LOAN AND SECURITY AGREEMENT Between COSTA BLANCA I REAL ESTATE, LLC, a Florida limited liability company, as Borrower, AND KENNEDY FUNDING, INC. as Agent for the lenders named herein Date: as of June 26, 2007
Exhibit
10.10
Between
XXXXX
XXXXXX I REAL ESTATE, LLC, a Florida limited liability company, as
Borrower,
AND
XXXXXXX
FUNDING, INC.
as
Agent for the
lenders
named herein
Date:
as
of June 26, 2007
TABLE
OF CONTENTS
Page
|
1.
|
Definitions
|
1 |
|
2.
|
The
Loan.
|
3 |
|
3.
|
The
Note
|
8 |
|
4.
|
Grant
of Security Interest.
|
9 |
|
5.
|
Conditions
Precedent to Lender’s Obligations
|
10 |
|
6.
|
Representations
and Warranties of Borrower
|
13 |
|
7.
|
Survival
of Representations and Warranties
|
17 |
|
8.
|
Affirmative
Covenants
|
18 |
|
9.
|
Negative
Covenants of Borrower
|
21 |
|
10.
|
Events
of Default
|
23 |
|
11.
|
Remedies.
|
26 |
|
12.
|
Payment
of Expenses.
|
27 |
|
13.
|
Lender’s
Right to Assign
|
25
|
|
14.
|
Default
Interest Rate
|
28 |
|
15.
|
Usury
Savings
|
28 |
|
16.
|
Notices
|
27
|
|
17.
|
No
Waiver
|
29 |
|
18.
|
Failure
to Exercise Rights
|
30 |
|
19.
|
Prohibition
Against Exercise of Rights Applicable Only to Individual
Lenders
|
30 |
|
20.
|
Miscellaneous.
|
30 |
|
21.
|
Successors
and Assigns.
|
32 |
|
22.
|
Waiver
of Jury Trial
|
33 |
|
23.
|
Releases
of Collateral.
|
33 |
Schedules
|
Schedule
A
|
-
Description of the Collateral
|
|
Schedule
B
|
-
Principal Loan Documents
|
|
Schedule
C
|
-
Criteria for Funding of Holdback
|
|
Schedule
D
|
-
Lenders
|
|
Exhibit
A
|
-
Form of Advertisement
|
-2-
LOAN
AND SECURITY AGREEMENT
THIS
LOAN AND SECURITY AGREEMENT (“Agreement”),
dated as
of June 26, 2007, between
XXXXX XXXXXX I REAL ESTATE, LLC,
a
Florida limited liability company, having an address at 0000 Xxxx Xxxx Xxxx,
Xxxxxxx, Xxxxxxx 00000 (“Borrower”), and XXXXXXX
FUNDING, INC.
(“Agent”), a New Jersey corporation having an address at Xxx Xxxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000, as agent for the lenders identified
on
Schedule
D
attached
hereto and incorporated herein by reference, in each case having an address
care
of Xxxxxxx Funding, Inc., Xxx Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxx
Xxxxxx 00000 (the aforesaid Agent and lenders are hereinafter collectively
referred to as “Lender”).
W
I T N E S S E T H
WHEREAS,
Borrower has requested that Lender make a loan to Borrower in the amount of
FOUR
MILLION FOUR HUNDRED FIFTY THOUSAND ($4,450,000) DOLLARS
(the
“Loan”), subject to and upon the terms and conditions hereinafter contained,
which Loan shall be evidenced by a Promissory Note as of even date herewith
from
Borrower to Lender (the “Note”);
WHEREAS,
the
Loan is to be secured by certain instruments, agreements and documents,
including, but not limited to, those items identified in the Principal Loan
Documents as set forth on Schedule
B
hereto
and made a part hereof, and payment and performance of the Loan is to be
guaranteed pursuant to that certain guaranty of even date herewith from
Guarantor (as hereinafter defined) to Lender (“Guaranty”);
WHEREAS,
capitalized terms not otherwise defined herein shall have those meanings
assigned to them in the Loan Documents (as hereinafter defined);
and
WHEREAS,
Lender
has agreed to make the Loan to Borrower on the terms and conditions hereinafter
set forth.
NOW,
THEREFORE,
in
consideration of the foregoing and of the covenants and conditions hereinafter
set forth, Borrower and Lender hereby agree as follows:
1. Definitions.
As used
herein:
(a) “Account”
or “Accounts Receivable” means,
in
addition to the definition of account as contained in the Uniform Commercial
Code, the right of Borrower to receive payment for goods sold or leased or
for
services rendered which are not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
-3-
(b) “Account
Debtor” means,
in
addition to the definition of account debtor as contained in the Uniform
Commercial Code, the person or persons obligated to Borrower on an Account,
or
who is represented by Borrower to be so obligated.
(c) “Affiliate”
of any Person (as hereinafter defined) shall mean any other Person which,
directly or indirectly, controls or is controlled by, or is under common control
with such Person. For the purposes of this definition, “controls” (including,
with correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
(d) “Business
Day” shall mean any day upon which banks located in the State of New Jersey
generally are open to conduct regular banking business.
(e) “Closing
Date” shall mean the date on which this Agreement is executed by the parties
hereto and the conditions set forth in Paragraph 5 are fulfilled to the
satisfaction of Lender.
(f) the
“Collateral” shall mean the Real Property Collateral, the Collateral described
in Paragraph 4 hereof, any other collateral described in any Loan Document
and
any other property of Borrower and/or Guarantor now or hereafter subject to
a
security agreement, mortgage, pledge, assignment or other document granting
Lender a security interest therein and/or securing the Loan.
(g) the
“Default Rate” shall have the meaning ascribed thereto in the Note.
(h) “Dollar”
or “$” or “dollar” or any other terms of similar import shall mean United States
Dollars, it being understood and agreed that all advances of the Loan shall
be
made in U.S. Dollars and repaid or reimbursed in U.S. Dollars without reduction
for currency exchange fluctuation.
(i) “Environmental
Laws” shall mean a collective reference when and as applicable to (i) the
Comprehensive Environmental Response, Compensation & Liability Act, as
amended, 42 U.S.C. Section 9601 et seq.,
(ii)
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901
et seq.,
and
(iii) any and all other federal, state and local statutes, laws, rules,
ordinances, regulations and executive orders pertaining to environmental matters
applicable to the Borrower’s business and/or properties, as the same may be
amended or supplemented from time to time.
-4-
(j) “Governmental
Authority” or “Governmental Authorities” shall mean any federal, state, county
or municipal governmental agency, board, commission,officer,
official or entity exercising executive, legislative, judicial, regulatory
or
administrative functions of or pertaining to government and having jurisdiction
over Borrower, the Guarantor (as hereinafter defined) or the
Collateral.
(k) the
“Guarantor” shall collectively mean, jointly and severally, American Leisure
Holdings, Inc., TDS Amenities, Inc. and Xxxxxxx Xxxxxx.
(l) the
“Indemnified Party” and “Indemnified Parties” shall mean Agent and Lender as
well as their directors, officers, trustees, partners, employees, agents,
attorneys and shareholders.
(m) the
“Loan
Documents” shall mean this Agreement, the Note, the Mortgage (as hereinafter
defined), the Guaranty and any other documents or agreements given to Lender
by
Borrower or the Guarantor in connection with the Loan whether or not
specifically set forth herein.
(n) “Mortgage”
shall mean that certain Mortgage and Security Agreement, given by Borrower
(as
such term is defined therein), as mortgagor, in favor of Lender, as mortgagee,
in connection with the Mortgaged Property, which Mortgage is given as security
for the due payment of Borrower’s obligations under the Note.
(o) “Person”
or “Persons” shall mean any one or more individuals, partnerships, corporations
(including a business trust), joint stock companies, limited liability company,
trusts, unincorporated associations, joint ventures or other entities, or a
foreign state or political subdivision thereof or any agency of such state
of
subdivision.
(p) “Personalty”
shall mean all Accounts, Accounts Receivable, Equipment, Inventory, Goods (as
such terms are defined in the Uniform Commercial Code) and other personal
property of the Borrower, as more particularly described herein.
(q) “Real
Property Collateral” or “Mortgaged Property” shall mean that certain real
property owned or leased by Borrower, situated in Polk County, Florida as more
particularly described in Schedule
A attached
hereto and made a part hereof.
(r) “Uniform
Commercial Code” shall mean the Uniform Commercial Code, as enacted in the State
of Florida and amended from time to time.
2. The
Loan.
(a) Provided
that no default shall have occurred and be continuing hereunder, Lender agrees,
subject to the terms and conditions hereinafter set forth, to advance from
time
to time (each, an “Advance”) to Borrower up to Four Million Four Hundred Fifty
Thousand ($4,450,000) Dollars.
-5-
(b) Subject
to a final closing statement prepared by Lender’s counsel and executed by
Borrower (the “Closing Statement”), the proceeds of the initial Advance in the
amount of Three Million Nine Hundred Fifty Thousand ($3,950,000) Dollars (the
“Initial Advance”) shall be disbursed as follows and used only for the following
purposes and as set forth on the Closing Statement:
(1) The
sum
of Four Hundred Sixty Four Thousand and 00/100 ($464,000) Dollars shall be
disbursed on behalf of Borrower on the Closing Date and simultaneously paid
to
Lender as a fully earned, non-refundable fee (the “Fee”) in consideration of
Lender’s commitment to make the Loan on the terms and conditions stated herein.
In no event shall the Fee be applied or credited in reduction of any principal,
interest or other sum payable hereunder; and
(2) The
sum
of Four Hundred Thousand Five Hundred and 00/100 ($400,500) Dollars shall be
disbursed by Lender on behalf of Borrower on the Closing Date and simultaneously
paid to Lender (the “Prepaid Interest”) which shall be credited against interest
payments due under the terms of the Note, as such interest payments become
due;
and
(3) The
sum
of Forty Four Thousand Five Hundred and 00/100 ($44,500) Dollars shall be
disbursed by Lender on behalf of Borrower on the Closing Date and simultaneously
paid to Whitestone Realty Capital, LLC (the “Broker”) as full satisfaction of
the Broker’s commission resulting from the consummation of this
Loan;
(4) The
sum
of Thirty Two Thousand Five Hundred and 00/100 ($32,500) Dollars shall be
disbursed by Lender on behalf of Borrower on the Closing Date and simultaneously
paid to Cole, Schotz, Meisel, Xxxxxx & Xxxxxxx, P.A., in payment of its
legal fees;
(c) The
foregoing disbursements may be made, notwithstanding contrary directions from
Borrower , and for such purpose Borrower agrees that:
A. The
foregoing constitutes an irrevocable direction or authorization to so disburse
the funds (said authorization being coupled with an interest) and no further
direction or authorization from Borrower shall be necessary to warrant any
such
disbursements; and
B. All
such
disbursements shall satisfy the obligations of Lender to advance funds to
Borrower notwithstanding any other agreement or document to the contrary and
shall be secured by the Mortgage as fully as if made by Borrower, regardless
of
the disposition by the party to whom such disbursements are so
made.
-6-
(d) Prepaid
Interest.
So long
as no Event of Default and no event which with the passage of time and/or the
giving of notice would constitute a default hereunder or
under
any other Loan Documents shall have occurred, Lender shall credit Borrower
from
Prepaid Interest to the extent of amounts not so credited for payments of
interest under the Note, it being understood, however, that the Prepaid Interest
does not in any way limit Borrower’s obligations to make payments of interest
under the Note after the Prepaid Interest has been exhausted Any amounts not
so
credited from Prepaid Interest on the Maturity Date shall be credited to the
payment of the Loan, and any remaining Prepaid Interest after payment in full
of
the Loan shall be disbursed to Borrower. Upon an Event of Default, the Lender
may credit to the extent of amounts not so credited from the Prepaid Interest
any amounts then due hereunder and under the Loan Documents.
(e) Holdback.
A
portion of the Loan, in the amount of up to Five Hundred Thousand and 00/100
($500,000) Dollars (the “Holdback”) shall be held by Lender, to be disbursed
after the date hereof from time to time in accordance with the terms hereof,
to
reimburse Borrower for construction costs incurred by Borrower in connection
with the construction of the swimming pool on certain real property owned by
TDS
Amenities, Inc. (the “Project”), as such real property is more specifically
described in the Costa II Loan Documents (as hereinafter defined) (the “TDS
Parcel”), or as reduced as set forth herein. Each Advance of the Holdback shall
accrue interest as of the date when disbursed by Lender. Notwithstanding
anything to the contrary contained herein, Lender’s obligation to make any
Advance of the Holdback shall be subject to the determination by Lender, in
its
reasonable discretion, that all of the following conditions are satisfied at
the
time of the disbursement, each in form, manner and substance satisfactory to
Lender and its counsel, and after giving effect thereto: (A) no Event of Default
and no event which with the passage of time and/or the giving of notice would
constitute a default hereunder or under any other Loan Documents shall have
occurred, (B) each representation and warranty set forth in Section 6 herein
shall continue to be materially true and correct as if then made, (C) Borrower’s
continuing satisfaction of all of the above conditions and each of the following
conditions, all in form, manner and substance satisfactory to Lender and its
counsel, and (D) if at any time in Lender’s reasonable discretion the
loan-to-value ratio based on the “as improved” disposition value of the Real
Property Collateral (“Improved Value”) shall not exceed sixty percent (60%),
determined as set forth in Subsection (j) of this Section 2:
(1) The
conditions for release set forth on Schedule
C
attached
hereto and made a part hereof;
(2) Borrower
has obtained from all appropriate Governmental Authorities the appropriate
permits and approvals for the work for which the Advance is requested and Lender
has been furnished with a filed copy thereof;
(3) All
material, equipment and fixtures incorporated in the work at the Property shall
have been purchased so that the absolute ownership thereof shall have vested
in
Borrower immediately upon installation thereof on the Mortgaged Property
and Borrower shall have produced and furnished, if required by Lender, the
contracts, bills of sale or other agreements under which title thereto has
vested;
-7-
(4) Borrower
has obtained all applicable authorizations, consents, licenses, approvals,
and
permits of Governmental Authorities for the work for which disbursements are
requested; and
(5) Each
Advance shall be used by Borrower solely to pay or as reimbursement for the
obligations for which such disbursement is sought, and for the purposes set
forth in the sources and uses set forth on Schedule
C
hereof,
as applicable.
(f) Lender
shall not be required to make any Advance of the Holdback if at the time of
the
requested Advance: (i) the Mortgaged Property or any portion thereof has been
damaged or destroyed by fire or any other casualty and the Borrower is unwilling
or unable to repair same using funds other than the proceeds of the Loan or
insurance proceeds; (ii) any legal action is pending which may have a material
adverse effect upon the ability of Borrower to complete the improvements to
the
Property or the ability of Borrower to repay the principal and interest on
the
Loan as it becomes due, or (iii) Lender shall have determined that the
undisbursed balance of the loan plus any funds of Borrower is insufficient
to
fund completion of the project and Borrower is unable or unwilling to produce
funds to cover the deficiency.
(g) Lender
shall be entitled to reimbursement from the Holdback for all costs and expenses
incurred by Lender in connection with each Advance of the Holdback, including,
without limitation, on-site engineer or architect inspections to verify work
“in
place” and the value thereof, which shall be limited to one (1) inspection per
draw by Borrower and conducted by Lender or a local consultant retained by
Lender at Lender’s discretion, the cost of which shall not exceed Two Thousand
Dollars ($2,000) per inspection.
(h) Upon
an
Event of Default, Lender may, in its sole discretion, apply all or any portion
of the Holdback to any outstanding payment, sum or obligation of Borrower under
the Loan Documents.
(i) Lender
shall notify Borrower of Lender’s determination of the Improved Value (“Lender’s
Determination Notice”) as determined by Xxxxx Real Estate Advisors, Inc. (“Xxxxx
Value”). If Borrower disagrees with Lender’s determination of the Improved
Value, Borrower shall notify Lender (“Borrower’s Notice of Disagreement”) within
twenty (20) calendar days of Borrower’s receipt of Lender’s Determination
Notice, specifying therein Borrower’s determination of the Improved Value as
determined by Integra Realty Resources (“IRR Value”). If the IRR Value is within
ten (10%) percent of the Xxxxx Value, then the Improved Value shall be the
average of the IRR Value and the Xxxxx Value. If the IRR Value is not within
ten
(10%) percent
of the Xxxxx Value, then the Improved Value shall be determined as follows:
Xxxxx Real Estate Advisors, Inc. and Integra Realty Resources shall appoint
a
third appraiser for the purpose of determining the Improved Value (“Third Party
Value”). The Lender and Borrower each agree that the average of the two closest
appraisals of the “as improved” disposition value of the Real Property
Collateral as determined by the Xxxxx Value, the IRR Value and the Third Party
Value shall be the Improved Value. Borrower shall be responsible for and shall
pay all fees associated incurred by Lender in connection with this Section
2(i).
-8-
(j) Costa
II Cash Collateral.
(1) Notwithstanding
anything contained herein to the contrary, the Costa II Borrowers (as
hereinafter defined) may deposit with Lender, in cash, an amount equal to the
greater of (i) the amount of the Holdback (as such term is defined in the Costa
II Loan Agreement), and (ii) the amount necessary to complete the Project,
as
determined by Lender in its reasonable discretion (the “Cash Collateral”).
(2) In
the
event the Costa II Borrowers deposit the Cash Collateral with Lender, regardless
of whether the Costa II Note (as hereinafter defined) is prepaid in whole,
and
no Event of Default hereunder or under any other Loan Documents or any of the
Costa II Loan Documents shall have occurred beyond any applicable grace periods,
Lender shall, at the sole cost and expense of the Costa II Borrowers, release
its lien on the TDS Parcel; provided,
however,
that in
addition to the Cash Collateral, the Borrowers shall provide to Lender, (a)
written evidence, satisfactory to Lender in its reasonable discretion, that
the
completion of the Project, the resort water complex (including a wave pool,
flowrider surfing pool, water slides, spas and a four-story children’s water
park) and the 16,000 square foot pool-side sports bar (collectively,
“Amenities”), each of which shall be located on or adjacent to the Mortgaged
Property, shall be partially financed in an amount of no less than $5,800,000
(i.e. $2,900,000 plus the Cash Collateral) by an institutional lender, (b)
documentation evidencing that the swimming pool on the TDS Parcel will be
constructed, to Lender’s reasonable satisfaction, in accordance with the plans
and specifications provided to Lender by Borrower and the contract submitted
to
Lender from Xxxxxx Pools, (c) written evidence that the owners of all or any
portion of the remainder of the Mortgaged Property shall have access to, and
the
ability to use, the swimming pool constructed on the TDS Parcel and the other
Amenities pursuant to easements established by the Borrower and reasonably
acceptable to Lender, (d) written evidence that Lender shall have continued
access into and across the TDS Parcel pursuant to easements established by
the
Borrower and reasonably acceptable to Lender to complete the Project, if
necessary, (e) such other documents as may be required by Lender in its
reasonable discretion, and (f) written evidence that the construction contract
submitted to Lender from Xxxxxx Pools to complete the Project is still in full
force and effect.
(3) The
Cash
Collateral shall be held by Lender as additional security for (1) the repayment
of the Loan and the Costa II Loan, (2) the repayment of all obligations owed
to
Lender pursuant to the Loan Documents and the Costa II Loan Documents (as
hereinafter defined), and (3) the completion of the Project, and shall be
disbursed to Borrower or the Costa II Borrowers, as applicable, pursuant to
the
terms and conditions of Section 29 and Section 2(e) of the Costa II Loan
Agreement and Section 2(e) and this Section 2(j) of this Agreement, as
applicable.
-9-
(4) Notwithstanding
anything contained herein or in any of the other Loan Documents to the contrary,
the Borrower acknowledges and agrees that in the event the Cash Collateral
is
deposited with Lender, Lender shall not be required to make any further Advances
of the Holdback to Borrower. However, notwithstanding the foregoing, upon
written request from Borrower, Lender may make such further Advances of the
Holdback to Borrower in Lender’s sole and absolute discretion.
(5) Notwithstanding
the foregoing, upon an Event of Default, Lender may, in its sole discretion,
apply all or any portion of the Cash Collateral to any outstanding payment,
sum
or obligation of Borrower under the Loan Documents or the Costa II Loan
Documents, including without limitation, the completion of the Project.
(k) Notwithstanding
the foregoing or anything contained herein to the contrary, provided that no
Event of Default and no event which with the passage of time and/or the giving
of notice would constitute a default hereunder or under any other Loan Documents
or any of the Costa II Loan Documents (as hereinafter defined) shall have
occurred, (i) in the event Borrower and/or the Costa II Borrowers repay an
amount equal to at least $16,000,000 (but less than $18,000,000) of the
aggregate outstanding principal balance of the Costa II Loan and this Loan
prior
to the six (6) month anniversary of the date hereof, Borrower shall receive
a
credit at the time this Loan is repaid in full in the amount of $150,000, or
(ii) in the event Borrower and the Costa II Borrowers repays an amount equal
to
at least $18,000,000 of the aggregate outstanding principal balance of the
Costa
II Loan and this Loan prior to the six (6) month anniversary of the date hereof,
Borrower shall receive a credit at the time this Loan is repaid in full in
the
amount of $200,000.
3. The
Note.
The
obligation of the Borrower to repay all monies advanced by Lender to Borrower
in
connection with the Loan shall be evidenced by this Agreement and the Note.
The
Loan shall bear interest at the rate(s) set forth in the Note and shall be
payable as provided in the Note with final payment due on the Maturity Date
(as
defined in the Note). All of Borrower’s obligations hereunder and under the Note
are secured by the Mortgage and the other Loan Documents. Should the principal
of or interest on the Loan become due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business
Day
and, in the case of principal, interest shall be payable thereon at the rate
per
annum specified in the Note during such extension.
-10-
4. Grant
of Security Interest.
(a) Borrower
hereby assigns and pledges to Lender, and hereby grants to Lender a security
interest in all property of the following types, wherever located and whether
now owned or hereafter owned or acquired by Borrower, whether or not affixed
to
the Mortgaged Property, in all proceeds (including, without limitation, amounts
payable under any policies of insurance with respect thereto), and Products
(as
such term is defined in the Uniform Commercial Code) thereof in any form, in
all
parts, accessories, attachments, special tools, additions, replacements,
substitutions and accessions thereto or therefor, and in all increases or
profits received therefrom:
(1) all
Accounts, to the extent that the same relate to the Mortgaged Property and/or
the operations at the Mortgaged Property;
(2) all
Equipment (as such term is defined in the Uniform Commercial Code), and in
all
of Borrower’s machinery and equipment of every kind, nature and description, as
well as trucks and vehicles of every kind and description, including, but not
limited to, trailers, cranes and hoisting equipment, whether presently owned
by
Borrower or hereafter acquired, and wherever located to the extent that the
same
relate to the Mortgaged Property and/or the operations at the Mortgaged
Property;
(3) all
Inventory (as such term is defined in the Uniform Commercial Code);
(4) all
General Intangibles (as such term is defined in the Uniform Commercial Code),
to
the extent that the same relate to the Mortgaged Property and/or the operations
at the Mortgaged Property;
(5) all
deposit accounts of Borrower with Lender, now or hereafter existing, and all
money, instruments, escrows, securities, documents, chattel paper, credits,
claims, performance bonds, payment bonds, all other forms of surety to the
extent that the same relate to the Mortgaged Property and/or the operations
at
the Mortgaged Property, and other property of Borrower now or hereafter in
the
possession or custody of Lender or any of its agents;
(6) all
Chattel Paper (as such term is defined in the Uniform Commercial Code), to
the
extent that the same relate to the Mortgaged Property and/or the operations
at
the Mortgaged Property, including, but not limited to, all such Chattel Paper
now or hereafter left in the possession of Lender for any purpose;
-11-
(7) all
Instruments (as such term is defined in the Uniform Commercial Code), including
any negotiable instruments or a securities, or any other writing which evidences
a right to the payment of money and is of the type which is, in the ordinary
course of business, transferred by delivery with any necessary endorsement
or
assignment whether presently owned by Borrower or hereafter acquired, to the
extent that the same relate to the Mortgaged Property and/or the operations
at
the Mortgaged Property, including, but not limited to, all such Instruments
now
or hereafter left in the possession of Lender for any purpose;
(8) all
Documents (as such term is defined in the Uniform Commercial Code);
(9) all
Goods
(as such term is defined in the Uniform Commercial Code), to the extent that
the
same relate to the Mortgaged Property and/or the operations at the Mortgaged
Property whether presently owned by Borrower or hereafter acquired;
(10) any
and
all deposits (whether held in escrow or not) given to the Borrower in connection
with those certain Purchase Agreements for townhouses and condominiums on the
Mortgaged Property; and
(11) all
books
and records, including, without limitation, customer lists, credit files,
computer programs, print-outs and other computer materials and records of
Borrower pertaining to all of the Collateral.
(b) Borrower
will perform any and all steps requested by Lender to create and maintain in
Lender’s favor a first and valid lien on and security interest in the Collateral
or pledges of Collateral, including, without limitation, the execution,
delivery, filing and recording of financing statements and continuation
statements, supplemental security agreements, notes, filings with federal
government offices and any other documents necessary, in the opinion of Lender,
to protect its interest in the Collateral which liens shall be exclusive except
for those liens expressly permitted elsewhere herein. Lender and its designated
officer are hereby appointed Borrower’s attorney-in-fact to do all acts and
things which Lender may deem necessary to perfect and continue perfected the
security interests and Liens provided for in this Agreement, including, but
not
limited to, executing financing statements on behalf of Borrower.
5. Conditions
Precedent to Lender’s Obligations.
Lender
shall not be obligated to make the Loan hereunder unless Lender shall have
received the following, all in form and substance satisfactory to the Lender
in
all respects:
(a) the
Note,
duly executed by Borrower;
(b) the
Mortgage, duly executed by Borrower;
(c) this
Agreement, duly executed by each Borrower;
(d) the
Guaranty, duly executed by each Guarantor;
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(e) the
Assignment of Leases and Rents, duly executed by each Borrower;
(f) the
Assignment of Licenses, Contracts, Plans, etc., duly executed by each
Borrower;
(g) the
Environmental Indemnity Agreement, duly executed by Borrower and
Guarantor;
(h) the
Document Re-Execution Agreement, duly executed by Borrower and
Guarantor;
(i) the
Closing Statement, duly executed by each Borrower;
(j) certificates
of insurers, or other evidence satisfactory to Lender, indicating that Borrower
and Guarantor have obtained the policies of insurance as are required under
the
terms of the Mortgage;
(k) a
paid
title insurance policy (without survey exception) in the full amount of the
Loan
issued by a title insurance company acceptable to Lender and insuring the
Mortgage as a valid first lien on the Mortgaged Property, with such endorsements
as Lender shall require and subject to the Permitted Exceptions identified
in
the Mortgage;
(l) UCC-1
financing statements required to evidence or perfect Lender’s security interest
in the personal property now or hereafter owned by the Borrower and located
on
or used in connection with the Mortgaged Property and UCC-1 financing statements
required to perfect Lender’s security interest in the Collateral;
(m) an
appraisal of the Mortgaged Property;
(n) financial
statements and tax returns for each Borrower, and each Guarantor;
(o) evidence
of a search of the public records which discloses no conditional sales
contracts, chattel mortgages, leases of personalty, financing statements or
title retention agreements filed or recorded against any Borrower or the
Mortgaged Property;
(p) a
survey
of the Mortgaged Property prepared in accordance with the “Minimum Standard
Detail Requirements for ALTA and ACSM Land Title Surveys” jointly established by
ALTA and ACSM in 2005, as updated, and certified to Lender by a registered
land
surveyor acceptable to the Lender (“Survey”);
-13-
(q) copies
of
all permits or approvals required by Governmental Authorities to such date
with
respect to Borrower or the Mortgaged Property, to the extent the same are
necessary and appropriate to operate and develop the Mortgaged
Property.
(r) an
environmental audit of the Mortgaged Property (Phase I and, if necessary Phase
II);
(s) the
operating agreement of Borrower certified by the Manager of each
Borrower;
(t) an
incumbency certificate of Borrower which shall certify the names and titles
of
the members of the limited liability company authorized to sign, in the name
and
on behalf of Borrower this Agreement and each other Loan Document to be
delivered pursuant to this Agreement by Borrower, together with the true
signatures of such officers, upon which certificate the Lender may conclusively
rely;
(u) consents
of the limited liability company authorizing the transactions to be entered
into
by Borrower in connection with this Agreement;
(v) evidence
that the Mortgaged Property is not located in a federal or state flood hazard
area;
(w) certification
regarding debts and liens, executed by the owner of the Mortgaged
Property;
(x) payment
of the Short Interest, the Fee (as such terms are defined herein and in the
Note) and other fees and expenses required to be paid to or on behalf of Lender
in connection with the Loan;
(y) opinions
of legal counsel to the Borrower with respect to such matters as the Lender
may
reasonably request including, but not limited to, opinions from Borrower’s local
Florida counsel and Borrower’s New Jersey counsel;
(z) an
opinion of legal counsel to the Guarantor with respect to such matters as the
Lender may reasonably request including, but not limited to, opinions from
Guarantor’s local Florida counsel and Guarantor’s New Jersey counsel;
and
(aa) evidence
of the appointment of a New Jersey agent to accept service of process on behalf
of Borrower and Guarantor, pursuant to the requirements of the Loan
Documents;
(bb) evidence
demonstrating current full compliance with all applicable zoning, health,
environmental and safety laws, ordinances and regulations (including, without
limitation, approval of local, private or public sewage or water
utility);
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(cc) certification
from Borrower that Borrower is not a party to any existing or pending or
threatened litigation, except as previously disclosed to Lender;
and
(dd) evidence
demonstrating receipt of all appropriate approvals meeting all applicable
requirements of all Governmental Authorities having jurisdiction including,
but
not limited to, subdivision and site plan approvals, potable water supply,
sewage discharge and sewage connection, use of septic tanks or
alternatives.
(ee) satisfactory
evidence that all roads and utilities necessary for the full utilization of
the
Collateral for its intended purposes have been completed or the presently
installed and proposed roads and utilities will be sufficient for the full
utilization of Collateral for its intended purposes.
(ff) such
other agreements, certificates or other documents as Lender or Title Insurance
Company may reasonably request;
6. Representations
and Warranties of Borrower.
To
induce Lender to make the Loan pursuant to this Loan Agreement, each Borrower,
jointly and severally, hereby represents and warrants to Lender as
follows:
(a) By
its
acceptance of Lender’s funds and execution of the Loan Documents, Borrower
acknowledges, agrees and confirms that it has no defense, offset or counterclaim
for any occurrence in relation to this Loan and Borrower acknowledges that
Lender has complied with all of its obligations under the Loan Documents as
of
the date hereof.
(b) Borrower
is a limited liability company, duly organized under the laws of the State
of
Florida and has all requisite power and authority and legal right to own its
property, to carry on its business as it is now being conducted, to enter into
this Agreement and the other Loan Documents entered into by it and to perform
all of its obligations hereunder and thereunder.
(c) The
execution and delivery by Borrower of the Loan Documents, and the performance
of
its obligations thereunder, have been duly authorized by all necessary action,
corporate or otherwise, and do not and will not: (i) require any further action,
consent or approval on the part of the members of any Borrower; (ii) violate
any
provision of law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to any Borrower,
or the members of such Borrower; or (iii) result in any breach of or constitute
a default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which any Borrower is a party or by which
any
Borrower or its properties may be bound or affected, and Borrower is not in
default under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, agreement, lease or
instrument.
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(d) The
Loan
Documents have been duly executed and delivered by Borrower and are legal,
valid
and binding obligations of such Borrower, enforceable against such Borrower
in
accordance with their respective terms.
(e) Except
as
previously disclosed to Lender, there is no material action, suit, proceeding,
inquiry or investigation, at law or in equity, or before any court, governmental
instrumentality, public board or arbitrator pending or threatened against or
affecting any Borrower or any of its properties or rights, wherein an
unfavorable decision, ruling or finding would (i) to the extent not covered
by
insurance as to which the insurer has not disclaimed coverage, result in any
material adverse change in the financial condition, business, properties or
operations of Borrower; (ii) materially or adversely effect the transactions
evidenced by the Loan Documents; (iii) materially impair the right of either
to
carry on its business substantially as now conducted; or (iv) adversely effect
the validity or enforceability of the Loan Documents.
(f) To
the
best of each Borrower’s knowledge, Borrower is in compliance with all laws
applicable to such Borrower or its properties or assets.
(g) Borrower
is a pre-existing limited liability company and is actively engaged in the
operation of its business and has not been created as a vehicle to obtain the
Loan. The proceeds of the Loan will be used by the Borrower for the purposes
set
forth in Paragraph 6(o) in connection with the operation of the Borrower’s
business, and the proceeds of the Loan will not be paid over or diverted by
Borrower to any member, manager, officer, director, trustee, shareholder of
Borrower, any Guarantor or any other person.
(h) The
following entity constitutes the sole member of Xxxxx Xxxxxx I Real Estate,
LLC
and its respective membership interest in Xxxxx Xxxxxx I Real Estate, LLC is
set
forth opposite its name:
Tierra
Del Sol Resort (Phase 1), Ltd. 100%
(i) There
has
been no material adverse change in the condition, financial or otherwise, of
any
Borrower or any Guarantor since the date of its financial statements furnished
to Lender.
(j) Each
Borrower’s properties and assets reflected on its financial statements referred
to above, and all such properties and assets are free and clear of all
mortgages, pledges, liens, charges or other encumbrances, except as reflected
on
such financial statements which have been previously provided to
Agent.
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(k) Borrower
and each Guarantor have each filed all federal, state and other income or
franchise tax returns which are required to be filed and have paid all
taxes
due
or which may become due pursuant to such returns or pursuant to any assessment
received by it.
(l) All
timely authorizations, permits, approvals and consents of Governmental
Authorities which may be required in connection with the valid execution and
delivery of this Agreement and the other Loan Documents and the carrying out
or
performance of any of the activities or transactions required or contemplated
hereunder or thereunder have been applied for or obtained (and remain in full
force and effect).
(m) All
financial statements, information and other financial data furnished by any
Borrower and any Guarantor to Lender in connection with the Agreement (i) were
true, correct and complete in all material respects, as of the date of said
financial statements, information and other data, (ii) such financial statements
present fairly the financial condition of such Borrower and such Guarantor
at
the respective dates thereof and the results of operations and changes in
financial position for the periods to which they apply, and (iii) there have
been no material adverse changes in the financial condition of Borrower or
any
Guarantor since the delivery by Borrower or the Guarantor, as the case may
be,
to Lender of the most recent financial statements.
(n) Each
Borrower’s assets, at a fair valuation, exceed such Borrower’s liabilities
(including, without limitation, contingent liabilities). Every Borrower is
paying its debts as they become due and Borrower anticipates the continuing
ability to pay its debts as they become due. Borrower has capital and assets
sufficient to carry on its business.
(o) Proceeds
from the Loan shall be used only as set forth in this Agreement, the Closing
Statement, and for other proper limited liability company purposes. No part
of
the proceeds of the Loan shall be used, directly or indirectly, for the purpose
of purchasing or carrying any margin stock within the meaning of Regulation
U of
the Board of Governors of the Federal Reserve System, or for the purpose of
purchasing or carrying or trading in any stock under such circumstances as
to
involve Borrower in a violation of Regulation U of the Board of Governors of
the
Federal Reserve System. In particular, without limitation of the foregoing,
no
part of the proceeds from the Loan are intended to be used to acquire any
publicly-held stock of any kind. As used in this subparagraph (r), the terms
“margin stock” and “purpose of purchasing or carrying” shall have the meanings
assigned to them in the aforesaid Regulation U, and the term “publicly-held,” in
respect to securities, shall have the meaning assigned to it in Section 220.7(a)
of Regulation T of the Board of Governors of the Federal Reserve
System.
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(p) No
Borrower is not in violation of or in default under (nor on the Closing Date
is
there any waiver in effect which, if not in effect, would result in a violation
or default under) any provision of such Borrower’s operating
agreement, or under any provision of any agreement, indenture, evidence of
indebtedness, loan or financing
agreement, certificate, lease or other instrument to which it is a party,
or by
which it is bound, or of any law, governmental order, rule or regulation,
in any
such case under this subparagraph (s) so as to affect adversely in any material
manner its business, assets or financial conditions.
(q) All
statements, representations and warranties made by any Borrower or any other
person in this Agreement, any other Loan Document and any other agreement,
document, certificate or instrument previously furnished or to be furnished
by
said person to Lender under this Agreement or in connection with the Loan:
(i)
are and shall be true, correct and complete in all material respects at the
time
they were made and, in the case of those made prior to the Closing Date, on
and
as of the Closing Date, (ii) do not and shall not contain any untrue statement
of a material fact at the time made, and (iii) do not and shall not omit to
state a material fact at the time made necessary in order to make the
information contained herein or therein not misleading or incomplete. Borrower
understands that all such statements, representations and warranties shall
be
deemed to have been relied upon by Lender as a material inducement to provide
the Loan.
(r) No
person
is entitled to receive from Borrower any brokerage commission, finder’s fee or
similar fee or payment in connection with the consummation of the transactions
contemplated by this Agreement except Whitestone Realty Capital. No brokerage
or
other fee, commission or compensation is to be paid by Lender by reason of
any
act, alleged act or omission of Borrower with respect to the transaction
contemplated hereby.
(s) Except
as
set forth in that certain Phase I report dated November 26, 2006 and prepared
by
Universal Engineering Sciences, Inc., Borrower has no knowledge of any of the
following:
(i) The
release or threatened release of any hazardous substance, pollutant or
contaminant as each such term is presently defined in any applicable
Environmental Laws resulting from any activity by or on behalf of Borrower
or
any predecessor in interest to the Mortgaged Property, including, without
limitation, the generation, handling, storage, treatment, transportation or
disposal of any hazardous substance, pollutant or contaminant at any of the
past
or present business locations and facilities of Borrower; or
(ii) Any
past
or future action taken or to be taken by any federal, state, county or municipal
Governmental Authority or by any other person under any applicable Environmental
Laws concerning the release of any hazardous substance, pollutant or contaminant
into the soil, air, surface or subsurface water or the environment in general
from any of the past or present business locations and facilities of Borrower;
or
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(iii) Any
claims or actions brought or which are threatened to be brought by any Person
against Borrower for damages occurring at or outside of any of the past or
present business locations and facilities of Borrower resulting from the alleged
release or threatened release of any hazardous substance, pollutant or
contaminant by Borrower or any predecessor in interest, including, without
limitation, claims for health effects to Persons, property damage and/or damage
to natural resources.
(t) (A) Borrower’s
address set forth above is the location of Borrower’s chief executive office,
and is the only location where Borrower keeps its records concerning its
Accounts, and its inventory and equipment. (B) Within four (4) months of the
date of this Agreement, none of Borrower’s assets have been moved from any
jurisdiction or other locations than the present location of assets set forth
above except for inventory or equipment purchased or sold by Borrower in the
ordinary course of business from persons or entities customarily selling such
inventory or equipment. (C) As of the date hereof, no inventory is now stored
with a bailee, warehouseman or similar party. (D) As of the date hereof,
Borrower does not hold any goods belonging to third parties or in which other
parties have an interest, including any goods sold on a xxxx and hold basis.
(E)
Borrower does not presently purchase or otherwise hold goods on a consignment
basis. (F) None of Borrower’s inventory is of a nature that contains any labels,
trademarks, trade names, or other identifying characteristics which are the
properties of third parties, and the use of which by Borrower is in violation
of
the rights of such third parties or under license, royalty or similar agreements
with any third parties. (G) No persons hold any goods of Borrower. (H) Borrower
has not purchased any inventory or equipment except in the ordinary course
of
business for value and from persons customarily in the business of selling
such
inventory or equipment. (I) Borrower does not hold any instrument or chattel
paper connected with any Account. (J) Borrower does not own any trademarks,
trade names, patents or copyrights. (K) No surety bonds have been issued on
behalf of Borrower with respect to any contracts or purchase orders out of
which
Accounts Receivable have arisen or are expected to arise.
(u) Borrower
is the owner and the operator of the Mortgaged Property.
(v) Borrower
has all approvals necessary so that the final development permit that Polk
County, Florida has issued in connection with the Mortgaged Property is
valid.
7. Survival
of Representations and Warranties.
The
foregoing representations and warranties shall survive the execution of this
Loan Agreement and the closing of the Loan.
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8. Affirmative
Covenants.
To
induce Lender to make the Loan pursuant to this Agreement, each Borrower,
jointly and severally, hereby covenants and agrees that so long as the Loan
shall remain outstanding hereunder, Borrower shall comply with the following
covenants:
(a) Borrower
shall keep and maintain complete and accurate books, accounts and records.
Borrower shall permit access thereto and examination thereof by Lender and
any
authorized representatives of Lender, at all reasonable times and places during
normal business hours (including the right to make copies thereof at the cost
and expense of Borrower).
(b) Borrower
shall comply in all material respects with all applicable federal, state, county
and municipal laws, rules, regulations and orders of any Governmental Authority
having jurisdiction over Borrower, subject to the limitations expressly set
forth in the Mortgage, except to the extent contested in good faith and by
proper proceedings or where the failure to so comply would not have a material
adverse effect on Borrower, including, without limitation, all Environmental
Laws and health and safety laws.
(c) Borrower
shall promptly notify Lender of the occurrence of any Event of Default or an
event which, with the giving of notice or passage of time or both, would
constitute an Event of Default and of the occurrence of any event or the
commencement of any action, suit or proceeding which, if adversely determined,
would adversely affect the condition, financial or otherwise, of Borrower or
Guarantor.
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(d) Borrower
shall indemnify, protect, defend and save harmless the Indemnified Parties
from
and against (i) any and all losses, damages, expenses or liabilities of any
kind
or nature and from any suits, claims, or demands, by third parties including
reasonable counsel fees incurred in investigating or defending such claim,
suffered by any of them and caused by, relating to, arising out of, resulting
from, or in any way connected with the Loan and the transactions contemplated
herein, and (ii) any and all losses, damages, expenses or liabilities sustained
by Lender in connection with any environmental sampling or cleanup relating
to
any properties or assets owned or otherwise used by Borrower in the operation
of
its business, or mandated by any Environmental Law; provided, however, Borrower
shall not be obligated to indemnify, protect, defend and save harmless an
Indemnified Party, if the loss, damage, expense or liability was caused by
or
resulted from the gross negligence or willful misconduct of that Indemnified
Party. In case any action shall be brought against an Indemnified Party based
upon any of the above and in respect to which indemnity may be sought against
Borrower, the Indemnified Party against whom such action was brought, shall
promptly notify Borrower in writing, and Borrower shall assume the defense
thereof, including the employment of counsel selected by Borrower and reasonably
satisfactory to the Indemnified Party, the payment of all costs and expenses
and
the right to negotiate and consent to settlement. Upon reasonable determination
made by the Indemnified Party, the
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof at the Indemnified Party’s cost
and expense. Borrower shall not be liable for any settlement of any such action
effected without its consent, but if settled with Borrower’s consent, or if
there be a final judgment for the claimant in any such action, Borrower agrees
to indemnify and save harmless said Indemnified Party against whom such action
was brought from and against any loss or liability by reason of such settlement
or judgment. The provisions of this subparagraph (d) shall survive the
termination of this Agreement and the final repayment of the Loan.
(e) If
Lender
shall so require, Borrower agrees to establish and maintain at a banking
institution of Lender’s choice a lockbox, in accordance with Lender’s standard
lockbox agreement in effect from time to time, and to direct all Account Debtors
to make remittances on all Accounts to said lockbox. Any and all remittances
received in said lockbox may be applied to the Obligations of Borrower to Lender
in accordance with Paragraph (g) hereof.
(f) If,
notwithstanding the notices to Account Debtors to remit payments on Accounts
to
the lockbox referred to above, Borrower receives any payments on Accounts or
other Collateral, Borrower agrees to receive any and all payments and
remittances on Accounts and Inventory and other Collateral, including cash,
checks, drafts, notes, acceptances or other forms of payment in trust for Lender
and to deliver such payments in the identical form in which they were received,
together with collection reports in form satisfactory to Lender.
(g) All
proceeds of any Account(s) and inventory and other Collateral which are
delivered to or otherwise received by Lender for application to the Loan
provided for herein shall be deemed received as of the date of actual receipt
by
Lender, and shall be applied by Lender on account of the Obligations upon
Lender’s receipt of same; provided, however, that no checks, drafts, or other
Instruments received by Lender shall constitute payment to Lender unless and
until such item of payment has actually been collected by Lender. For the sole
purpose of calculation of interest due to Lender from Borrower, all such
proceeds and other payments on account of the Loan provided for in this
Agreement, irrespective of the type or form of payment thereof shall not be
considered applied on account of the Obligations until actual clearance of
such
funds.
(h) Borrower
shall maintain all of its property in good working condition, ordinary wear
and
tear excepted (including obsolete and abandoned property).
(i) Borrower
shall, within ten (10) days of the end of each month, deliver to Lender an
aging
of its Accounts and report of its inventory, and an aging of its accounts
payable in such form as may be reasonably acceptable to Lender, and within
thirty (30) days of the end of each month, a duly completed accounts receivable
reconciliation report in such form as may be reasonably acceptable to
Lender.
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(j) Borrower
will continue to hold all necessary licenses and permits for the operations
of
their business, including but not limited to contract vendor registrations
and
account numbers.
(k) Lender
(by any of its officers, employees and agents) shall have the right, at any
time
or times during Borrower’s usual business hours (provided reasonable prior
notice is given except if an Event of Default has occurred and is continuing),
to inspect the Collateral, all records related thereto (and to make extracts
from such records) and the premises upon which any of the Collateral is located,
to discuss Borrower’s affairs and finances with any person and to verify the
amount, quality, quantity, value and condition of, or any other matter relating
to, the Collateral.
(l) (A) Lender
shall have the right at any time and from time to time, without notice, to
notify Account Debtors to make payments to Lender, to endorse all items of
payment which may come into its hands payable to Borrower, to take control
of
any cash or non-cash proceeds of Accounts and of any returned or repossessed
goods; to compromise, extend or renew any Account or deal with it as it may
deem
advisable, and to make exchanges, substitutions or surrenders of Collateral,
to
notify the postal authorities, after an Event of Default, to deliver all mail,
correspondence or parcels addressed to Borrower to Lender at such address as
Lender may choose. (B) Borrower herewith appoints Lender or its designee as
Attorney-in-Fact to endorse Borrower’s name on any checks, notes, acceptances,
drafts or any other instrument or document requiring said endorsement and to
sign Borrower’s name on any invoice or bills of lading relating to any Account,
or drafts against its customers, or schedules or confirmatory assignment on
Accounts, or notices of assignment, financing statements under the Uniform
Commercial Code, and other public records, and in verification of Accounts
and
in notices to Account Debtors. (C) Lender shall have no obligation to preserve
any rights against any Person obligated on any Account, chattel paper,
instrument or other item of Collateral. Lender shall not be permitted to
exercise the rights granted to it under the foregoing clauses (A) and (B) prior
to an Event of Default.
(m) Borrower
will furnish Lender with at least ten (10) days’ prior written notice of any
change in location of or addition to its chief executive office, the office
where it keeps its records concerning its Accounts, its location of Inventory,
Equipment and other assets, and other business locations.
(n) Pay
and
discharge, and require its subsidiaries to pay and discharge, when due, all
taxes, assessments or other governmental charges imposed on them or any of
their
respective properties, unless the same are currently being contested in good
faith by appropriate proceedings and adequate reserves are maintained
therefor.
(o) Operate
its properties, and cause those of its subsidiaries to be operated in compliance
with all applicable orders, rules and regulations promulgated by the
jurisdictions and agencies thereof where such properties are located and duly
file or cause to be filed such reports and/or information returns as may be
required or appropriate under applicable orders, regulations or
law.
-22-
(p) Permit
the Lender’s representatives and/or agents full and complete access to any or
all of the Borrower’s and its subsidiaries’ properties and financial records, to
make extracts from and/or audit such records and to examine and discuss the
Borrower’s properties, business, finances and affairs with the Borrower’s
officers and outside accountants.
(q) Obtain
lien releases and lien waivers, in a statutory standard form, as and when
Borrower pays contractors, materialmen, laborers providing labor, equipment,
or
materials to the Mortgaged Property and submit copies of the same to
Lender.
(r) Within
fifteen (15) calendar days of the date hereof, Borrower shall provide Lender
with an update of that certain Phase I report dated November 26, 2006 and
prepared by Universal Engineering Sciences, Inc. and a corresponding reliance
letter and professional liability insurance certificate (with limits of not
less
than $2,000,000) from Universal Engineering Sciences, Inc., each of which shall
be in form and with substance satisfactory to Lender in its reasonable
discretion.
(s) Within
thirty (30) calendar days of the date hereof, Borrower shall provide Lender
with
full searches, in form and with content satisfactory to Lender in its reasonable
discretion, on American Leisure Holdings, Inc. (including, without limitation,
lien and judgment searches, tax and assessment searches, litigation, bankruptcy
and UCC searches, municipal searches) performed in the State of Nevada and
in
each County and State where American Leisure Holdings, Inc. does business.
Such
searches shall be performed by a nationally recognized search company
satisfactory to Lender in its reasonable discretion.
9. Negative
Covenants of Borrower.
To
induce Lender to make the Loan pursuant to this Agreement, each Borrower,
jointly and severally, hereby covenants and agrees that so long as the Loan
shall remain outstanding, Borrower shall not:
(a) Except
for Permitted Encumbrances as set forth in the Mortgage, at any time: (i)
create, incur, assume or suffer to exist any mortgage, deed of trust, pledge,
security interest, encumbrance, lien or charge of any nature upon or with
respect to Borrower’s assets and properties or (ii) sign or file under the
Uniform Commercial Code of any jurisdiction a financing statement which names
Borrower as a debtor or (iii) sign any security agreement authorizing any
secured party thereunder to file such financing statement. Borrower further
covenants and agrees not to grant any similar negative pledge to any other
lender.
-23-
(b) Except
as
to the sale or disposition of assets which are obsolete or worn out and are
no
longer used or useful in the conduct of its business, convey, sell, lease,
assign, transfer, hypothecate or otherwise dispose of any of its now or
hereafter acquired property, business or assets.
(c) Create,
incur, suffer to exist, assume, guaranty, endorse, become a surety, or otherwise
become liable for the debt or other obligations of any other Person whether
directly or indirectly, or make or incur any advance, purchase commitment,
other
obligation or loan for the direct or indirect purpose of paying or discharging
any such obligations.
(d) Make
any
advance, loan, extension of credit or capital contribution to, or purchase
any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment income, any
Person.
(e) Enter
into any merger or consolidation or liquidate or wind-up or dissolve itself
(or
suffer any liquidation or dissolution) or convey, sell, lease, assign, transfer
or otherwise dispose (directly or indirectly) of all or substantially all of
its
property, business or assets or make any material change in its present method
of conducting business or permit any corporate guarantor to do any of the
foregoing.
(f) Materially
change, amend, alter or modify the bylaws/operating agreement or other governing
documents of Borrower or permit any corporate guarantor to do any of the
foregoing.
(g) Enter
into or permit any Guarantor to enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of
any
service, with any officer, director, shareholder or partner of Borrower or
any
Guarantor or Affiliate of any of the foregoing.
(h) Declare
or pay any dividends on, distributions on or make any payment on account of,
or
set apart assets or a sinking fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any interest, shares or any class of stock
or any warrant or option to purchase any such stock whether now or hereafter
outstanding or make any other distribution in respect thereof, directly or
indirectly whether in cash or property or obligations.
(i) Create,
incur, suffer to exist any indebtedness, except (i) indebtedness in respect
of
the Loan; (ii) indebtedness, if any, outstanding as of the date of this
Agreement and shown on the financial statements previously delivered to Lender;
and (iii) for new advances to the Borrower in connection with a loan in the
combined amount of up to Twenty Five Million ($25,000,000) Dollars to Xxxxxxxxx
International Bank and Resorts Funding Group, LLC both of whom are current
stockholders and investors of the Borrower; provided, however, that any such
loan to Xxxxxxxxx International Bank and Resorts Funding Group, LLC shall be
subordinate to the Loan.
-24-
(j) Transfer,
sell, lease or otherwise convey (directly or indirectly) any interest or shares
of capital stock or membership or ownership interest in any guarantor; provided,
however, that upon reasonable notice to Lender, American Leisure Holdings,
Inc.
shall be permitted to transfer shares of capital stock to a public company
to be
listed on the Alternative Investment Market in London, England.
(k) Purchase
any Inventory or Equipment except in the ordinary course of business from
persons customarily in the business of selling such Inventory or
Equipment.
(l) Without
prior written consent of Lender, remove the Collateral from its present
location, except for the removal of Inventory upon its sale.
(m) Sell
or
transfer any Inventory to any Affiliate or subsidiary of Borrower except on
arms
length terms in the ordinary course of business.
(n) Sell,
lease or transfer any of its equipment (except for abandoned or obsolete
equipment) or other assets without the prior written consent of Lender except
for sales of inventory in the ordinary course of business to good faith
purchasers for value.
(o) Allow
its
existence of as a corporation/limited liability company to be other than in
good
standing and will not, without the prior written consent of Lender, dissolve
or
liquidate, or merge or consolidate with or acquire or affiliate with any other
business entity or form any subsidiary.
(p) Change
its name without furnishing to Lender at least ten (10) days’ prior written
notice thereof.
(q) Utilize
any trade name, and will not in the future utilize any trade name without
furnishing to Lender at least ten (10) days prior written notice
thereof.
(r) Change
the nature of its business.
(s) Sell,
assign, transfer or dispose of any of its accounts or notes receivable, with
or
without recourse, except to the Lender.
(t) Except
after notice to Lender and with Lender’s prior written consent, partition or
subdivide the Mortgaged Property.
10. Events
of Default.
The
occurrence of any of the following shall constitute an Event of Default
hereunder:
(a) failure
of any Borrower to make any payment of any installment of principal or interest
when due under the Note;
-25-
(b) failure
of any Borrower to pay any other sum when due hereunder or under the Note or
any
other Loan Document;
(c) any
representation or warranty of any Borrower or any Guarantor made herein or
in
any other Loan Document or in any other writing given to Lender in connection
with the Loan shall have been incorrect in any material respect as of the time
when the same shall have been made or is nor accurate when a further
disbursement is to be made to Borrower;
(d) the
occurrence of an Event of Default under the Mortgage or any other Loan Document,
subject to any applicable notice and/or cure periods;
(e) the
sale,
conveyance, assignment, transfer or other disposition or divestiture of
Borrower’s title to any of the Collateral, or the mortgage or other conveyance
of a security interest in, or other encumbrance on any of the Collateral or
any
interest therein, whether voluntary or involuntary, except as provided herein
or
in any of the Loan Documents;
(f) any
merger, consolidation, liquidation or dissolution, or the sale or transfer
of
all or substantially all of the assets, of any Borrower;
(g) except
as
may be permitted herein or in any of the Loan Documents, the transfer (directly
or indirectly) of any of the stock or other ownership interest of any Borrower
or Guarantor;
(h) any
default in the performance or observance of any term, covenant or agreement
to
be performed by any Borrower or any Guarantor in this Loan Agreement or in
any
Loan Document;
(i) the
use
of proceeds of the Loan for any purpose other than the purpose described in
Paragraph 6(o);
(j) any
Loan
Documents for any reason shall cease to be in full force and effect, the liens
on the Collateral purported to be created thereby shall cease to be or are
not
valid and perfected liens having priority over all other liens except any
encumbrances specifically permitted under such Loan Documents, or any Guarantor
shall assert that it has no liability under the Guaranty to which it is a
party;
(k) one
or
more judgments or decrees shall be entered against any Borrower in excess of
$25,000 or any Guarantor (not paid or fully covered by insurance) and all such
judgments or decrees shall not have been vacated or discharged, stayed or bonded
pending appeal within ninety (90) days from the entry thereof;
(l) if
any
Borrower or any Guarantor becomes insolvent;
-26-
(m) if
any
Borrower or any Guarantor generally does not pay its debts as they become
due;
(n) if
any
Borrower or any Guarantor makes an assignment for the benefit of
creditors;
(o) if
any
Borrower or any Guarantor calls or causes to be called a meeting of creditors
for the composition of debts;
(p) if
there
shall be filed by or with the consent or authorization of any Borrower or any
Guarantor a petition in bankruptcy for liquidation or for reorganization, or
a
custodian, receiver or agent is appointed or authorized to take charge of its
properties, or any Borrower or any Guarantor authorizes any such
action;
(q) if
there
shall be filed against any Borrower or any Guarantor a petition in bankruptcy,
for liquidation, or for reorganization, or a custodian, receiver, or agent
is
appointed or authorized to take charge of its properties and any Borrower or
any
Guarantor, as the case may be, has not consented to or authorized such action
and such action is not dismissed within sixty (60) days;
(r) if
any
license, permit, registration, vendor account or other approval required for
the
normal operation of any Borrower’s business or any of the Collateral shall be
suspended or shall cease to be in full force and effect; and
(s) an
Event
of Default (beyond any applicable grace periods) under that certain Loan and
Security Agreement dated as of April 20, 2007, between Costa
Xxxxxx XX Real Estate, LLC, a Florida limited liability company, Xxxxx Xxxxxx
III Real Estate, LLC, a Florida limited liability company, TDS Town Homes (Phase
1), LLC, a Florida limited liability company, TDS Town Homes (Phase 2), LLC,
a
Florida limited liability company and Lender, as Agent, as amended by that
certain First Amended to Loan and Security Agreement and Other Loan Documents
of
even date herewith, and/or any other document or agreement given or delivered
to
Lender in connection therewith, including without limitation that certain
Amended and Restated Promissory Note in the original principal amount of Twenty
Four Million Nine Hundred Thousand ($24,900,000) Dollars dated as of the date
hereof.
Notwithstanding
anything contained herein to the contrary, (i) Borrower shall have a ten (10)
calendar day grace period with respect to any payments referenced in subsection
(b) of this Section 10, and (ii) Borrower shall be provided with written notice
from Lender and a thirty (30) calendar day grace period to diligently cure
same
with respect to the occurrence of any event described in subsections (c), (h),
(l), (m), (o) and (r) of Section 10; provided, however, that the giving of
such
notice and/or grace period shall not have a material adverse effect on the
Lender, the Collateral, the Mortgaged Property and/or Lender’s lien on the
Mortgaged Property, as determined by Lender in its reasonable discretion.
-27-
11. Remedies.
(a) Upon
the
occurrence of an Event of Default (subject to any applicable cure periods)
and
at any time thereafter during the continuance of such Event of Default, in
addition to any remedies available to Lender under applicable law, Lender may
take one or more of the following remedial steps in any order of
priority:
(i) Declare
immediately due and payable the outstanding principal balance of the Note,
together with all accrued and unpaid interest, fees and other sums or expenses
payable thereunder and hereunder and accordingly accelerate payment thereof
without presentment, demand, notice of intention to accelerate, notice of
acceleration or notice of any other kind, all of which are expressly
waived;
(ii) Take
any
action at law or in equity against any Borrower or any Guarantor pursuant to
the
Guaranty (a) to collect the payments then due and thereafter to become due
under
the Loan Documents, or (b) to enforce performance and observance of any
obligation, agreement or covenant of Borrower or such other parties under the
Loan Documents;
(iii) Exercise
any and all rights and remedies provided for in the other Loan Documents as
they
relate to any Borrower or any Guarantor pursuant to the Guaranty.
(iv) Proceed
with or without judicial process to take possession of all or any part of the
Collateral provided for herein not already in the possession of Lender and
Borrower agrees that upon receipt of notice of Lender’s intention to take
possession of all or any part of said Collateral, Borrower will do everything
reasonably necessary to assemble the Collateral and make same available to
Lender at a place to be designated by Lender. Borrower hereby waives any and
all
rights it may have, by statute, constitution or otherwise to notice from Lender,
for Lender to obtain possession, by Court proceedings or otherwise, of the
Collateral provided for in this or in any other agreement with
Lender;
-28-
(v) So
long
as Lender acts in a commercially reasonable manner, assign, transfer and
deliver
at any time or from time to time the whole or any portion of the Collateral
or
any rights or interest therein in accordance with the Uniform Commercial
Code,
and without limiting the scope of Lender’s rights thereunder, Lender may sell
the Collateral at public or private sale, or in any other manner, at such
price
or prices as Lender may deem best, and either for cash or credit, or for
future
delivery, at the option of Lender, in bulk or in parcels and with or without
having the Collateral at the sale or other disposition. Lender shall have
the
right to be the purchaser at any public sale.
Lender shall have the right to conduct such sales on Borrower’s premises or
elsewhere and shall have the right to use Borrower’s premises without charge for
such sales for such time or times as Lender may see fit. Lender is hereby
granted license or other right to use, without charge, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property of a similar nature, as
it
pertains to the collateral, in advertising for sale and selling any collateral
and Borrower’s rights under all licenses and franchise agreements shall inure to
Lender’s benefit. Borrower agrees that a reasonable means of disposition of
Accounts shall be for Lender to hold and liquidate any and all Accounts.
In the
event of a sale of the Collateral, or any other disposition thereof, Lender
shall apply all proceeds first to all costs and expenses of disposition,
including reasonable attorneys’ fees, and then to the Obligations of Borrower to
Lender;
(vi) Elect
to
retain the Collateral or any part thereof in satisfaction of all Obligations
due
from Borrower to Lender upon notice of such proposed election to Borrower and
any other party as may be required by the Uniform Commercial Code;
and
(vii) Lender
shall have the right immediately, and without notice or other action to set-off
against any of any Borrower’s Obligations to Lender any sum owed by Lender in
any capacity to any Borrower whether due or not, and Lender shall be deemed
to
have exercised such right of set-off and to have made a charge against any
such
sum immediately upon the occurrence of a Default, even though the actual book
entries may be made at some time subsequent thereto.
(b) No
remedy
conferred in this Agreement or the other Loan Documents is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein
or
now or hereafter existing at law or equity or by statute or
otherwise.
12. Payment
of Expenses.
(a) Borrower
agrees that it shall pay, within ten (10) days after demand, all out-of-pocket
expenses incurred by Lender in connection with this transaction including,
without limitation, fees and expenses for any title searches required hereunder,
recording and filing fees, and reasonable attorneys’ fees incurred by Lender in
connection with the Loan (including any amendments and waivers), the preparation
of the Loan Documents, the administration of the Loan, inspection of the
Mortgaged Property during the course of the Project and the enforcement Lender’s
rights and remedies under the Loan Documents.
-29-
(b) If
Borrower should fail to perform or observe, or to cause to be performed or
observed, any covenant or obligation under this Agreement or any of the other
Loan Documents, then the Lender, may (but shall be under no obligation to)
take
such steps as are necessary to remedy any such nonperformance or nonobservance
and provide
for payment thereof, if any (which shall include, without limitation, steps
necessary to cure any defaults of Borrower under any lease).
(c) All
amounts expended or advanced by the Lender pursuant to this Paragraph 12 shall
become part of the outstanding principal balance of the Loan and the Note,
shall
be secured by, among other things, the Mortgage, shall become due and payable
by
the Borrower upon demand by Lender, and shall bear interest at the Default
Rate
(such interest to be calculated from the date of such advance by Lender to
the
date of repayment thereof by Borrower).
13. Lender’s
Right to Assign.
Lender
shall have the right to sell, assign, participate, transfer or dispose of all
or
any part of its interest in the Loan without the consent or approval of Borrower
or Guarantor.
14. Default
Interest Rate.
All sums
advanced and all expenses incurred by Lender pursuant to any provision of this
Agreement or of the other Loan Documents which are not paid when due shall
bear
interest at the Default Rate set forth in the Note from the date such sum was
due until such sum is paid in full and shall be secured by the
Mortgage.
15. Usury
Savings.
Notwithstanding anything to the contrary contained herein, under no
circumstances shall the aggregate amount paid or agreed to be paid hereunder
or
under the Note exceed the highest lawful rate permitted under applicable usury
law (the “Maximum Rate”) and the payment obligations of Borrower under this
Agreement and the Note are hereby limited accordingly. If under any
circumstances, whether by reason of advancement or acceleration of the maturity
of the unpaid principal balance hereof or otherwise, the aggregate amounts
paid
hereunder or under the Note shall include amounts which by law are deemed
interest and which would exceed the Maximum Rate, Borrower stipulates that
payment and collection of such excess amounts shall have been and will be deemed
to have been the result of a mistake on the part of both Borrower and Lender
or
the holder of the Note, and the party receiving such excess payments shall
promptly credit such excess (only to the extent such payments are in excess
of
the Maximum Rate) against the unpaid principal balance hereof and any portion
of
such excess payments not capable of being so credited shall be refunded to
Borrower.
16. Notices.
All
notices, consents, approvals and requests required or permitted hereunder or
under any other Loan Document shall be given in writing and shall be effective
for all purposes if hand delivered or sent by (a) certified or registered United
States mail, postage prepaid, return receipt requested or (b) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, and by telecopier (with answer back acknowledged),
addressed as follows (or at such other address and a person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section):
-30-
If
to
Lender:
Xxxxxxx
Funding, Inc.
Xxx
Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxxx Xxxxxx
Facsimile
No. (000) 000-0000
With
a
copy to:
Cole,
Schotz, Meisel, Xxxxxx & Xxxxxxx P.A.
00
Xxxx
Xxxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000-0000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile
No.: (000) 000-0000
If
to
Borrower:
Xxxxx
Xxxxxx I Real Estate, LLC
0000
Xxxx
Xxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
With
a
copy to:
Xxxxx
X.
Xxxxxxxx, Esq.
0000
Xxxx
Xxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
Facsimile
No.: (000) 000-0000
With
a
copy to:
Xxxxxx
X.
Xxxxx, Esq.
Xxxxxx
X.
Xxxxx, P.A.
00
X.
Xxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Facsimile
No.: (000) 000-0000
A
notice
shall be deemed to have been given: in the case of hand delivery, at the time
of
delivery; in the case of registered or certified mail, when delivered or the
first attempted delivery on a business day; or in the case of expedited prepaid
delivery and telecopy, upon the first attempted delivery on a business
day.
17. No
Waiver.
No
course of dealing between Borrower and Lender or any failure or delay on the
part of Lender in exercising any rights or remedies hereunder shall operate
as a
waiver of any rights or remedies of Lender and no single or partial exercise
of
any rights or remedies hereunder shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder. In the event any agreement
contained in this Agreement or the other Loan Documents should be breached
and
thereafter waived by Lender, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder
or
thereunder.
-31-
18. Failure
to Exercise Rights.
Nothing
herein contained shall impose upon Lender any obligation to enforce any terms,
covenants or conditions contained in this Agreement and the other Loan
Documents. Failure of Lender, in any one or more instances, to insist upon
strict performance of any terms, covenants or conditions of this Agreement
and
the other Loan Documents, shall not be considered or taken as a waiver or
relinquishment by Lender of its right to insist upon and to enforce in the
future, by injunction or other appropriate legal or equitable remedy, strict
compliance with all the terms, covenants and conditions of this Agreement and
the other Loan Documents. The consent of Lender to any act or omission by
Borrower shall not be construed to be a consent to any other or subsequent
act
or omission or a waiver of the requirement for Lender’s consent to be obtained
in any future or other instance.
19. Prohibition
Against Exercise of Rights Applicable Only to Individual
Lenders.
Borrower
is hereby prohibited from exercising against Lender or Agent any right or remedy
which it might otherwise be entitled to exercise against any one or more (but
less than all) of the individual parties constituting Lender, including, without
limitation, any right of set-off or any defense.
20. Miscellaneous.
(a) Choice
of Law.
THE
LOAN WAS NEGOTIATED IN THE STATE OF NEW JERSEY, THIS AGREEMENT WAS NEGOTIATED
IN
THE STATE OF NEW JERSEY, WAS EXECUTED AND DELIVERED BY BORROWER AND ACCEPTED
BY
LENDER IN THE STATE OF NEW JERSEY, AND THE PROCEEDS OF THE NOTE WERE DISBURSED
FROM THE STATE OF NEW JERSEY, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, 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 JERSEY APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES
OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
PRIORITY, ENFORCEMENT AND FORECLOSURE OF THE LIENS AND SECURITY INTERESTS
CREATED IN THE REAL PROPERTY COLLATERAL UNDER THE LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE JURISDICTION IN WHICH
THE
REAL PROPERTY COLLATERAL IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH JURISDICTION, THE LAW OF THE STATE OF NEW
JERSEY SHALL GOVERN THE VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS,
AND
THE DEBT OR OBLIGATIONS ARISING HEREUNDER.
-32-
(b) Jurisdiction. AT
LENDER’S ELECTION, TO BE ENTERED IN ITS SOLE DISCRETION, ANY LEGAL SUIT, ACTION
OR PROCEEDING AGAINST BORROWER OR LENDER ARISING OUT OF OR RELATING TO THIS
NOTE
OR THE OTHER LOAN DOCUMENTS SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN
NEW JERSEY, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE
TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION
OR
PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT THE
CORPORATION TRUST COMPANY, LOCATED AT 000 XXXX XXXXXX XXXX, XXXX XXXXXXX, XXX
XXXXXX 00000,
AS ITS AUTHORIZED AGENT TO RECEIVE AND FORWARD ON ITS BEHALF SERVICE OF ANY
AND
ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT IN NEW JERSEY, AND AGREES THAT SERVICE OF PROCESS UPON
SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED IN THE MORTGAGE, SHALL BE DEEMED
IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW JERSEY. BORROWER (1) SHALL GIVE PROMPT
NOTICE TO THE LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(2) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW JERSEY (WHICH OFFICE SHALL BE DESIGNATED AS THE
ADDRESS FOR SERVICE OF PROCESS), AND (3) SHALL PROMPTLY DESIGNATE SUCH A
SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW JERSEY OR
IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.
(c) Borrower
and/or Guarantor (as applicable) agrees if Borrower and/or Guarantor is required
to make any deduction or withholding of foreign taxes (or taxes imposed because
Borrower and/or Guarantor is a foreign person or entity) from any payment due
to
Lender herein, then the amount payable to Lender upon which such deduction
or
withholding is based, shall be increased to the extent necessary to ensure
that,
after all deductions or withholdings, Lender is paid a net amount equal to
the
amount Lender would have been paid in the absence of such deduction or
withholding. At Lender's request, Borrower and/or Guarantor shall provide Lender
with documentation adequate to demonstrate payment of such deduction or
withholding by Borrower and/or Guarantor under this provision.
-33-
(d) The
parties hereto agree that, notwithstanding anything contained herein to the
contrary, there shall be required the consent of the Agent, Borrower and Lenders
holding Fifty Percent (50%) of the outstanding balance or commitment to lend
under the Loan to do any of the following:
(1) Amend
of
modify the terms of the Note, this Agreement, the Mortgage and the other Loan
Documents or execute any waiver of any material event of default under this
Agreement or the other Loan Documents.
(2) Consent
to or permit any substitution, withdrawal or release of any collateral, any
Guarantor or any other security securing the payment of the Loan except in
accordance with the terms of the Note, this Agreement and the Loan
Documents.
(e) Any
condition of this Agreement or any other Loan Document which requires the
submission of evidence of the existence or non-existence of a specified fact
or
facts implies as a condition the existence or non-existence, as the case may
be,
of such fact or facts, and Lender shall, at all times, be free independently
to
establish to its reasonable satisfaction and in its absolute discretion such
existence or non-existence.
(f) Borrower
and each Guarantor, as the case may be, shall execute and deliver, or cause
to
be executed and delivered to Lender, all other instruments, certificates and
agreements as Lender or Lender’s counsel may reasonably require, including, but
not limited to, estoppel certificates stating that the Loan is in full force
and
effect and that there are no defenses or offsets thereto, to effect, confirm
or
assure the rights, remedies and liens intended to be granted or conveyed to
Lender under this Agreement or any other Loan Document.
(g) A
determination that any portion of this Agreement or any of the Loan Documents
is
unenforceable or invalid shall not affect the enforceability or validity of
any
other provision, and any determination that the application of any provisions
of
this Agreement or any Loan Document to any person or circumstance is illegal
or
unenforceable shall not affect the enforceability or validity of such provisions
it may apply to other persons or circumstances.
(h) Without
the consent of, or notice to Borrower, Lender may add one or more additional
co-agents to this Loan.
-34-
21. Successors
and Assigns.
(a) Borrower
may not assign its rights under this Agreement without the prior written consent
of Lender. Any such attempted assignment in violation of this Agreement shall
be
void and of no effect.
(b) All
covenants and agreements in this Agreement shall bind and inure to the benefit
of the respective permitted successors and assigns of the parties hereto and
any
holder or holders of the Note or any portion thereof.
22. Waiver
of Jury Trial.
BORROWER AND LENDER AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM
OR
COUNTERCLAIM, BROUGHT BY BORROWER OR LENDER ON OR WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO
OR
THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BORROWER AND LENDER
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL
BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, BORROWER WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN,
OR
IN ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS
SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT LENDER
WOULD NOT EXTEND CREDIT TO BORROWER (AS APPLICABLE) IF THE WAIVERS SET FORTH
IN
THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
23. Releases
of Collateral.
(a) The
Lender may release, regardless of consideration, the obligation of any Person
or
Persons liable for payment of any of the Obligations secured hereby, or may
release any part of the Mortgaged Property or any other collateral now or
hereafter given to secure the payment of the Obligations or any part thereof,
without impairing, reducing or affecting the obligations of the Borrower or
Guarantors under the Loan Documents.
-35-
(b) Within
thirty (30) days of Borrower’s request, provided: (i) Borrower is not in default
hereunder or under any other Loan Document(s); and (ii) no event has occurred
which with the passage of time and/or the giving of notice would constitute
a
default hereunder or under any other Loan Document(s), Lender shall release
portions of the Mortgaged Property from the lien created by the Mortgage
(“Released Property”) subject to: (i) Borrower’s payment to Lender of the
Release Price (as hereinafter defined) for the Released Property, (ii) in
Lender’s reasonable discretion, the loan-to-value
ratio based on the “as improved” disposition value of the Mortgaged Property
shall not be less than sixty percent (60%) as determined in accordance with
Section 2(i) of this Agreement, (iii) Borrower’s compliance with the terms and
conditions set forth in Subsection 2.20(d)(ii), (iv), (v), (vi), (ix) and (x)
of
the Mortgage, and (iv) with respect to the release of each townhouse or
condominium unit to be released from the Mortgaged Property (each a “Sale
Unit”), (1) evidence that such Sale Unit shall be transferred or sold to an
Affiliate Purchaser (as defined below) in connection with Borrower obtaining
construction financing, (2) an assignment of the proceeds of the sale of such
Sale Unit (in an amount not less than (a) $55,000 for each Sale Unit if such
Sale Unit is transferred to an Affiliate in connection with Borrower obtaining
construction financing, or (b) the Release Price described below if such Sale
Unit is not transferred to an Affiliate Purchaser in connection with Borrower
obtaining construction financing) after the payment of the first mortgage on
such Sale Unit, and (3) a pledge of the ownership interest in the Affiliate
Purchaser, subject to any assignment to the first mortgagee, each in form and
with substance satisfactory to Lender in its reasonable discretion. The Release
Price for the Released Property shall be $55,000 for each Sale Unit; when such
Sale Unit is transferred to an Affiliate of Borrower (“Affiliate Purchaser”) in
connection with Borrower obtaining construction financing. In the event a Sale
Unit is not transferred to an Affiliate Purchaser in connection with Borrower
obtaining construction financing, the Release Price for such Sale Unit shall
be
equal
to
the greater of: (i) eighty (80%) percent of the net sale price of the Sale
Unit (subject to reasonable and customary closing adjustments and sales
commissions (to be approved by Lender in Lender’s commercially reasonable
discretion)); (ii) seventy-five (75%) percent of the gross sale price of the
Sale Unit or (iii) the minimum release amount agreed to by Lender prior to
closing.
24. Publicity.
(a) With
the
prior written consent of Borrower, which consent shall not be unreasonably
withheld, conditioned or delayed, Lender shall have the right to issue news
releases, and publicize and/or advertise the fact that it has provided financing
with respect to the project and/or the Mortgaged Property and in connection
therewith Lender shall have the right to photograph and use pictures of the
Mortgaged Property in any such advertisements, brochures, print, media and
other
copy. Notwithstanding the foregoing, Borrower shall use reasonable efforts
to
obtain the consent of its United Kingdom counsel (the “Legal Consent”) to the
Lender’s publication of the form of advertisement previously approved by
Borrower and attached hereto as Exhibit A (“Advertisement”) no later than July
6, 2007. The Advertisement shall describe a $29,350,000 loan transaction with
Lender. In the event Borrower cannot obtain the Legal Consent by July 6, 2007,
the Borrower shall continue to work diligently to obtain such Legal Consent
and
Lender shall have the right, without the prior written consent of Borrower,
to
publish the Advertisement upon the earlier of (i) the expiration of the “quiet
period” in connection with the public offering of an affiliate of Borrower, (ii)
the termination or discontinuance of such public offering, and (iii) the date
upon which Borrower obtains the Legal Consent.
-36-
(b) With
the
prior written consent of Borrower, which consent shall not be unreasonably
withheld, conditioned or delayed, Borrower, at Lender’s cost and expense, shall
erect a suitable sign or signs at the Mortgaged Property in a location which
is
clearly visible to the public and otherwise reasonably acceptable to Lender.
The
Sign shall be prepared by Lender and may contain, among other things, that
financing for the Mortgaged Property is being provided by Lender and otherwise
publicize Lender’s role in the financing. Lender shall coordinate the placement
and maintenance of such signs on the Mortgaged Property with
Borrower.
25. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
effective only upon delivery and thereafter shall be deemed an original, and
all
of which shall be taken to be one and the same instrument, for the same effect
as if all parties hereto had signed the same signature page. Any signature
page
of this Agreement may be detached from any counterpart of this Agreement without
impairing the legal effect of any signatures thereon and may be attached to
another counterpart of this Agreement identical in form hereto but having
attached to it one or more additional signature pages.
26. Joint
and Several Liability.
Notwithstanding anything contained herein to the contrary, Borrower shall be
jointly and severally liable for a breach of any and all covenants,
representations, warranties, terms, obligations and liabilities under this
Agreement.
27. Conflict.
In the
event of any conflict between the terms set forth in this Agreement and the
terms set forth in Article 7 of that certain Guaranty of even date herewith
executed by Xxxxxxx X. Xxxxxx, American Leisure Holdings, Inc. and TDS
Amenities, Inc. in favor of Lender (hereinafter referred to as the “Guaranty”)
the terms set forth in the Guaranty shall supersede and prevail over any
conflicting terms set forth in this Agreement; provided, however, that nothing
contained in the Guaranty shall expand any notice or grace period set forth
in
this Agreement.
-37-
28. Cross
Collateralization.
Borrower
understands and agrees that the Loan is and will be cross-collateralized
with
that certain loan dated
as
of April 20, 2007 in
the
amount of Twenty
Four Million Nine Hundred Thousand ($24,900,000) Dollars by and between Costa
Xxxxxx XX Real Estate, LLC, a Florida limited liability company, Xxxxx Xxxxxx
III Real Estate, LLC, a Florida limited liability company, TDS Town Homes
(Phase
1), LLC, a Florida limited liability company, TDS Town Homes (Phase 2), LLC,
a
Florida limited liability company (the “Costa
II Borrowers”)
and
Lender, as Agent (the “Costa
II Loan”).
It is
understood and agreed that a default (beyond any applicable grace periods)
under
the terms and conditions of (i) that certain Loan and Security Agreement
dated
as of April 20, 2007, between Costa
Xxxxxx XX Real Estate, LLC, Xxxxx Xxxxxx III Real
Estate, LLC, TDS Town Homes (Phase 1), LLC, TDS Town Homes (Phase 2), LLC
and
Lender, as Agent, as amended by that certain First Amendment to Loan and
Security Agreement and Other Loan Documents of even date herewith (“Costa
II Loan Agreement”),
and/or (ii) any other document or agreement given or delivered to Lender
in
connection therewith, including without limitation that certain (a) Amended
and
Restated Promissory Note in the original principal amount of Twenty Four
Million
Nine Hundred Thousand ($24,900,000) Dollars of even date herewith (“Costa
II Note”),
and
(b) and that certain Mortgage and Security Agreement filed in the County
of
Polk, State of Florida, as amended by that certain First Amendment to Mortgage
and Security Agreement of even date herewith, which was given as security
for
the repayment of said Promissory Note (the “Costa
II Loan Documents”)
will
also constitute a default (beyond any applicable grace periods) under the
terms
and conditions of this Loan and will entitle Lender to all rights and remedies
available to Lender under the Costa II Loan Documents. It is further understood
and agreed that in the event Borrower defaults upon the terms and conditions
of
the Loan or any of the Loan Documents executed or delivered in connection
with
the Loan, Lender shall have the right to declare the Costa II Loan in default
and accelerate same and avail itself of any rights and remedies thereunder.
Borrower shall execute any and all documents necessary to effectuate such
cross-collateralization.
[Remainder
of this page intentionally left blank.]
-38-
IN
WITNESS WHEREOF,
the
undersigned have executed this Loan and Security Agreement as of the day and
year first set forth above.
|
WITNESS:
_________________________________
Print
Name:
|
LENDER:
XXXXXXX
FUNDING, INC.,
as Agent
By:_________________________________
Name:
Title:
|
|
WITNESS:
Name:/s/
Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx
|
BORROWER:
XXXXX
XXXXXX I REAL ESTATE, LLC,
a
Florida limited liability company
By:
Tierra del Sol Resort (Phase 1), Ltd., a Florida limited partnership,
its
manager
By:
TDS Management, LLC, a Florida limited liability company, its general
partner
By:/s/
Xxxxxxx X.
Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Manager
|
-00-
XXXXX
XX
XXX XXXXXX )
)
ss.:
COUNTY
OF
BERGEN )
I
certify
that on __________ _____, 2007, __________ personally came before me and this
person acknowledged under oath, to my satisfaction, that he:
(a) executed
the attached Loan and Security Agreement; and
(b) was
authorized to and did execute the attached Loan and Security Agreement on behalf
of and as _______________ of Xxxxxxx Funding, Inc., the entity named in this
instrument, by virtue of authority granted by its bylaws and board of
directors.
_____________________________________
NOTARY
PUBLIC
STATE
OF
FLORIDA )
) ss.:
COUNTY
OF ORANGE )
I
certify
that on June 20th, 2007, Xxxxxxx X. Xxxxxx came before me in person and
stated to my satisfaction that he/she:
(a) made
the
attached instrument; and
(b) was
authorized to and did execute this instrument on behalf of and as Manager of
TDS
MANAGEMENT, LLC, a Florida limited liability company, the General Partner of
TIERRA DEL SOL RESORT (PHASE 1), LTD., a Florida limited partnership, the
Manager of XXXXX XXXXXX I REAL ESTATE, LLC, a Florida limited liability company
(the “Company”), the entity named in this instrument, as the free act and deed
of the Company, by virtue of the authority granted by its operating agreement
and its members.
/s/
X.X. Xxxxxx
NOTARY
PUBLIC
#DD459074
-40-
SCHEDULE
A
DESCRIPTION
OF THE COLLATERAL
A-1
SCHEDULE
B
PRINCIPAL
LOAN DOCUMENTS
1. Loan
Commitment dated June 5, 2007, as amended;
2. Loan
and
Security Agreement dated as of the date hereof;
3. Promissory
Note dated as of the date hereof;
4. Mortgage
and Security Agreement dated as of the date hereof;
5. Document
Re-Execution Agreement dated as of the date hereof;
6. Environmental
Indemnity Agreement dated as of the date hereof;
7. Assignment
of Leases and Rents dated as of the date hereof;
8. Assignment
of Licenses, Contracts, Plans, Specifications, Surveys, Drawings and Reports
dated as of the date hereof;
9. Guaranty
dated as of the date hereof;
10. Loan
Closing Statement dated as of the date hereof;
11. UCC-1
Financing Statements.
B
-1
SCHEDULE
C
CRITERIA
FOR FUNDING OF HOLDBACK
This
Schedule
C
to the
Loan and Security Agreement (the “Agreement”) dated June 26, 2007 between XXXXX
XXXXXX I REAL ESTATE, LLC, a Florida limited liability company, having an
address at 0000 Xxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxx 00000, (“Borrower”) and XXXXXXX
FUNDING, INC. (“Agent”), as agent for the lenders identified therein (Agent and
such lenders are hereinafter collectively referred to as “Lender”) is hereby
incorporated as a part of the Agreement with the same effect as if set forth
in
the body thereof. Capitalized terms not otherwise defined in this Schedule
C
shall have those meanings assigned to them in the Agreement.
In
addition to any other terms, conditions and requirements under the Agreement
with respect to the Holdback or any advance (each, an “Advance”) of the
Holdback, Lender’s obligation to make any Advance shall be subject to the
determination by Lender, in its reasonable discretion, that all of the following
conditions are satisfied at the time of the disbursement, each in form, manner
and substance satisfactory to Lender and its counsel:
|
1.
|
Sources
and Uses.
Each Advance shall be used for construction by Borrower of improvements
with respect to the Project and for such purposes set forth in Paragraph
2
of the Agreement. Advances shall only be made by Lender upon satisfactory
review and confirmation by Agent that the construction of the Project
is
proceeding and is being constructed according to the terms and conditions
of any construction contracts or agreements to be executed by Borrower
for
the construction on the Project, each of which are subject to the
approval
of Agent, including without limitation, that certain Xxxxxx Pool
contract.
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2.
|
Borrower’s
Draw Requests.
Borrower may request an advance of the Holdback by delivering to
Agent a
draw request in substantially the form attached to this Schedule
C (“Draw
Request”) or as otherwise approved by Agent in its sole discretion. Draw
Requests shall not be submitted more frequently than once in any
one
calendar month. Each Draw Request shall contain the sources and uses
for
such requested advance, reference the complete budget, the amounts
of any
previous draws, the percentage of work then complete, the amount
requested
for the then current draw request, and the balance remaining, all
on a
line by line basis.
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|
3.
|
Plans
and Specifications and Contracts.
Each Advance shall only be used to pay expenses incurred in connection
with the Project in accordance with the plans and specifications
approved
by Lender (as amended from time to time with Lender’s approval, the “Plans
and Specifications”). Borrower shall submit to Agent copies of all
contracts with respect to the Project entered into with third party
contractors for materials provided or work performed on the Project
(“Third Party Contractors”) and other hard construction costs related to
the Project in accordance with the Plans and Specifications. Each
contract
shall be in form and substance and containing terms reasonably acceptable
to Agent prior to Borrower submitting a Draw Request for monies due
under
such contracts.
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X-
0
|
0.
|
Xxxx
Xxxxxxx and Verification of Payment.
It
shall be Borrower’s responsibility to obtain lien releases, in standard
statutory form, as and when Borrower pays Third-Party Contractors
and any
other contractors, materialmen and laborers providing labor, equipment,
or
materials to the job. If required by Agent as a condition to any
Draw
Request, Borrower shall provide reasonable written verification (such
as
copies of cleared or pending checks) that funds previously drawn
have been
used for the purpose intended, and that Borrower has obtained lien
releases from contractors.
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|
5.
|
Loan
Title Policy and Verification of Title.
As a condition to the funding of any Draw Request, Borrower shall
deliver
or cause to be delivered to Agent an endorsement to the title policy
issued to Lender with respect to the Loan and the Mortgage covering
the
date of disbursement and showing the Mortgage as a first, prior and
paramount lien on the Mortgage Property subject only to the Permitted
Encumbrances (as defined in the Mortgage), confirming that nothing
has
intervened to affect the validity or priority of the Mortgage, and
such
other instruments, documents and information as Agent or the title
company
insurer may reasonably request.
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|
6.
|
Lender
to Timely Process Borrower’s Draw Request.
Lender shall authorize its disbursement to Borrower, by wire transfer,
within fifteen (15) days of receipt of Borrower’s Draw Request provided
that: (a) the Draw Request is in the proper form and accompanied
by a copy
of bona fide invoices from Third Party Contractors evidencing a request
for payment for materials provided or work performed in connection
with
the Project, (b) Borrower has satisfied the conditions set forth
in the
Agreement with respect to the Holdback and this Schedule C and (c)
Borrower provides Lender with evidence acceptable to Lender that
the
balance of the Holdback will be sufficient to pay all remaining costs
in
connection with the Project.
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7.
|
Liens
and Encumbrances.
Lender shall not be required to make an Advance if at the time of
such
requested Advance there is any lien or encumbrance upon the Mortgaged
Property (other than the Permitted Encumbrances), or while there
is any
change, question or claim of any kind whatsoever, whether of record
or
not, which, in the reasonable opinion of the Agent and its counsel,
may
constitute a cloud on the title to the Mortgaged Property, as applicable,
render the title of the Mortgaged Property unmarketable, or otherwise
invalidate or have priority over the Mortgage or other instruments
securing the Loan, or any portion thereof, or in any way may render
Lender’s position insecure. Further, Lender shall not be required to make
an Advance if at the time of such requested Advance there shall have
been
a “discharge” of any “hazardous substances” or “hazardous wastes”, as
those terms are defined by any applicable federal, state, or local
environmental laws.
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C-2
|
8.
|
Special
Representations, Warrants and Covenants.
Borrower represents, warrants and covenants to Agent and Lender that
the
Project will continue with reasonable diligence. Borrower represents,
warrants and covenants to Agent and Lender that Lender and its agents,
at
all times prior to payment and satisfaction of the Loan, including
on the
occasion of each Advance, shall have the right of entry and free
access to
the Project and the right to inspect all of the work performed or
furnished in and about the Project and to inspect subcontracts and
records
of Borrower. Borrower agrees to pay for all reasonable costs of such
inspections to be performed by Agent and Lender or their
agents.
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|
9.
|
No
Default.
Lender shall have no obligation to make an Advance if at the time
of the
Draw Request or and after giving effect thereto there exists an Event
of
Default or other event which with the passage of time and/or the
giving of
notice would constitute a default under the Agreement or under any
other
Loan Documents.
|
C-3
DRAW
REQUEST FORM
LENDER:
XXXXXXX FUNDING, INC.
BORROWER:
XXXXX XXXXXX I REAL ESTATE, LLC
RE:
LOAN
AND SECURITY AGREEMENT between Lender and Borrower dated June 26, 2007 (“Loan
Agreement”)
Date:
___________
Draw
Request No._________
Amount
of
Draw Request: $ _____________________
Attached
to this Draw Request is a sources and uses for the funds in connection with
this
Draw Request which identifies (a) the use of funds requested to be advanced;
(b)
the amounts of any previous advances of the Holdback (as defined in the Loan
Agreement); and (c) the work performed and costs incurred to date in connection
with the Project (as defined in the Loan Agreement).
The
Borrower certifies that attached herewith is a true, correct and complete copy
of the invoices with respect to amounts requested under this Draw Request.
The
Borrower also certifies that (i) no Event of Default (as defined in the Loan
Agreement), nor any event, circumstance or condition which with notice or the
passage of time or both would be an Event of Default, has occurred and is
continuing, (ii) Borrower knows of no fact or circumstance which will or could
prejudice the construction or operation of the Project or repayment of the
Loan;
(iii) Borrower has received no affidavits or other notices in connection with
the creation of a mechanic’s lien by any contractor, subcontractor or
materialman; (iv) the budget for the Project has not been modified or amended
in
any material respect since the time it was previously approved by Lender; (v)
the statements made in this Draw Request and any documents submitted herewith
are true, correct and complete, and (vi) this Draw Request has been duly
authorized by Borrower.
CERTIFIED
AS TRUE AND CORRECT:
XXXXX
XXXXXX I REAL ESTATE, LLC TDS
AMENITIES, INC.
|
By:
________________________________
|
By:
________________________________
|
|
Name:
|
Name:
|
|
Title:
|
Title:
|
|
_________________________________
|
|
|
Xxxxxxx
X. Xxxxxx, individually
|
By:_____________________________
|
|
Name:
|
|
|
Title:
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SOURCES
AND USES
To
be
attached to Each Draw Request
SCHEDULE
D
LENDERS
D-1
EXHIBIT
A
Form
of
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