower and Lender, and no other Person shall have any
benefits, rights or remedies under or by reason of this Agreement, or by reason
of any actions taken by Lender pursuant to this Agreement. Lender shall not be liable to any contractors,
subcontractors, supplier, architect, engineer, tenant or other party for labor
or services performed or materials supplied in connection with the
Construction. Lender shall not be liable
for any debts or claims accruing in favor of any such parties against Borrower
or others or against the Project.
Lender, by making the Loan or taking any action pursuant to any of the
Loan Documents, shall not be deemed a partner or a joint venturer with Borrower
or fiduciary of Borrower. No payment of
funds directly to a contractor or subcontractor or provider of services shall
be deemed to create any third party beneficiary status or recognition of same
by Lender. Without limiting the
generality of the foregoing:
shall have no liability, obligation or responsibility whatsoever with respect
to the Construction. Any inspections of
the Construction made by or through Lender are for purposes of administration
of the Loan only and neither Borrower nor any third party is entitled to rely
upon the same with respect to the quality, adequacy or suitability of materials
or workmanship, conformity to the Plans and Specifications, state of completion
or otherwise; and
neither undertakes nor assumes any responsibility or duty to Borrower to
select, review, inspect, supervise, pass judgment upon or inform Borrower of
any matter in connection with the Project, including matters relating to the
quality, adequacy or suitability of: (x)
the Plans and Specifications, (y) architects, contractors, subcontractors and
material suppliers employed or utilized in connection with the Construction, or
the workmanship of or the materials used by any of them or (z) the progress or
course of Construction and its conformity or nonconformity with the Plans and
Specifications; Borrower shall rely entirely upon its own judgment with respect
to such matters, and any review, inspection, supervision, exercise of judgment
or supply of information to Borrower by Lender in connection with such matters
is for the protection of Lender only, and neither Borrower nor any third party
is entitled to rely thereon.
Section 22.6 Partial Invalidity; Severability.
If any of the provisions of this Agreement, or the
application thereof to any person, party or circumstances, shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of such provision or provisions to persons, parties or
circumstances other than those as to whom or which it is held invalid or
unenforceable, shall not be affected thereby, and every provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by
Section 22.7 Definitions Include Amendments.
Definitions contained in this Agreement which identify
documents, including, but not limited to, the Loan Documents, shall be deemed
to include all amendments and supplements to such documents from the date
hereof, and all future amendments, modifications, and supplements thereto
entered into from time to time to satisfy the requirements of this Agreement or
otherwise with the consent of Lender.
Reference to this Agreement contained in any of the foregoing documents
shall be deemed to include all amendments and supplements to this Agreement.
Section 22.8 Execution in Counterparts.
This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
Section 22.9 Entire Agreement.
This Agreement, taken together with all of the other
Loan Documents and all certificates and other documents delivered by Borrower
to Lender, embody the entire agreement and supersede all prior agreements,
written or oral, relating to the subject matter hereof.
Section 22.10 Waiver of Damages.
In no event shall Lender be liable to Borrower for
punitive, exemplary or consequential damages, including, without limitation,
lost profits, whatever the nature of a breach by Lender of
its obligations under
this Agreement or any of the Loan Documents, and Borrower for itself and its
Guarantor waives all claims for punitive, exemplary or consequential damages.
Section 22.11 Jurisdiction.
TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY
LENDER. WITH RESPECT TO ANY SUIT, ACTION
OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A “PROCEEDING”),
BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT
COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW
YORK COUNTY, NEW YORK, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY
TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES
ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH
COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE
LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE
BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING
OF A PROCEEDING IN ANY OTHER JURISDICTION.
BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF
SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN
ANY PROCEEDING IN THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE
FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE
COURT SITTING IN NEW YORK COUNTY, NEW YORK, MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS
INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT
THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED
COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
Section 22.12 Set-Offs.
After the occurrence and during the continuance of an
Event of Default, Borrower hereby irrevocably authorizes and directs Lender
from time to time to charge Borrower’s accounts and deposits with Lender (or
its Affiliates), and to pay over to Lender an amount equal to any amounts from
time to time due and payable to Lender hereunder, under the Note or under any
other Loan Document. Borrower hereby
grants to Lender a security interest in and to all such accounts and deposits
maintained by Borrower with Lender (or its Affiliates).
Section 22.13 Authorized Representative.
The Authorized Representative shall deal with Lender
on behalf of Borrower in respect of any and all matters in connection with this
Agreement, the other Loan Documents, and the Loan. The Authorized Representative shall have the
power, in his or her discretion, to give and
receive all notices,
monies, approvals, and other documents and instruments, and to take any other
action on behalf of Borrower. All
actions by the Authorized Representative shall be final and binding on
Borrower. Lender may rely on the
authority given to the Authorized Representative until actual receipt by Lender
of a duly authorized resolution depriving such Authorized Representative of his
authority. No more than one person shall
serve as Authorized Representative at any given time.
Section 22.14 Non-Recourse Provisions.
The provisions of Article IX of the Note
pertaining to the personal liability of Borrower and its members, officers,
directors and employees are hereby incorporated herein by reference.
Section 22.15 Time is of the Essence.
Time is of the essence under this Agreement.
Section 22.16 Sole Discretion of Lender and Deemed
Wherever pursuant to this Agreement (a) Lender
exercises any right given to it to approve, disapprove or consent, (b) any
arrangement or term is to be satisfactory to Lender, or (c) any other decision
or determination is to be made by Lender, the decision of Lender to approve,
disapprove or consent, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations
made by Lender, shall be in the sole and absolute discretion of Lender and
shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein, and any such decision or determination to be made
in “the sole discretion of Lender” or in
or at “Lender’s sole discretion” under this Agreement shall be deemed to be in
the sole and absolute discretion of Lender and shall be final and conclusive.
With respect to any consent that is a Standard Consent such consent shall be deemed given by
Lender if Lender (or Servicer acting on behalf of Lender) fails to object
(which objection may consist solely of a request for additional information or
documentation) within ten (10) Business Days of receipt of a written request by
Borrower for such consent and receipt by Lender and Servicer of all information
reasonably necessary for Lender to make an informed decision, all delivered in
accordance with Article XXIV hereof and marked on the consent request and on
the envelope transmitting same “NOTICE THAT MAY TRIGGER
DEEMED CONSENT - KAPALUA BAY”.
Section 22.17 Conflict; Construction of Documents;
In the event of any conflict between the provisions of
this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties
hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to
the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be
subject to any limitation whatsoever in the exercise of any rights
or remedies available to
it under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender’s exercise of
any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse
to or competitive with the business of Borrower or its Affiliates.
Any notice, demand, request or other communication
which any party hereto may be required or may desire to give hereunder shall be
in writing and shall be deemed to have been properly given (a) if hand
delivered, when delivered, (b) if mailed by United States Certified Mail
(postage prepaid, return receipt requested), three Business Days after mailing
(c) if by Federal Express or other reliable overnight courier service, on the
next Business Day after delivered to such courier service or (d) if by
telecopier on the day of transmission so long as copy is sent on the same day
by overnight courier as set forth below:
If to Borrower:
Kapalua Bay, LLC
c/o Maui Land & Pineapple Company, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telecopy: (000) 000-0000
With a copy to:
Xxxx, Xxxxxx & Roeper, LLP
ICW Plaza at Torrey Reserve
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
If to Lender:
Xxxxxx Brothers Holdings Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
With a copy to:
Estate Advisors, Inc.
0000 Xxxxxxxxx Xxxx XX, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxx
Telecopy: 000 000-0000
And a copy to:
Xxxxxxx, Xxxxxxxxx LLP
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
or at such other address as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice.
WAIVER OF JURY TRIAL
BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE
LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SALE OF NOTE AND SECURITIZATION.
Section 25.1 Cooperation.
acknowledges that Lender may sell the Loan to a party who may pool the Loan
with a number of other loans and grant participations therein or issue one or
more classes of Mortgage Backed, Pass-Through Certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement (such sale and/or securitization, a “Securitization”;
the securities evidencing such Securitization the “Securities”) or
syndicate the Loan to one or more third parties. In connection therewith, Borrower agrees to
make available to Lender such financial and other information with respect to
the Project, Borrower, Borrower’s members and Guarantor that was provided to
Lender in the course of its underwriting and origination of the Loan as well as
such financial and other non-confidential information with respect to the
Project, Borrower, Borrower’s members and Guarantor as Lender reasonably
requests (collectively, the “Provided Information”). The Provided Information shall be provided by
Borrower to Lender at Lender’s cost and expense, provided that Borrower’s
expenses payable by Lender shall not exceed Five Thousand and 00/100 Dollars
($5,000.00). The Securities and/or the
Loan may be rated by one or more of the Rating Agencies. Lender may share the Provided Information
with the investment banking firms, Rating Agencies, accounting firms, law firms
and other third-party advisory firms involved with the Loan or the
Securities. The Provided Information may
ultimately be incorporated into the offering documents for the Securities or in
connection with a syndication and thus such information may be disclosed to
various investors. Lender and all of the
aforesaid third-party advisors and professional firms may reasonably rely on
the information supplied by, or on behalf of, Borrower. Lender, at its sole option, may also elect to
split the Loan into two or more loans, each secured by liens on the Project,
and sell, assign, pledge or otherwise hypothecate one or more of such loans to
third parties. Borrower shall cooperate
in all such efforts by executing and delivering all such documents, certificates,
instruments and other things reasonably necessary to evidence or confirm
Borrower’s obligations hereunder, provided, however, that in no event shall the
Debt or Borrower’s obligations hereunder be increased as a result thereof.
Section 25.2 Non-Consolidation Opinion; Independent Director.
If Lender securitizes, sells,
participates, syndicates or hypothecates the Loan, Lender may require that (i)
Borrower cause its counsel to deliver to Lender, any Rating Agency and such
other Persons as Lender deems necessary or appropriate, an update of, or
supplement to, the Non-Consolidation Opinion, in form and substance
satisfactory to Lender and (ii) Borrower cause Member to appoint an Independent
Director to Member.
Section 25.3 Loan Components.
Borrower agrees that in connection with any
Securitization or syndication of the Loan, upon Lender’s reasonable request and
at Lender’s sole cost and expense (excluding Borrower’s legal counsels’ fees
and expenses), Borrower shall deliver one or more new component notes to
replace the original Note or modify the original Note to reflect multiple
components of the Loan. The initial new
Notes or modified Note shall have the same weighted average coupon as the
original Note for the duration of the term of the Note, without regard to any
differing amortization or payment schedules or permitted prepayments. In the event of a prepayment of the Loan,
Lender shall be entitled to apply the amount of such prepayment to one or more
of the new component notes as Lender in its sole discretion decides, subject to
the provisions of the foregoing sentence
Section 25.4 Intentionally Deleted.
Section 25.5 Conversion of Loan and Creation of
Lender shall have the right, at Lender’s sole cost and
expense, to convert a portion of the Loan into subordinate financing,
including, but not limited to, mezzanine debt, subordinate debt or
participations in the Loan (collectively, the “Subordinate Loan”),
provided that (i) the aggregate principal amount of the Loan and the Subordinate
Loan on the date of such adjustment shall equal the aggregate outstanding
principal balance of the Loan immediately prior to such adjustment, (ii) the
Note evidencing the Loan and the Subordinate Loan shall have the same weighted
average coupon as the original Note for the duration of the term of the Note,
regard to any different
amortization or schedules or any permitted prepayments and (iii) the other
terms and provisions of the Loan and the Subordinate Loan shall substantially
remain unchanged, except for changes which are customary with respect to
subordinate loan financing. Borrower
shall cooperate with all reasonable requests of Lender in connection with any
such adjustment of the Loan and shall execute and deliver such documents as
shall reasonably be required by Lender at no cost to Borrower in connection
therewith provided that Borrower’s
attorneys’ costs and expenses payable by Lender shall not exceed Five Thousand
and 00/100 Dollars ($5,000.00).
Section 25.6 Securitization Indemnification.
(a) Borrower understands that
certain of the Provided Information may be included in disclosure documents in
connection with the Securitization, including, without limitation, a
prospectus, prospectus supplement or private placement memorandum (each, a “Disclosure Document”)
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Securities Act”),
or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”),
or provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the
Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects.
(b) Borrower agrees to provide in connection
with each of (i) a preliminary and a private placement memorandum or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable, an
indemnification certificate (A) certifying that Borrower has carefully examined
such memorandum or prospectus, as applicable, including without limitation, the
sections entitled “Special Considerations,” “Description of the Mortgages,”
“Description of the Mortgage Loans and Mortgaged Property,” “The Manager,” “The
Borrower” and “Certain Legal Aspects of the Mortgage Loan,” and such sections
(and any other sections reasonably requested) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in the light of the circumstances under
which they were made, not misleading, (B) indemnifying Lender (and for purposes
of this Section 25.6(b), Lender hereunder shall include its officers,
employees and directors), the Affiliate of Xxxxxx Brothers Inc. (“Xxxxxx”)
that has filed the registration statement relating to the securitization (the “Registration
Statement”), each of its directors, each of its officers who have signed
the Registration Statement and each Person who controls the Affiliate within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (collectively, the “Xxxxxx Group”), and Xxxxxx, each of its
directors and each Person who controls Xxxxxx within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter
Group”) for any losses, claims, damages or liabilities (collectively, the “Liabilities”)
to which Lender, the Xxxxxx Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such sections or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated in such sections or necessary in
order to make the statements in such sections or in light of the circumstances
under which they were made, not misleading and (C) agreeing to reimburse
Lender, the Xxxxxx Group and the Underwriter Group for any
legal or other expenses reasonably incurred by Lender and Xxxxxx in
connection with investigating or defending the Liabilities; provided, however, that
Borrower will be liable in any such case under clauses (B) or (C) above only to
the extent that any such loss claim, damage or liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the memorandum or prospectus or
in connection with the underwriting of the Debt, including, without limitation,
financial statements of Borrower, operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Project. This indemnity
agreement will be in addition to any liability which Borrower may otherwise
have. Moreover, the indemnification
provided for in Clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in (A) above is provided and shall be applicable
based on information previously provided by Borrower or its Affiliates if
Borrower does not provide the indemnification certificate.
(c) In connection with
filings under the Exchange Act, Borrower agrees to indemnify (i) Lender, the
Xxxxxx Group and the Underwriter Group for Liabilities to which Lender, the
Xxxxxx Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or alleged omission to
state in the Provided Information a material fact required to be stated in the
Provided Information in order to make the statements in the Provided
Information, in light of the circumstances under which they were made not
misleading and (ii) reimburse Lender, the Xxxxxx Group or the Underwriter Group
for any legal or other expenses reasonably incurred by Lender, the Xxxxxx Group
or the Underwriter Group in connection with defending or investigating the
(d) Promptly after receipt by
an indemnified party under this Section 25.6 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 25.6,
notify the indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the indemnifying
party from any liability which the indemnifying party may have to any
indemnified party hereunder except to the extent that failure to notify causes
prejudice to the indemnifying party. In
the event that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled, jointly with any other indemnifying party, to
participate therein and, to the extent that it (or they) may elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel satisfactory to such indemnified party. After notice from the indemnifying party to
such indemnified party under this Section 25.6, the indemnifying party
shall not be responsible for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. The indemnifying party shall not be liable
the expenses of more than one such separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.
(e) In order to provide for
just and equitable contribution in circumstances in which the indemnity
agreements provided for in Sections 25.6(b) or (c) is or are for any
reason held to be unenforceable by an indemnified party in respect of any
losses, claims, damages or liabilities (or action in respect thereof) referred
to therein which would otherwise be indemnifiable under Sections 25.6(b) or
(c), the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such losses, claims, damages or
liabilities (or action in respect thereof); provided,
however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
In determining the amount of contribution to which the respective
parties are entitled, the following factors shall be considered: (i) Xxxxxx’x and Borrower’s relative
knowledge and access to information concerning the matter with respect to which
claim was asserted; (ii) the opportunity to correct and prevent any statement
or omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender and Borrower
hereby agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation.
(f) The liabilities and
obligations of both Borrower and Lender under this Section 25.6 shall
survive the termination of this Agreement and the satisfaction and discharge of
Section 25.7 Rating Surveillance.
Borrower will retain the Rating Agencies to provide
rating surveillance services on any certificates issued in a
Securitization. Such rating surveillance
will be at the expense of Borrower in an amount determined by Lender in its
reasonable discretion prior to the occurrence of a Securitization. Such expense will be paid in monthly
[Signature page follows]
IN WITNESS WHEREOF, this
Agreement has been executed by the undersigned as of the date first set forth
XXXXXX BROTHERS HOLDINGS INC., a Delaware
/S/ XXXXXX X.
Xxxxxx X. Xxxxxxxx
KAPALUA BAY, LLC,
a Delaware limited liability company
Kapalua Bay Holdings, LLC,
a Delaware limited liability company,
Its Managing Member
MLP KB Partner LLC,
a Hawaii limited liability company,
Its Managing Member
Maui Land & Pineapple Company,
Inc., a Hawaii corporation,
/S/ XXXXXX XXXXXX
/S/ XXXX XXXXXXXXX