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EXHIBIT 10.9
LOAN AND SECURITY AGREEMENT
$5,000,000.00 Credit Facility
provided by Textron Financial Corporation to
Ascension Resorts, Ltd., a Texas Limited Partnership
doing business as
Silverleaf Resorts, Ltd.
As of August 15, 1995
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TABLE OF CONTENTS
SECTION 1 - DEFINITION OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 - THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3 - COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Security Interest in All Pledged Notes Receivable... . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6 Protection of Collateral; Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4 - CONDITIONS PRECEDENT TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Closing Date Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 Proceeding Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5 - FUNDING PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6 - GENERAL REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Organization, Standing, Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Authorization, Enforceability, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Financial Statements and Business Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 Title to Properties: Prior Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6 Subsidiaries, Affiliates and Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Litigation, Proceedings, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Licenses, Permits, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.9 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Use of Proceeds/Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.12 No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.14 Restrictions of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.15 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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6.16 Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.18 Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.19 Timeshare Regimen Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.20 Operating Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.21 Architectural and Environmental Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.22 Tax Identification/Social Security Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7 - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8 - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1 Nature of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9 - REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.2 Notice of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.3 Application of Collateral; Termination of Agreements . . . . . . . . . . . . . . . . . . . . . . . . 53
9.4 Rights of Lender Regarding Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.5 Delegation of Duties and Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.6 Lender Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.7 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.8 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.9 Expenditures by Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.10 Diminution in Value of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10 - CERTAIN RIGHTS OF LENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.1 Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.2 Performance by Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.3 No Liability of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.4 Right to Defend Action Affecting Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.6 Lender's Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.7 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.8 Right of Lender to Extend Time of Payment, Substitute, Release
Security, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.9 Assignment of Lender's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.10 Notice to Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.11 Collection of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.12 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.13 Relief from Automatic Stay, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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SECTION 11 - TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
12.3 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
12.4 Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
12.5 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.8 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.9 Lender Not Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.10 Return of Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.11 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.12 Total Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.14 Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
12.15 Consent to Advertising and Publicity of Timeshare Documents . . . . . . . . . . . . . . . . . . . . 64
12.16 Directly or Indirectly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
12.17 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.18 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
EXHIBIT "A" -- FORM OF REQUEST & BORROWING BASE CERTIFICATE
EXHIBIT "B" -- INTENTIONALLY OMITTED
EXHIBIT "C" -- LOAN DOCUMENTS
EXHIBIT "D" -- OPERATING CONTRACTS
SCHEDULE 1.1(n) -- DECLARATIONS
SCHEDULE 1.1(xx) -- RESORTS
SCHEDULE 1.1(eee) -- TIMESHARE OWNERS' ASSOCIATIONS
SCHEDULE 5 -- APPLICABLE RECORDING OFFICES
SCHEDULE 6.9 -- ENVIRONMENTAL MATTERS
SCHEDULE 6.19 -- TIMESHARE REGIMENT REPORT
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LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT dated as of August 15,1995 among Ascension
Resorts, Ltd, a Texas limited partnership ("Borrower"), ASCENSION CAPITAL
CORPORATION, a Texas corporation (the "Guarantor"), jointly and severally, and
TEXTRON FINANCIAL CORPORATION, a Delaware corporation ("Lender").
In consideration of the mutual covenants and agreements contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged, the parties to this Agreement, intending to
be legally bound, agree as follows:
SECTION 1 - DEFINITION OF TERMS
1.1 Capitalized terms used in this Agreement are defined in this
Section 1.1. The definitions include the singular and plural forms of the terms
defined.
(a) ADVANCE. A portion of the proceeds of the Loan
advanced from time to time by the Lender to the Borrower in accordance
with the terms of this Agreement.
(b) AFFILIATE. Any party controlled by, controlling, or
under common control with, the Borrower or the Guarantor.
(c) AGREEMENT. This Loan and Security Agreement among
Borrower, the Guarantor and Lender (including the exhibits and
schedules to it), as it may be amended from time to time.
(d) ASSIGNMENT OF NOTES RECEIVABLE AND MORTGAGES. A
recordable assignment made by Borrower in favor of Lender evidencing
the assignment to Lender of all of the Pledged Notes Receivable and
Mortgages.
(e) BORROWING BASE. With respect to Eligible Notes
Receivable pledged to Lender in connection with each Advance, an
amount equal to seventy percent (70%) of the remaining principal
balance of each such Note.
(f) BUSINESS DAY. Each day which is not a Saturday or
Sunday or a legal holiday under the laws of the State of Connecticut,
the State of Missouri, the State of Rhode Island, the State of Texas,
or the United States.
(g) CLOSING DATE. The date of this Agreement.
(h) CODE. The Uniform Commercial Code in force in the
State of Rhode Island as amended from time to time.
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(i) COLLATERAL. Collectively, all now owned or hereafter
acquired right, title and interest of the Borrower, in all of the
following:
(i) Pledged Notes Receivable and all
proceeds of or from them;
(ii) Mortgages and all proceeds of or
from them;
(iii) Documents, instruments, accounts,
chattel paper, and general intangibles relating to the Pledged
Notes Receivable and the Mortgages;
(iv) Extensions, additions, improvements,
betterments, renewals, substitutions and replacements of, for
or to any of the Collateral, wherever located, together with
the products, proceeds issues, rents and profits thereof, and
any replacements, additions or accessions thereto or
substitutions thereof; and
(v) All books, records, reports,
computer tapes, disks and software relating to the Collateral.
(j) COMMITMENT. The Loan Commitment issued by Lender to
Borrower dated May 11, 1995 and accepted on May 26, 1995.
(k) COMMITMENT FEE. The commitment fee in the amount of
$50,000.00 described in the Commitment, which is to be paid in
accordance with the terms of the Commitment Letter.
(l) COMMON ELEMENTS. All common elements, including but
not limited to any limited common elements, as each such common
element is defined or provided for in the Declaration or other
Timeshare Documents.
(m) DEBTOR RELIEF LAWS. Any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar law, proceeding or device providing for the
relief of debtors from time to time in effect and generally affecting
the rights of creditors.
(n) DECLARATION OR DECLARATIONS. With respect to each
Resort, the applicable Declaration or Declarations described on
Schedule 1.1(o) attached hereto.
(o) DEFAULT. An event or condition the occurrence of
which immediately is or, with a lapse of time or the giving or notice
or both, becomes an Event of Default.
(p) DEFAULT RATE. Defined in the Note.
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(q) DIVISION OR COMMISSION. The Texas Real Estate
Commission.
(r) ELIGIBLE NOTES RECEIVABLE. Those Pledged Notes
Receivable which satisfy each of the following criteria:
(i) the Borrower shall be the sole payee;
(ii) it arises from a bona fide sale by Borrower
of one or more Intervals;
(iii) the Interval sale from which it arises shall
not have been cancelled by the Purchaser, and any statutory or
other applicable cancellation or rescission period shall have
expired and otherwise in compliance with this Agreement;
(iv) it is secured by a Mortgage on the purchased
Interval;
(v) principal and interest payments on it are
payable to the Borrower in legal tender of the United States;
(vi) payments of principal and interest on it are
payable in equal monthly installments;
(vii) it shall have an original term of no more
than 84 months;
(viii) a cash down payment has been received from
the Purchaser or the maker in an amount equal to at least ten
percent (10%) of the actual purchase price of each Interval,
and Purchaser shall have received no cash or other rebates of
any kind;
(ix) The Purchaser or other obligor shall have
made at least one (1) monthly payment pursuant to the Note;
(x) no monthly installment is more than thirty
(30) days contractually past due at the time of an Advance in
respect of such Eligible Note Receivable, or more than sixty
(60) days contractually past due at any time;
(xi) the rate of interest payable on the unpaid
balance is at least the rate required so that when the Advance
is made in respect of such Eligible Note Receivable the
average interest rate on all Eligible Notes Receivable in
respect of which Advances are outstanding shall not be less
than fourteen percent (14%) per annum at any time;
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(xii) the Purchaser of the related Interval has
immediate access, for the timeshare "unit week" related to
such purchase, to the Interval described in the Mortgage
securing such Eligible Note Receivable, which Interval has
been completed, developed, and furnished in accordance with
the specifications provided in the Purchaser's purchase
contract, public offering statement and other Timeshare
Documents; and the Purchaser has, subject to the terms of the
Declaration, purchase contract, public offering statement and
other Timeshare Documents, complete and unrestricted access to
the related Interval and the Resort;
(xiii) neither the Purchaser of the related Interval
or any other maker of the Note is an Affiliate of, or related
to, or employed by the Borrower or the Guarantor;
(xiv) the Purchaser or other maker has no claim
against Borrower and no defense, set-off or counterclaim with
respect to the Note Receivable;
(xv) the maximum remaining principal balance of
any such Note Receivable shall not exceed $25,000 and the
total maximum remaining principal balance of the Notes
Receivable executed by any one Purchaser or other maker shall
not exceed $25,000 in the aggregate (or such greater amount as
may be approved in writing in advance by Lender);
(xvi) it is executed by a U.S. or Canadian
resident; provided, however, that no more than ten percent
(10%) of the outstanding principal balance of all Eligible
Notes Receivable shall at any time be comprised of Notes
Receivable executed by Canadian residents, and, to the extent
such outstanding principal balance of such Notes exceeds ten
percent (10%), they shall not be considered Eligible Notes
Receivable;
(xvii) the original of such Note Receivable has been
endorsed to Lender and delivered to Lender as provided in this
Agreement, and the terms thereof and all instruments related
thereto shall comply in all respects with all applicable
federal and state laws and the regulations promulgated
thereunder; and
(xviii) the Unit in which the timeshare Interval
being financed or evidenced by such Note Receivable is
located, shall not be subject to any Lien which is not
previously consented to in writing by Lender.
(s) ENCUMBERED INTERVALS. The Intervals subject to the
Mortgages.
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(t) ENVIRONMENTAL LAWS. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time
to time ("CERCLA"), the Resource Conservation and Recovery Act of
1976, as amended from time to time ("RCRA"), the Superfund Amendments
and Reauthorization Act of 1986, as amended, the federal Clean Air
Act, the federal Clean Water Act, the federal Safe Drinking Water Act,
the federal Toxic Substances Control Act, the federal Hazardous
Materials Transportation Act, the federal Emergency Planning and
Community Right to Know Act of 1986, the federal Endangered Species
Act, the federal Occupational Safety and Health Act of 1970, the
federal Water Pollution Control Act, all Texas and Missouri state and
local environmental laws, rules and regulations, as all of the
foregoing legislation may be amended from time to time, and any
regulations promulgated pursuant to the foregoing; together with any
similar local, state or federal laws, rules, ordinances or regulations
either in existence as of the date hereof, or enacted or promulgated
after the date of this Agreement, that concern the management,
control, storage, discharge, treatment, containment, removal and/or
transport of Hazardous Materials or other substances that are or may
become a threat to public health or the environment; together with any
common law theory involving Hazardous Materials or substances which
are (or alleged to be) hazardous to human health or the environment,
based on nuisance, trespass, negligence, strict liability or other
tortious conduct, or any other federal, state or local statute,
regulation, rule, policy, or determination pertaining to health,
hygiene, the environment or environmental conditions.
(u) EXCHANGE COMPANY. Resort Condominiums International,
Inc. ("RCI").
(v) EVENT OF DEFAULT. Defined in Section 8.1 of this
Agreement.
(w) FINAL MATURITY DATE. August 31, 2000.
(x) FINANCIAL STATEMENTS. The tax returns and balance
sheets and statements of income and expense of the Borrower, and the
related notes and schedules delivered by Borrower prior to the Closing
Date and provided for in Section 4.1(d) of this Agreement; and the
financial statements and reports of the Guarantor delivered to Lender
prior to the Closing Date; and the monthly and annual financial
statements and reports required to be provided to Lender pursuant to
Section 7.1(h) (i), (ii) and (iii).
(y) GAAP. Generally accepted accounting principles,
applied on a consistent basis, as described in Opinions of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting
Standards Board which are applicable in the circumstances as of the
date in question.
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(z) GUARANTOR. Ascension Capital Corporation, a Texas
corporation.
(aa) GUARANTY. A Guaranty and Subordination Agreement
executed and delivered to Lender concurrently with this Agreement by
the Guarantor.
(bb) HAZARDOUS MATERIALS. "Hazardous substances,"
"hazardous waste" or "hazardous constituents," "toxic substances", or
"solid waste", as defined in the Environmental Laws, and any other
contaminant or any material, waste or substance which is petroleum or
petroleum based, asbestos, polychlorinated biphenyls, flammable
explosives, or radioactive materials.
(cc) INTEREST RATE. The variable rate, adjusted as of the
first day of each calendar month, equal to the sum of the Prime Rate
as of the first day of each calendar month, plus two and
three-quarters percent (2 3/4%) per annum.
(dd) INTERVAL. With respect to each Resort the undivided
fractional fee simple interval ownership interest as a
tenant-in-common (sometimes referred to in the Timeshare Documents as
a Condoshare Interest or Condoshare Week) in a Unit sold to a
Purchaser by delivery of a warranty deed, for a time-share period per
calendar year of one week (as is defined in the Declaration), together
with all appurtenant rights and interests, including without
limitation, appurtenant rights in and to Common Elements, and
easement, license, access and use rights in and to all Resort
facilities and amenities, (as each is defined in the Declaration), all
as more particularly described in the Declaration or other Timeshare
Documents.
(ee) LIEN. Any interest in property securing an obligation
owed to, or claim by, a Person other than the owner of such property,
whether such interest arises in equity or is based on the common law,
statute, or contract.
(ff) LOAN. The $5,000,000.00 revolving term credit
facility described in this Agreement.
(gg) LOAN DOCUMENTS. Collectively, this Agreement and the
following documents and instruments listed below as such agreements,
documents, instruments or certificates may be amended, renewed,
extended, restated or supplemented from time to time.
(i) THIS AGREEMENT;
(ii) THE NOTE;
(iii) THE GUARANTY;
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(iv) THE ASSIGNMENT OF NOTES RECEIVABLE AND
MORTGAGES;
(v) THE LOCKBOX AGREEMENT;
(vi) FINANCING STATEMENTS; UCC financing
statements covering the Collateral, to be filed with the
Missouri Secretary of State and the Texas Secretary of State.
(vii) OTHER ITEMS; Such other agreements,
documents, instruments, certificates and materials as Lender
may request to evidence the Obligations; to evidence and
perfect the rights and Liens and security interests of Lender
contemplated by the Loan Documents, and to effectuate the
transactions contemplated herein.
(hh) LOAN YEAR. The period from the Closing Date through
the last day of the next full twelve (12) calendar month period and
each twelve (12) calendar month period thereafter.
(ii) LOCKBOX AGENT. Texas Commerce Bank, National
Association, a national banking association having a place of business
at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or such other financial
institution as may be approved by Lender in writing from time to time.
(jj) LOCKBOX AGREEMENT. A Lockbox and Servicing Agreement
between Borrower, Lender, Servicing Agent and Lockbox Agent pursuant
to which Lockbox Agent is to provide lockbox, reporting and related
services and is to provide for the receipt of payments on the Notes
Receivable and disbursement of such payments to Lender.
(kk) MANDATORY PREPAYMENT. Any prepayment required by
Section 2.4(b) of this Agreement.
(ll) MORTGAGE. A properly recorded, first priority
mortgage executed and delivered by each Purchaser to Borrower,
securing a Pledged Note Receivable and encumbering all of the right,
title and interest of each Purchaser in the related Encumbered
Interval and Common Elements, and related or appurtenant easement,
access and use rights and benefits.
(mm) NOTE. The Secured Promissory Note evidencing the Loan
dated the Closing Date executed and delivered by Borrower to Lender
concurrently with this Agreement.
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(nn) NOTE RECEIVABLE. A promissory note executed in favor
of Borrower in connection with a Purchaser's acquisition of an
Interval.
(oo) OBLIGATIONS. All amounts due or becoming due to
Lender in respect of the Loan or any of the Loan Documents, including
principal, interest, prepayment premiums, contributions, taxes,
insurance, loan charges, custodial fees, attorneys' and paralegals'
fees and expenses and other fees or expenses incurred by Lender or
advanced to or on behalf of Borrower by Lender pursuant to any of the
Loan Documents, and the prompt and complete payment and performance by
the Borrower, and by the Guarantor, jointly and severally, of all
obligations, indebtedness and liabilities pursuant to this Agreement
or any of the Loan Documents or otherwise
(pp) OPERATING CONTRACT OR OPERATING CONTRACTS. As defined
in Section 6.20.
(qq) PAYMENT AUTHORIZATION AGREEMENT. Pre-authorized
electronic debit agreement by Purchaser for payment of a Note
Receivable.
(rr) PERSON. An individual, partnership, corporation,
limited liability company, trust, unincorporated organization, other
entity, or a government or agency or political subdivision thereof.
(ss) PLEDGED NOTES RECEIVABLE. Any Note Receivable which
at any time has been pledged to Lender by Borrower pursuant to this
Agreement or any of the Loan Documents.
(tt) PROPERTY OR PROPERTIES. Any interest in any kind of
property or asset, whether real, personal or mixed, tangible or
intangible.
(uu) PRIME RATE. The highest prime rate of interest from
time to time announced or published by Chase Manhattan Bank, N.A.
("Bank"). In the event that the prime rate established by Bank shall
no longer be available, due to either the non-existence of the Bank or
the Bank's failure to publish a prime rate, then the Prime Rate shall
be the highest prime rate published by a comparable major money center
bank selected by Lender.
(vv) PURCHASE PRICE. The total purchase price of a
timeshare Interval, as set forth in the Timeshare Documents and Note
Receivable relating to the purchase of such Interval.
(ww) PURCHASER. Any Person who purchases one or more
Intervals.
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(xx) RESORT OR RESORTS. As applicable, each or all of the
interval ownership and time-share projects commonly known as Xxxxx
Lake Condoshare, Piney Shores Resort Condoshare, Lake O'the Xxxxx, The
Villages Condoshare, Hill Country Resort Condoshare, Ozark Mountain
Resort Condoshare, and Holiday Hills Resort Condoshare, consisting of,
among other things, Units and Intervals, now existing or hereafter
added, in one or more buildings or phases and all related Common
Elements and appurtenances, described on Schedule 1.1(xx), together
with all related or appurtenant properties, amenities, facilities,
equipment, appliances, fixtures, easements, licenses, rights and
interests as established by and more fully described in the
Declaration and the other Timeshare Documents, and as the same may be
amended from time to time.
(yy) SECURITY. Shall have the same meaning as in Section
2(l) of the Securities Act of 1933, as amended.
(zz) SERVICING AGENT. Lender's exclusive agent, which shall
be such Person or Persons designated by Lender in Lender's sole
discretion, for the purposes of billing and collecting amounts due on
account of the Pledged Notes Receivable, providing reports pursuant to
the Lockbox Agreement and performing other servicing functions not
performed by the Lockbox Agent. Borrower shall be the Servicing Agent
for so long as no Event of Default shall have occurred, provided,
however, that upon the occurrence of an Event of Default, Borrower
shall continue to serve as Servicing Agent until a new Servicing Agent
is designated by Lender.
(aaa) SURVEY. A plat or survey of the Resort prepared by a
licensed surveyor acceptable to Lender and in a form acceptable to
Lender.
(bbb) TERM. A period of five (5) calendar years from the
Closing Date, plus the number of days from the Closing Date to the end
of the month in which the Closing Date occurs.
(ccc) TIMESHARE ACT. The Texas Timeshare Act, or any
successor thereto or replacement thereof, as the same may be amended
from time to time and any rules and regulations promulgated
thereunder, and any timeshare act that may be enacted in the State of
Missouri.
(ddd) TIMESHARE DOCUMENTS. All of the documents relating to
each of the Resorts and the creation, marketing and sale of Intervals
including:
(1) The registration statement
(currently required in Texas but not in Missouri)
approving the establishment and operation of the
Resorts and the sales of Intervals.
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(2) The Resort Declaration and all
amendments establishing and describing the timeshare
estate status of the Units and Intervals, and all
amenities, services, and the Common Areas and
elements related or appurtenant thereto and any other
declarations of covenants, conditions and
restrictions encumbering the Resorts.
(3) The Rules and Regulations of the
Resorts.
(4) Other registrations, approvals and
permits for creation and sale of Intervals and
operation of the Resorts, including, without
limitation, samples of all advertising and
promotional materials.
(5) The Association's certificate of
good standing, and certified articles of
incorporation, bylaws and all amendments or, if the
Association is an unincorporated association, the
bylaws and all amendments.
(6) All agreements entered into, by or
on behalf of the Association, including agreements
with Borrower or any Affiliate related to management,
operations and maintenance of the Resorts and,
agreements with Purchasers.
(7) The form of all documents used to
market and sell Intervals or that govern the rights
of Purchasers, including without limitation, purchase
contracts, advertising materials, Notes Receivable,
truth-in-lending statements, Purchaser's
Acknowledgments, grant deeds, Deeds of Trust, the
Exchange Agreement with the Exchange Company,
reservation agreements, subsidy agreements,
management agreements, warranties, space leases,
equipment leases or other personal property financing
arrangements, if any, and a certified Personal
Property inventory.
(eee) TIMESHARE OWNERS' ASSOCIATION. With respect to each
Resort, the Master Endless Escape Club, a Texas non-profit
corporation, and the applicable not-for-profit corporations described
on Schedule 1.1(eee).
(fff) UNIT. With respect to each Resort, one living unit in
a building incorporated into the Resort pursuant to the Declaration,
together with all related or appurtenant Common Elements and related
or appurtenant interests in services, easements and other rights or
benefits, as described and provided for in the Declaration, including
but not limited to the right to use the Resort amenities and
facilities in accordance with the Timeshare Documents.
(ggg) VOLUNTARY PREPAYMENT. Any voluntary prepayment of the
loan permitted to be made by the Borrower under the terms of this
Agreement.
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SECTION 2 - THE LOAN
2.1 REVOLVING LOAN. Upon the terms and subject to the conditions
set forth in this Agreement, Lender shall advance to Borrower, and Borrower may
borrow, repay and reborrow, principal under the Loan in an amount not to exceed
at any time the lesser of the amount of the Borrowing Base, or $5,000,000.00.
No Advances of the Loan will be made after August 31, 1996.
2.2 INTEREST RATE. The aggregate principal amount of all Advances
of the Loan which are outstanding from time to time will bear interest at a
rate equal to the Interest Rate. The outstanding principal balance of the Loan
shall bear interest as of Lender's wiring of funds through its receipt of
repayment of the Loan (if received by Lender later than 12 noon, E.S.T., then
interest accrual shall be through the next Business Day following such
receipt). Immediately upon the occurrence of an Event of Default and after the
Final Maturity Date (if the Loan is not paid in full on the Final Maturity
Date), at Lender's election in its sole discretion, the Loan will bear interest
at the Default Rate.
2.3 PAYMENTS. The Borrower agrees punctually to pay or cause to be
paid to the Lender all principal and interest due under the Note or in respect
of the Loan. The Borrower shall make the following payments on the Loan:
(a) MONTHLY PAYMENT. The Borrower shall direct or
otherwise cause all makers of all Pledged Notes Receivable to pay all
monies due thereunder to the lockbox established pursuant to the
Lockbox Agreement, or as otherwise required by Lender. One hundred
percent (100%) of the cleared funds collected from the Pledged Notes
Receivable each week will be paid to Lender by the Lockbox Agent
pursuant to the Lockbox Agreement, and will be applied by Lender in
the following order: (i) to the payment of costs or expenses incurred
by Lender pursuant to this Agreement in creating, maintaining,
protecting or enforcing its Liens in and to the Collateral and in
collecting any amounts due to Lender in connection with the Loan; (ii)
to any interest accrued at the Default Rate; (iii) to the payment of
accrued and unpaid interest at the Interest Rate; and (iv) to the
reduction of the principal balance of the Loan. If the amount of the
funds received by Lender from the Lockbox Agent with respect to any
month is insufficient to pay in full the amounts provided for in
clauses (i), (ii), and (iii) of the preceding sentence for such month,
without notice or demand, Borrower shall pay the difference to Lender
on or before the fifth (5th) day of the following month. In the event
Borrower receives any payments on any of the pledged Notes Receivable
directly from or on behalf of the maker or makers thereof, Borrower
shall receive all such payments in trust for the sole and exclusive
benefit of Lender; and Borrower shall deliver to the Lockbox Agent all
such payments (in the form so received by Borrower) as and when
received by Borrower, unless Lender shall have notified Borrower to
deliver directly to Lender all payments in respect of the Pledged
Notes Receivable which may be received by Borrower, in which event
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all such payments (in the form received) shall be endorsed by Borrower
to Lender and delivered to Lender promptly upon Borrower's receipt
thereof.
(b) FINAL PAYMENT. The entire outstanding principal
amount of the Loan together with all other Obligations shall be paid
in full by not later than the Final Maturity Date.
2.4 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Subject to the terms of this
Agreement, and to the payment of the applicable premium set forth in
Section 2.4(c) below, Borrower may prepay the Loan, in whole but not
in part, at any time after the end of the first Loan Year, after
thirty (30) days' prior written notice to Lender. Any such prepayment
must include all outstanding principal, accrued but unpaid interest,
and all other Obligations, including the applicable prepayment premium
provided in Section 2.4(c) below. The Loan may not be prepaid before
the end of the first Loan Year.
(b) MANDATORY PREPAYMENT. If at any time and for any
reason, the outstanding unpaid principal balance of the Loan shall
exceed the aggregate amount of the Borrowing Base, then, within five
(5) Business Days following Borrower's receipt of telecopied notice
from Lender of the occurrence of such excess over Borrowing Base or,
absent such telecopied notice, within fifteen (15) days after the end
of the calendar month in which such excess occurred, Borrower shall
either (i) prepay the principal balance of the Loan in an amount equal
to the difference between the aggregate principal amount of the Loan
and the amount of the Borrowing Base, or (ii) increase the aggregate
principal amount of Eligible Note Receivables pledged to Lender so
that the amount of Borrowing Base equals or exceeds the aggregate
outstanding principal amount of the Loan. The pledge and delivery to
Lender of additional Eligible Notes Receivable shall comply with the
document delivery and recordation requirements set forth in Section
4.2(b) of this Agreement and shall be accompanied by a written
certification of the Borrower to the effect that such additional
Pledged Notes Receivable are Eligible Notes Receivable, and that,
giving effect to the pledge to Lender of such Eligible Note
Receivable, the outstanding unpaid principal balance of the Loan is
equal to or less than the aggregate amount of the Borrowing Base. If
Borrower elects to prepay the excess principal balance of the Loan
pursuant to this Section 2.4(b)(i) above, no prepayment premium shall
be payable in connection with such prepayment.
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(c) PREMIUMS. Any prepayment of the Loan pursuant to
Section 2.4(a) above must be accompanied by a prepayment premium
calculated, as of immediately prior to such prepayment, as follows:
DATE OF PREPAYMENT PREMIUM
------------------ -------
Loan Year Two Three percent (3%) of the then
outstanding balance of the Loan.
Loan Year Three Two percent (2%) of the then
outstanding balance of the Loan.
Loan Year Four One percent (1%) of the then
outstanding balance of the Loan.
After Loan Year Four Zero (0).
No prepayment premium shall be payable in connection with any prepayment of the
principal balance of the Loan which arises from the prepayment of one or more
Eligible Notes Receivable by its maker or makers.
SECTION 3-COLLATERAL
3.1 GRANT OF SECURITY INTEREST. To secure the payment and
performance of the Obligations, for value received, Borrower unconditionally
and irrevocably assigns, pledges and grants to Lender a continuing first
priority security interest in and to the Collateral.
3.2 SECURITY INTEREST IN PLEDGED NOTES RECEIVABLE. Notwithstanding
that the Lender may be obligated, subject to the conditions of the Loan
Documents, to make Advances only in respect of Eligible Notes Receivable,
Lender shall have a continuing security interest in all of the Pledged Notes
Receivable, and may collect all payments made under or in respect of all
Pledged Notes Receivable, including Eligible Notes Receivable that may become
ineligible, until any of the same may be released by Lender, if at all,
pursuant to Section 12.10 below.
3.3 FINANCING STATEMENTS. Borrower agrees, at its own expense, to
execute the financing statements provided for by the Code together with any and
all other instruments or documents and take such other action as may be
required to perfect and to continue the perfection of Lender's security
interests in the Collateral and, unless prohibited by law, Borrower hereby
authorizes Lender to execute and file any such financing statements on the
Borrower's behalf.
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3.4 INTENTIONALLY DELETED
3.5 INSURANCE. Insurance coverage with respect to the Resort is
provided by the Timeshare Owners' Association. Borrower shall furnish Lender,
upon request, with satisfactory evidence that the Units, Buildings and Resorts
are adequately insured.
3.6 PROTECTION OF COLLATERAL; REIMBURSEMENT. The portion of the
Collateral consisting of (i) the original Pledged Notes Receivable, (ii) the
original Mortgages, (iii) the original purchase contract (including addendum)
related to such Pledged Notes Receivable and Mortgages, and (iv) originals or
true copies of the related truth-in-lending disclosure, loan application,
warranty deed, and if required by Lender, the related Purchaser's
acknowledgement, receipt, owner's policy of title insurance and the Exchange
Company application and disclosures, shall be delivered at Borrower's expense
to the Lender at its East Hartford, Connecticut office, and held in Lender's
possession and control until the Obligations are fully satisfied; and Borrower
shall pay to Lender, at the time of each Advance, a custodial fee of $10.00 for
each Pledged Note Receivable (and related Collateral) delivered into Lender's
physical possession. The portion of the Collateral delivered to Lender as
described above shall be segregated by Lender and stored in a fire-resistant
filing cabinet; and Borrower and the Guarantor agree that such storage is and
shall be deemed to constitute reasonable care by Lender with respect to such
Collateral. All insurance expenses and all expenses of protecting the
Collateral, including without limitation, storing, warehousing, insuring,
handling, maintaining and shipping the Collateral, and any and all excise,
property, intangibles, sales and use taxes imposed by any state, federal or
local authority on any of the Collateral or in respect of the sale thereof
shall be borne and paid by the Borrower; and if the Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge the Borrower's account therefor, and the
Borrower agrees promptly to reimburse Lender therefor with interest accruing
thereon daily at the Default Rate. All sums so paid or incurred by Lender for
any of the foregoing and any and all other sums for which the Borrower may
become liable hereunder and all costs and expenses (including attorneys' and
paralegals' fees, legal expenses and court costs) which the Lender may incur in
enforcing or protecting its Lien on, or rights and interest in, the Collateral
or any of its rights or remedies under this Agreement or any other Loan
Document or in respect to any of the transactions to be had hereunder or
thereunder, until paid by the Borrower to Lender with interest at the Default
Rate, shall be included among the Obligations, and, as such, shall be secured
by all of the Collateral. Provided that Lender retains the original Pledged
Notes Receivable and Mortgages, and originals or copies of the related
Timeshare Documents delivered to it and listed above, in a fire-resistant
filing cabinet as provided above, Lender shall not be liable or responsible in
any way for the safekeeping of any of the Collateral or for any loss or damage
thereto or for any diminution in the value thereof, or for any act or default
of any warehouseman, carrier, forwarding agency, the Lockbox Agent, Servicing
Agent or any other Person whomsoever.
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SECTION 4 - CONDITIONS PRECEDENT TO THE CLOSING
4.1 CONDITIONS PRECEDENT. The obligation of Lender to enter into
this Agreement and to fund the initial Advance shall be subject to the
satisfaction of each of the following conditions precedent, in addition to all
of the conditions precedent set forth elsewhere in the Loan Documents:
(a) REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations and warranties contained in the
Loan Documents are and shall be true and correct in all respects, and
all covenants and agreements have been complied with and correct in
all respects, and all covenants and agreements to have been complied
with and performed by Borrower and by Guarantor shall have been fully
complied with and performed to the satisfaction of Lender.
(b) NO PROHIBITED ACTS. Neither Borrower nor any of the
Guarantors shall have taken any action or permitted any condition to
exist which would have been prohibited by any provision of this
Agreement or the Loan Documents if such provision had been binding and
effective at all times during the period from May 11, 1995 to and
including the Closing Date.
(c) APPROVAL OF DOCUMENTS PRIOR TO CLOSING DATE. Borrower
has delivered to Lender (with copies to Lender's counsel, at least
fifteen (15) Business Days prior to the Closing Date, and Lender has
reviewed and approved, at least five (5) Business Days prior to the
Closing Date, the form and content of all of the items specified in
Subsection 4.1(c)(i) through (xviii) below (the "Submissions"). Lender
shall have the right to review and approve any changes to the form of
any of the Submissions. If Lender disapproves of any changes to any of
the Submissions, Lender shall have the right to require Borrower
either to cure or correct the defect objected to by Lender or to elect
not to fund the Loan or any Advance. Under no circumstances shall
Lender's failure to approve or disapprove a change to any of the
Submissions be deemed to be an approval of such Submissions. All of
the Submissions were and shall be prepared at Borrower's sole cost and
expense, unless expressly stated to be an obligation and expense of
Lender. Lender shall have the right of prior approval of any Person
responsible for preparing a Submission ("Preparer") and may disapprove
any Preparer in its sole discretion, for any reason, including without
limitation, that Lender believes that the experience, skill,
reputation or other aspect of the Preparer is unsatisfactory in any
respect. All Submissions required pursuant to this Agreement shall be
addressed to Lender and include the following language: "THE
UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL CORPORATION IS RELYING
ON THE WITHIN
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INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO
ASCENSION RESORTS, LTD. IN CONNECTION WITH THE SUBJECT COLLATERAL."
(i) A certificate, to be dated as of the Closing
Date and signed by the president, vice president, or secretary
of the General Partner of the Borrower and the Guarantor,
certifying that the conditions specified in Sections 4.1(a)
and (b) above are true;
(ii) Copies of the limited partnership agreement
of Borrower and articles of incorporation of Guarantor,
together with any amendments thereto certified to be true and
complete by Borrower and Guarantor, respectively and the
Secretary of State of the State of Texas, current certificates
of limited partnership for Borrower, a current certificate of
good standing for Guarantor, and copies of the by-laws of
Guarantor certified to be true, correct and complete by the
secretary or assistant secretary of Guarantor;
(iii) the Survey;
(iv) a certificate of the General Partner of the
Borrower certifying the adoption by the Borrower, and a
certificate of the secretary or assistant secretary of
Guarantor certifying the adoption by the board of directors
thereof, respectively, of a resolution authorizing Borrower
and Guarantor, respectively, to enter into and execute this
Agreement, the Note, and the other Loan Documents, to borrow
the Loan Amount from Lender, and to grant to Lender first
priority security interest in and to the Collateral;
(v) a certificate of the secretary or assistant
secretary of Guarantor and General Partner certifying the
incumbency, and verifying the authenticity of the signatures,
of the specified officers of Guarantor and General Partner
authorized to sign the Agreement, the Note and the other Loan
Document; and
(vi) an engineering report or reports covering the
Resorts, including without limitation all real property and
personal property subject to the Declaration and all Adjacent
Property, confirming:
(1) that soil conditions are sufficient
to support all existing and any contemplated
improvements to the real property;
(2) the absence of Hazardous Materials
on the personal property and real property comprising
the Resort;
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(3) that the engineering firm has
obtained, reviewed and included within its report a
CERCLIS printout from the Environmental Protection
Agency (the "EPA"), statements from the EPA and other
applicable state and local authorities and such other
information as Lender may reasonably require,
including, without limitation, a Phase I
Environmental Audit, all of which information shall
confirm that there are no known or suspected
Hazardous Materials located at, used or stored on, or
transported to or from the Resorts or in such
proximity thereto as to create a material risk of
contamination of the Resorts;
(vii) Evidence that Borrower is maintaining all
policies of insurance required by and in accordance with
Section 7.1(d), including copies of the most current paid
insurance premium invoices;
(viii) Evidence that Borrower and the Timeshare
Documents are in compliance with all applicable laws in
connection with its sales of Intervals, including without
limitation, the Timeshare Acts;
(ix) A current preliminary title report for the
Resorts, with copies of all title exceptions;
(x) Copies of all applicable governmental
permits, approvals, consents, licenses, and certificates for
the establishment of the Resorts as timeshare projects in
accordance with Timeshare Act, and for the occupancy and
intended use and operation of the Resorts, including the
Units, including a letter certification from Borrower
regarding zoning classification and compliance, letters or
other satisfactory evidence from utility companies,
governmental entities or other persons confirming that water,
sewer (sanitary and storm), electricity, solid waste disposal,
telephone, police, fire and rescue services are being provided
to the Resorts, and any business licenses necessary for
operation of the Resorts;
(xi) Certified true, correct and complete copies
of all of the Timeshare Documents;
(xii) Evidence satisfactory to Lender that all
taxes and assessments owed by or for which Borrower is
responsible for collection have been paid, including but not
limited to sales taxes, room occupancy taxes, payroll taxes,
personal property taxes, excise taxes intangibles taxes, real
property taxes, and income taxes, and any assessments related
to the Resorts and copies of the most current paid tax bills
for the Resorts evidencing that the Resorts have been
segregated from all other property on the applicable municipal
taxrolls;
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(xiii) An audit by Lender, satisfactory to Lender,
of Borrower, Guarantors, subsidiaries of Borrower, the
Resorts, the Notes Receivable and the other Collateral;
(xiv) Independent credit references from the
following creditors for Borrower and Guarantor, which credit
references shall be furnished by mail directly to Lender from
the creditors: Marine Midland Bank and FINOVA. Lender may also
request additional credit references on Borrower or Guarantor
as Lender deems necessary in its sole discretion;
(xv) Copies or other evidence of all loans to
Borrower from any officers, shareholders, Guarantor or
Affiliates of Borrower.
(xvi) Commitment to issue Mortgagee Title Policies
(as defined below) from Title Insurer.
(xvii) The Financial Statements.
(d) EXECUTION AND DELIVERY OF LOAN DOCUMENTS. Borrower
shall have delivered to Lender, on or before the Closing Date, the
following Loan Documents, each of which shall be in the form of the
respective Loan Documents attached hereto as Composite Exhibit "C",
and each of which when required, shall be in recordable form:
(i) CLOSING OPINIONS FOR BORROWER AND GUARANTOR.
(ii) NOTE.
(iii) GUARANTY.
(iv) ASSIGNMENT OF DEEDS OF TRUST.
(v) SUBORDINATION AGREEMENT. A Subordination
Agreement executed by Borrower, Guarantor, each officer and
shareholder of Borrower, and each Affiliate of Borrower and
Guarantor, together with copies of any subordinated notes.
(vi) ENVIRONMENTAL INDEMNITY. An Environmental
Indemnity Agreement, executed by Borrower in favor of Lender.
(vii) LOCKBOX AGREEMENT. The Lockbox Agreement,
executed by Lockbox Agent, Borrower and Lender, together with
signature cards, Designation of Account and Secretary's
Certificate.
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(viii) DRAW REQUEST.
(ix) FINANCING STATEMENTS. Original UCC financing
statements covering the Collateral, filed with the Texas
Secretary of State and the Missouri Secretary of State.
(x) OTHER ITEMS. Such other agreements,
documents, instruments, certificates and materials as Lender
may request to evidence the Obligations; to evidence and
perfect the rights and Liens and security interests of Lender
contemplated by the Loan Documents, and to effectuate the
transactions contemplated herein.
(e) PHYSICAL INSPECTION. Lender shall be satisfied with
its physical inspection of the Resorts.
(f) UCC SEARCH. Lender shall have obtained, at Borrower's
cost, such searches of the applicable public records as it deems
necessary under Texas, Missouri and other applicable law to verify
that it has a first and prior perfected Lien and security interest
covering all of the Collateral. Lender shall not be obligated to fund
any Advance if Lender determines that it does not have a first and
prior perfected lien and security interest covering any portion of the
Collateral.
(g) LITIGATION SEARCH. Lender shall have obtained, at
Borrower's cost, an independent search to verify that there are no
bankruptcy, foreclosure actions or other material litigation or
judgments pending or outstanding against the Resorts, any portion of
the Collateral, Borrower, Guarantor, or any Affiliates of Borrower or
Guarantor (each a "Material Party"). The term "other material
litigation" as used herein shall not include matters in which (i) a
Material Party is plaintiff and no counterclaim is pending or (ii)
which Lender determines, in its sole discretion exercised in good
faith, are immaterial due to settlement, insurance coverage,
frivolity, or amount or nature of claim. Lender shall not be obligated
to fund any Advance if it determines that any such litigation is
pending.
4.2 CLOSING DATE ADVANCES. In the event that Borrower desires
Lender to make an Advance on the Closing Date, then, in addition to all of the
conditions precedent set forth in this Section 4, Borrower shall have complied
with all of the requirements of Section 5 below at least five (5) Business Days
prior to the Closing Date.
4.3 EXPENSES. Borrower shall have paid all fees and expenses
required to be paid pursuant to this Agreement. Lender shall have no obligation
to fund the Loan or make the initial Advance or any subsequent Advance unless
(a) the amount of the initial Advance together with any moneys paid by Borrower
is sufficient to satisfy all fees and expenses
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required to be paid pursuant to this Agreement, and (b) the use of the Advance
is not materially different from the uses set forth in Section 6.11.
4.4 PROCEEDING SATISFACTORY. Borrower shall execute all of the
Loan Documents approved by Lender on the Closing Date, and Guarantor shall
execute the Guaranty attached in Exhibit "C", and all actions taken in
connection with the execution or delivery of the Loan Documents, and all
documents and papers relating thereto, shall be satisfactory to Lender and its
counsel. Lender and its counsel shall have received copies of such documents
and papers as Lender or such counsel may reasonably request in connection
therewith, all in form and substance satisfactory to Lender and its counsel.
SECTION 5 -- FUNDING PROCEDURE
The obligation of Lender to make any Advance shall be subject to the
satisfaction of all of the following conditions precedent:
(a) REQUESTS FOR ADVANCES. Each request for an Advance
shall:
(i) be in writing and shall certify the amount of
the then-current Borrowing Base, specify the principal amount
of the Advance requested and designate the account to which
the proceeds of such Advance are to be transferred;
(ii) state that the representations and warranties
of the Borrower contained in the Agreement and any closing or
funding related certifications are true and correct as of the
date of the request and, after giving effect to the making of
such requested Advance, will be true and correct as of the
date on which the requested Advance is to be made;
(iii) state that no Default or Event of Default
exists as of the date of the request and, after giving effect
to the making of such requested Advance, no Default or Event
of Default would exist as of the date on which the requested
Advance is to be made;
(iv) be delivered to the office of Lender at least
ten (10) Business Days prior to the date of the requested
Advance;
(v) be signed by a principal financial officer of
the Borrower;
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(vi) certify that the Borrower has no knowledge of
any asserted or threatened defense, offset, counterclaim,
discount or allowance in respect of each Note Receivable to be
pledged in connection with such requested Advance, or in
respect of any of the Pledged Notes Receivable;
(vii) contain an aging report of the Pledged Notes
Receivable; identifying, among other things, which among them
are Eligible Notes Receivable; and
(viii) contain a delinquency report which shall be
in form and substance satisfactory to the Lender and shall
show which of such Notes Receivable is delinquent and the
duration of such delinquent and the duration of such
delinquency, and which of such Pledged Notes Receivable is not
an Eligible Notes Receivable;
(b) LOAN DOCUMENTS/COLLATERAL. Not less than ten (10)
Business Days prior to the date of any Advance, the Borrower shall
have:
(i) delivered to Lender a list of all Eligible
Notes Receivable and related Mortgages which are to be the
subject of such requested Advance, indicating the unpaid
principal balance owing on each of the Pledged Notes
Receivable deemed to be an Eligible Note Receivable, together
with such additional information as Lender may require;
(ii) delivered to Lender (or, if Lender shall so
instruct, a designee appointed by Lender in writing) (A) the
original of each Pledged Note Receivable (duly endorsed with
the words "Pay to the order of Textron Financial Corporation
with recourse"), (B) the original of each Mortgage securing
such Pledged Notes Receivable, (C) the original of each
purchase contract (including addenda) relating to the Pledged
Notes Receivable and Mortgages, and (D) originals or true
copies of the related truth-in-lending disclosures, loan
application, warranty deed, Payment Authorization Agreement
and, if required by Lender, the related Purchaser's
acknowledgement, receipt, owner's policy of title insurance
and exchange company application, disclosures and materials;
(iii) delivered to Lender a duly executed
Assignment of Notes Receivable and Mortgages assigning to
Lender all of the Borrower's right, title and interest in and
to each such Pledged Note Receivable and the related Mortgage;
and
(iv) delivered to Lender, with respect to each
Encumbered Interval, a commitment for a mortgagee's title
insurance policy showing that the
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Mortgage in respect of such Interval has been assigned to
Lender and insuring in favor of Lender the first priority Lien
of such Mortgage in the original principal amount of the
Pledged Note Receivable secured thereby, with a satisfactory
title insurance policy to be issued on the date of Advance.
The Mortgages and the assignments thereof to Lender shall each
have been duly recorded in the applicable land records which are
described in Schedule 5. The mortgagee's title insurance policies
shall be in form and substance satisfactory to Lender and shall be
issued by a title insurance company satisfactory to Lender (the "Title
Company"), and name Lender as the insured party therein. The funding
of the requested Advance, delivery of the Collateral and issuance of
the title insurance policy, and recording of the assignments or any
releases may, in Lender's discretion, be effected by way of an escrow
arrangement with the Title Company or other fiduciary, the form and
substance of which shall be satisfactory to Lender.
(c) OTHER CONDITIONS. In addition to the other conditions
set forth in this Agreement, the making of the initial or any
requested Advance shall be subject to the satisfaction of the
following conditions:
(i) no Default or Event of Default shall exist
immediately prior to the making of such requested Advance or,
after giving effect thereto, immediately after the making of
such requested Advance;
(ii) each agreement required to have been executed
and delivered in connection with any prior Advance shall be
consistent with the terms of this Agreement and shall be in
full force and effect;
(iii) the date on which such requested Advance is
to be made shall be a Business Day;
(iv) Borrower shall have delivered to Lender a
certification showing the dollar amount of the requested
Advance based on the Eligible Notes Receivable pledged to
Lender, and the Notes Receivable being pledged
contemporaneously with each requested Advance in the form
attached hereto as Exhibit "C";
(v) not more than one Advance shall have
previously been made in the same calendar month in which such
requested Advance is to be made, unless Lender, in its sole
discretion, agrees to make an additional Advance during such
calendar month;
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(vi) such requested Advance shall be in a
principal amount of not less than $50,000, unless Lender, in
its sole discretion, agrees to make an Advance in an amount
less than $50,000;
(vii) Lender shall have determined that the
requested Advance, when added to the aggregate outstanding
principal amount of all previous Advances, if any, does not
exceed the total amount of the Borrowing Base, based on the
Eligible Notes Receivable that have been duly pledged in favor
of Lender;
(viii) If Lender shall so require, Lender shall have
received an executed Closing Protection Letter issued by the
Title Company, which shall be reasonably acceptable to Lender.
(d) EXPENSES. The Borrower shall have paid all fees and
expenses required to be paid by pursuant to this Agreement in
connection with such requested Advance or any conditions related
thereto.
(e) PROCEEDINGS SATISFACTORY. All actions taken in
connection with such requested Advance and all documents and papers
relating thereto shall be satisfactory to Lender and its counsel.
Lender and its counsel shall have received copies of such documents
and papers as the Lender or such counsel may reasonably request in
connection with such requested Advance, all in form and substance
reasonably satisfactory to the Lender and its counsel.
SECTION 6 -- GENERAL REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
6.1 ORGANIZATION, STANDING, QUALIFICATION. Borrower (a) is a duly
organized and validly existing Texas limited partnership, acting herein by its
general partner, a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, and (b) has all requisite power,
corporate or otherwise, to conduct its business and to execute and deliver, and
to perform its obligations under, the Loan Documents.
6.2 AUTHORIZATION, ENFORCEABILITY, ETC.
(a) The execution, delivery and performance by Borrower
and Guarantor of the Loan Documents has been dully authorized by all
necessary partnership and corporate action by Borrower and Guarantor
and does not and will not (i) violate any provision of the limited
partnership agreement of Borrower, certificate or articles of
incorporation of Guarantor, bylaws of Guarantor, or any agreement,
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award
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presently in effect to which Borrower and/or Guarantor is a party or
is subject; (ii) result in, or require the creation or imposition of,
any Lien upon or with respect to any asset of Borrower or Guarantor
other than Liens in favor of Lender; or (iii) result in a breach of,
or constitute a default by Borrower or Guarantor under, any indenture,
loan or credit agreement or any other agreement, document, instrument
or certificate to which Borrower or Guarantor is a party or by which
it or any of its assets are bound or affected.
(b) No approval, authorization, order, license, permit,
franchise or consent of, or registration, declaration, qualification
or filing with, any governmental authority or other Person, including
without limitation, the Division or the Timeshare Owners' Association
is required in connection with the execution, delivery and performance
by Borrower of any of the Loan Documents.
(c) The Loan Documents constitute legal, valid and
binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms.
(d) Borrower has good and marketable title to the
Collateral, free and clear of any lien, security interest, charge or
encumbrance except for the security interests created by this
Agreement or any Loan Document or otherwise created in favor of Lender
or those specifically consented to in writing by the Lender. No
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Lender.
(e) The execution and delivery of the Loan Documents, the
delivery and endorsement to Lender of the Pledged Notes Receivable,
the filing of the UCC-1's with the Texas Secretary of State and the
Assignment of Notes Receivable and Mortgages in the Official Records
of the County in which the applicable Resort is located, create in
favor of Lender a valid and perfected continuing first priority
security interest in the Collateral. The Collateral shall secure the
full payment and performance of the Obligations.
(f) None of the Pledged Notes Receivable is forged or has
affixed thereto any unauthorized signatures or has been entered into
by any Person without the required legal capacity; and during the term
of the Agreement, none will be forged, or will have affixed thereto,
any unauthorized signatures.
(g) There have been no modifications or amendments to the
Pledged Notes Receivable or Mortgages.
(h) The makers of the Eligible Notes Receivable have no
defenses, offsets, counterclaims or claims relating to the Eligible
Notes Receivable or the Mortgages.
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(i) The Pledged Notes Receivable and the Mortgages were
executed and delivered by Purchasers in favor of Borrower in
connection with the purchase of the related Encumbered Intervals.
(j) The Mortgages constitute and will constitute valid
and enforceable first and prior liens and security interests on the
Encumbered Intervals.
(k) The Pledged Notes Receivable and the Mortgages are
and shall remain in full force and effect, are and will be valid and
binding obligations of the respective makers in favor of Lender, as
holder; and the Borrower further warrants and guarantees the value,
quantity, sound condition, grade and quality of the Encumbered
Intervals and rights, properties, easements and interests appurtenant
or related thereto.
(l) The grant of the security interests described herein
has not affected and will not affect the validity or enforceability of
the obligations of the respective makers of the Pledged Notes
Receivable under such Notes Receivable or the respective Mortgages.
(m) The Lender is not and shall not be required to take,
and the Borrower has taken any and all required steps to protect
Lender's security interests in the Collateral (other than maintaining
possession of the portion of the Collateral constituting instruments);
and Lender is not and shall not be required to collect or realize upon
the Collateral or any distribution of interest or principal, nor shall
loss of, or damage to, the Collateral release the Borrower (or the
Guarantor) from any of the Obligations.
6.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION. The Financial
Statements fairly present the respective financial conditions and results of
operations of Borrower and Guarantor as of the date or dates thereof and for
the periods covered thereby. There were no material liabilities, direct or
indirect, fixed or contingent, of Borrower or Guarantor as of the dates of such
Financial Statements which were not reflected therein or in the notes thereto,
which have not otherwise been disclosed to Lender in writing. Except for any
such changes heretofore expressly disclosed in writing to Lender, there has
been no material adverse change in the respective financial conditions of
Borrower or Guarantor from the financial conditions shown in their respective
Financial Statements, nor have Borrower or Guarantor incurred any material
liabilities, direct or indirect, fixed or contingent, which are not shown in
their respective Financial Statements. Borrower, or the Guarantor,
respectively, is able to pay all of its or their respective debts as they
become due and Borrower or Guarantor, as the case may be, shall maintain such
solvent financial condition, giving effect to the Obligations, as long as the
Borrower, or Guarantor, are obligated to Lender under the Agreement, or with
respect to the Guarantor, the Guaranty, or in any other manner whatsoever.
Borrower's or Guarantor's Obligations under this Agreement and
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under the Loan Documents will not render Borrower or the Guarantor unable to
pay its or their debts as they become due. The present fair market value of
Borrower's or Guarantor's assets is greater than the amount required to pay its
or their respective total liabilities.
6.4 TAXES. In accordance with the requirements set forth in the
Declaration, the Borrower represents and warrants that the Borrower or
Timeshare Owners' Association, as required, has paid or will have paid in full,
prior to delinquency, all ad valorem taxes and other taxes and assessments
against the Resort and the Collateral; and the Borrower knows of no basis for
any additional taxes or assessments against the Resort or the Collateral. The
Borrower or the Timeshare Owners' Association, as the case may be, has filed
all tax returns required to have been filed by it and has paid or will pay
prior to delinquency, all taxes shown to be due and payable on such returns,
including interest and penalties, and all other taxes which are payable by it
to the extent the same have become due and payable.
6.5 TITLE TO PROPERTIES: PRIOR LIENS. Borrower has good and
marketable title to all of the Collateral and to all unsold Units and Intervals
at each Resort, and all rights, properties and benefits appurtenant to or
benefitting them. Borrower is not in default under any of the documents
evidencing or securing any indebtedness which is secured, wholly or in part, by
any portion of any Resort or any portion or all the Collateral and no event has
occurred which with the giving of notice, the passage of time or both, would
constitute a default under any of the documents evidencing or securing any such
indebtedness. Other than the Liens granted in favor of Lender and the existing
mortgage in favor of Freedom Financial Corporation in the original principal
amount of $5,454,157.00 (having an outstanding balance of $4,718,554.00 as of
December 31, 1994), there are no liens or encumbrances against the Collateral,
or against any Resort.
6.6 SUBSIDIARIES, AFFILIATES AND CAPITAL STRUCTURE. Except for the
Guarantor and except for the mortgage in favor of Freedom Financial Corporation
referred to above, Borrower has no subsidiaries or Affiliates which have any
involvement or interest in any Resort in any way. Guarantor (98% owner and sole
general partner) and Equal Investment Company (2% owner and sole limited
partner) are the only owners and holders of 100% of all of the outstanding
partnership interests in the Borrower. The Guarantor is involved in the
business operations of and derives substantial financial benefit from the
Borrower. For so long as Borrower is obligated to Lender under any of the Loan
Documents, Guarantor shall remain the sole general partner of the Borrower.
None of the Affiliates of Borrower are parties to any proxies, voting trusts,
shareholders agreements or similar arrangements pursuant to which voting
authority, rights or discretion with respect to the Borrower is vested in any
other Person.
6.7 LITIGATION, PROCEEDINGS, ETC. There are no actions, suits,
proceedings, orders or injunctions pending or threatened against or affecting
Borrower, the Guarantor, the Resort or the Timeshare Owners' Association at law
or in equity, or before or by any governmental authority or other tribunal,
which (a) could have a material adverse effect on
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Borrower or Guarantor or (b) relate to the Loan or which could have a material
effect on the Collateral or the Resort. Borrower has received no notice from
any court, governmental authority or other tribunal alleging that Borrower or
the Resort have violated the Timeshare Act, any of the rules or regulations
thereunder, the Declaration or any other applicable laws, agreements or
arrangements that could have any material effect on the Loan, the Collateral or
the Resorts.
6.8 LICENSES, PERMITS, ETC. The Borrower, the Resorts, the
Timeshare Owners' Associations or Borrower's Affiliates involved in the
operations of the Resorts, and, to the best of Borrower's knowledge after
diligent inquiry, other Persons involved in the operations of the Resorts,
possess all requisite franchises, certificates of convenience and necessity,
operating rights, approvals, licenses, permits, consents, authorizations,
exemptions and orders as are necessary to carry on its or their business as now
being conducted, without any known conflict with the rights of others and, with
respect to the Borrower, the Resorts and the Timeshare Owners' Associations, in
each case subject to no mortgage, pledge, Lien, lease, encumbrance, charge,
security interest, title retention agreement or option other than as provided
for by this Agreement.
6.9 ENVIRONMENTAL MATTERS. Except as otherwise noted on Schedule
6.9, (a) no Resort contains any Hazardous Materials, (b) no Hazardous Materials
are used or stored at or transported to or from the Resorts, (c) neither
Borrower nor the Resorts nor any manager thereof or to Borrower's knowledge,
the Timeshare Owners' Associations, have received notice from any governmental
agency, entity or other Person with regard to Hazardous Materials on, under or
affecting any Resort, and (d) neither Borrower nor the Resorts, nor any portion
thereof, nor to Borrower's knowledge after diligent inquiry, the Timeshare
Owners' Associations, are in violation of any Environmental Laws.
6.10 FULL DISCLOSURE. No information, exhibit or written report or
the content of any schedule furnished by or on behalf of Borrower to Lender in
connection with the Loan or the Resorts contains any material misstatement of
fact or omits the statement of a material fact necessary to make the statement
contained herein or therein not misleading. Borrower knows of no fact or
condition which will prevent the sale of Intervals to Purchasers or prevent the
operation of the Resorts in accordance with the Declarations and related public
offering statements, and in accordance with applicable law, or prevent
Borrower's performing its Obligations pursuant to the Loan Documents.
6.11 USE OF PROCEEDS/MARGIN STOCK. None of the proceeds of the Loan
will be used to purchase or carry any "margin stock" (as defined under
Regulation U of the Board of Governors of the Federal Reserve System, as in
effect from time to time), and no portion of the proceeds of the Loan will be
extended to others for the purpose of purchasing or carrying margin stock. None
of the transactions contemplated in the Agreement (including, without
limitation, the use of the proceeds from the Loan) will violate or result in
the violation of Section 7 of the Securities Exchange Act of 1934, as amended,
or any
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regulations issued pursuant thereto, including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R., Chapter 11.
6.12 NO DEFAULTS. No Default or Event of Default exists, and there
is no violation in any material respect of any term of any agreement, charter
instrument, bylaw or other instrument to which the Borrower is a party or by
which it may be bound.
6.13 COMPLIANCE WITH LAW. The Borrower
(a) is not in violation, nor are any of its Resorts, or
the business operations in respect of any of the Resorts, or to the
Borrower's knowledge after diligent inquiry, the Timeshare Owners'
Association, in violation, of the Timeshare Act, or any laws,
ordinances, governmental rules or regulations of the State of Texas,
the State of Missouri, any political subdivision of said states or any
other jurisdiction to which the Borrower or the Resorts, or the
business operations conducted in respect of the Resorts, or the
Timeshare Owners' Association, are subject; and
(b) has not failed, nor have the Resorts or, to
Borrower's knowledge, the Timeshare Owners' Associations failed, to
obtain any consents or joinders, or any approvals, licenses, permits,
franchises or other governmental authorizations, or to make or cause
to be made any filings, submissions, registrations or declarations
with any government or agency or department thereof, necessary to the
establishment, ownership or operation of the Resorts or any of
Borrower's Properties, or to the conduct of Borrower's business,
including, without limitation, the operation of the Resorts and the
sale, or offering for sale, of Intervals therein; which violation or
failure to obtain or register materially adversely affects the
Borrower, the Resorts or the business, prospects, profits, properties
or condition (financial or otherwise) of the Borrower or Guarantor or
the Resorts. The Borrower has, to the extent required by its
activities and businesses, and the operations of the Resorts, fully
complied with (1) all of the applicable provisions of (a) the Consumer
Credit Protection Act; (b) Regulation Z of the Federal Reserve Board;
(c) the Equal Credit Opportunity Act; (d) Regulation B of the Federal
Reserve Board; (e) the Federal Trade Commission's 3-day cooling-off
Rule for Door-to-Door Sales; (f) Section 5 of the Federal Trade
Commission Act; (g) the Interstate Land Sales Full Disclosure Act
("ILSA"); (h) federal postal laws; (i) applicable state and federal
securities laws; (j) applicable usury laws; (k) applicable trade
practices, home and telephone solicitation, sweepstakes, anti-lottery
and consumer credit and protection laws; (1) applicable real estate
sales licensing, disclosure, reporting and escrow laws; (m) the
Americans With Disabilities Act and related accessibility guidelines
("ADA"); (n) the Real Estate Settlement Procedures Act ("RESPA"); (o)
all amendments to and rules and regulations promulgated under the
foregoing acts or laws; and (p) other applicable federal statutes and
the rules and regulations promulgated thereunder; and (2) all of the
applicable provisions of the Timeshare Acts, any law
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or laws of any state (and the rules and regulations promulgated
thereunder) relating to ownership, establishment or operation of the
Resort, or the sale, offering for sale, or financing of Intervals.
6.14 RESTRICTIONS OF BORROWER. Neither the Borrower nor any Resort,
nor to the Borrower's knowledge, any Timeshare Owners' Association, is a party
to any contract or agreement, or subject to any Lien, charge or corporate
restriction, which materially and adversely affects its or their business. The
Borrower will not be, on or after the Closing Date, a party to any contract or
agreement which restricts its right or ability to incur indebtedness, or
prohibits the Borrower's execution of, or compliance with the terms of this
Agreement or the other Loan Documents. The Borrower has not agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of the Collateral, whether now owned or hereafter acquired, to
be subject to a Lien except in favor of Lender as provided hereunder.
6.15 BROKER'S FEES. Lender and Borrower represent to each other
that neither of them has made any commitment or taken any action which will
result in a claim for any brokers', finders' or other similar fees or
commitments with respect to the transactions described in the Agreement. The
Borrower agrees to indemnify Lender and save and hold Lender harmless from all
claims of any Person for any broker's or finder's fee or commission other than
the Broker's Fee, and this indemnity shall include reasonable attorneys' fees
and legal expenses.
6.16 DEFERRED COMPENSATION PLANS. The Borrower has no pension,
profit sharing or other compensatory or similar plan (herein called a "Plan")
providing for a program of deferred compensation for any employee or officer.
No fact or situation, including but not limited to, any "Reportable Event," as
that term is defined in Section 4043 of the Employee Retirement Income Security
Act of 1974 as the same may be amended from time to time ("Pension Reform
Act"), exists or will exist in connection with any Plan of the Borrower which
might constitute grounds for termination of any Plan by the Pension Benefit
Guaranty Corporation or cause the appointment by the appropriate United States
District Court of a Trustee to administer any such Plan. No "Prohibited
Transaction" within the meaning of Section 406 of the Pension Reform Act exists
or will exist upon the execution and delivery of the Agreement or the
performance by the parties hereto of their respective duties and obligations
hereunder. The Borrower will (1) at all times make prompt payment of
contributions required to meet the minimum funding standards set forth in
Sections 302 through 305 of the Pension Reform Act with respect to each of its
Plans; (2) promptly, after the filing thereof, furnish to the Lender copies of
each annual report required to be filed pursuant to Section 103 of the Pension
Reform Act in connection with each Plan for each Plan Year, including any
certified financial statements or actuarial statements required pursuant to
said Section 103; (3) notify the Lender immediately of any fact, including, but
not limited to, any Reportable Event arising in connection with any Plan which
might constitute grounds for termination thereof by the Pension Benefit
Guaranty Corporation or
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for the appointment by the appropriate United States District Court of a
Trustee to administer the Plan; and (4) notify the Lender of any "Prohibited
Transaction" as that term is defined in Section 406 of the Pension Reform Act.
The Borrower will not (a) engage in any Prohibited Transaction or (b) terminate
any such Plan in a manner which could result in the imposition of a Lien on the
Property of the Borrower pursuant to Section 4068 of the Pension Reform Act.
6.17 LABOR RELATIONS. The employees of the Borrower are not a party
to any collective bargaining agreement with the Borrower, and, to the best
knowledge of the Borrower and its officers, there are no material grievances,
disputes or controversies with any union or any other organization of the
Borrower's employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
6.18 RESORT.
(a) TIMESHARE PLAN. Each Resort has been established and
dedicated, and is and will remain, a time-share plan and project in
full compliance with all applicable laws and regulations including
without limitation, the Timeshare Act.
(b) ACCESS. Each Resort has direct access to a publicly
dedicated road and all roadways inside each Resort are subject to an
access and use easement or other dedication or provision that benefits
and will continue to benefit all Purchasers.
(c) UTILITIES. Electric, sanitary and stormwater sewer,
telephone, water facilities and other necessary utilities are
available in sufficient capacity to service each Resort and any
easements necessary to the furnishing of such utility services have
been obtained and duly recorded, and inure to the benefit of each
Resort and each Timeshare Owners' Association.
(d) AMENITIES. Each Purchaser of an Interval has and will
have access to and the full use and enjoyment of all of the Common
Elements and public utilities of the Resort in which such interval is
located, all in accordance with the Declaration and Timeshare
Documents.
(e) CONSTRUCTION. All costs arising from the construction
or acquisition of any Units and any other improvements and the
purchase of any fixtures or equipment, inventory, furnishings or other
personalty located in, at, or on the Resorts have been paid or will be
paid when due.
(f) SALE OF INTERVALS. The marketing, sale, offering of
sale, rental, solicitation of Purchasers or, if applicable, lessees,
and financing of Intervals in the Resort (1) do not constitute the
sale, or the offering of sale, of Securities subject to
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the registration requirements of the Securities Act of 1933, as
amended, or any state securities law; (2) do not violate the Timeshare
Act or any land sales or consumer protection law, statute or
regulation of state or any other state or jurisdiction in which a
Purchaser resides or in which sales or solicitation activities occur;
and (3) do not violate any consumer credit or usury statute of state
or any other state or jurisdiction in which a Purchaser resides or in
which sales or solicitation activities occur. All marketing and sales
activities are performed by employees of Borrower, all of whom are and
shall be properly licensed in accordance with applicable laws.
(g) TANGIBLE PROPERTY. Except for specific items which
may be owned by independent contractors, the machinery, equipment,
fixtures, tools and supplies used in connection with the Resort,
including without limitation, with respect to the operations and
maintenance of the Common Elements, are owned either by the Borrower
or the applicable Timeshare Owners' Association.
(h) OPERATING CONTRACTS. The Borrower has entered into
the contracts, agreements, and arrangements necessary for the
operation of the Resorts, including but not limited to those with
respect to utilities, maintenance, management, services, marketing and
sales (hereinbelow defined as "Operating Contracts").
6.19 TIMESHARE REGIMEN REPORTS. The Borrower has furnished to the
Lender true and correct copies of the Timeshare Documents listed on SCHEDULE
6.19, which consist of all those placed on file by the Borrower with the
Divisions or any federal, state or local regulatory or recording agencies,
offices or departments. All such filings and/or recordations, and all joinders
and consents, necessary in order to establish the plan in respect of the
Resorts, including without limitation, the Units, Intervals, and all
appurtenant Common Elements, and all related use and access rights, have been
done or obtained and all laws, regulations and statutes, and all agreements or
arrangements, in connection therewith have been complied with.
6.20 OPERATING CONTRACTS. The contracts, agreements and
arrangements listed in EXHIBIT "D" comprise those agreements or arrangements
relating to the operation of the Resorts, including without limitation, with
respect to utilities, maintenance, management, services, marketing and sales
under which the fees to be paid equal or exceed $50,000.00 (collectively, all
such agreements and arrangements, including but not limited to those listed in
Exhibit D, are referred to herein as the "Operating Contracts"). All of the
Operating Contracts listed in Exhibit D are unmodified and in full force and
effect and shall remain free and clear of any Lien.
6.21 ARCHITECTURAL AND ENVIRONMENTAL CONTROL. All Units, Common
Elements and other improvements at, upon or appurtenant to the Resort are and
will be in compliance with the design, use, architectural and environmental
control provisions, IF ANY, set forth in the Declaration.
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6.22 TAX IDENTIFICATION/SOCIAL SECURITY NUMBERS. The Borrower's and
Guarantor's respective federal taxpayer's identification numbers, or social
security numbers, are as follows:
Ascension Resorts, Ltd. 00-0000000
Ascension Capital Corporation 00-0000000
SECTION 7 - COVENANTS
7.1 AFFIRMATIVE COVENANTS. So long as any portion of the
Obligations remains unsatisfied, Borrower hereby covenants and agrees with
Lender as follows:
(a) PAYMENT AND PERFORMANCE OF OBLIGATIONS. Borrower
shall pay all of the Loan and related expenses when and as the same
become due and payable, and Borrower shall strictly observe and
perform all of the Obligations, including without limitation, all
covenants, agreements, terms, conditions and limitations contained in
the Loan Documents, and will do all things necessary which are not
prohibited by law to prevent the occurrence of any Event of Default
hereunder; and the Borrower will maintain an office or agency in the
State of Texas where notices, presentations and demands in respect of
the Loan Documents may be made upon the Borrower. Such office or
agency and the books and records of the Borrower shall be maintained
at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 until such
time as the Borrower shall so notify the Lender, in writing, of any
change of location of such office or agency.
(b) MAINTENANCE OF EXISTENCE, QUALIFICATION AND ASSETS.
Borrower shall at all times (I) maintain its legal existence, (II)
maintain its qualification to transact business and good standing in
any state and in any jurisdiction where it conducts business in
connection with the Resort, and (III) comply or cause compliance with
all governmental laws, rules, regulations and ordinances applicable to
the Resort, the Borrower or its business, including, without
limitation, the Timeshare Act.
(c) CONSOLIDATION AND MERGER. Unless Borrower shall have
first obtained Lender's prior written approval, which shall not be
unreasonably withheld, Borrower will not consolidate with or merge
into any other Person or permit any other Person to consolidate with
or merge into it.
(d) MAINTENANCE OF INSURANCE. The Borrower, or if
required pursuant to the Declaration, the Timeshare Owners'
Association, shall maintain (or the Borrower shall cause to be
maintained) at all times during the term of this Agreement, policies
of insurance with premiums being paid when due, and shall deliver to
Lender originals of insurance policies issued by insurance companies,
in amounts, in form
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and in substance, and with expiration dates, all acceptable to Lender
and containing a waiver of subrogation rights by the insuring company,
a non-contributory standard mortgage benefit clause, or their
equivalents, and a mortgagee loss payable endorsement in favor of and
satisfactory to Lender, and breach of warranty coverage, providing the
following types of insurance on and with respect to the Borrower (or,
as appropriate, the respective Associations) and the Resort:
(i) Fire and extended coverage insurance
(including lightning, hurricane, tornado, wind and water
damage, vandalism and malicious mischief coverage) covering
the improvements at the Resort and any personal property
located in or on the Resort, in an amount not less than the
full replacement value of such improvements and personal
property, and said policy of insurance shall provide for a
deductible acceptable to Lender, breach of warranty coverage,
replacement cost endorsements satisfactory to Lender, and
shall not permit co-insurance;
(ii) Public liability and property damage
insurance covering the Resort in amounts and on terms
satisfactory to Lender; and
(iii) Such other insurance on the Resort or any
replacements or substitutions therefor including, without
limitation, flood insurance (if the Property is or becomes
located in an area which is considered a flood risk by the
U.S. Emergency Management Agency or pursuant to the National
Flood Insurance program), in such amounts and upon terms as
may from time to time be reasonably required by Lender.
To the extent any other timeshare receivable lender
has any rights to approve the form of insurance policies with respect
to the Resort, the amounts of coverage thereunder, the insurers under
such policies, or the designation of an attorney-in-fact for purposes
of dealing with damage to any part of the Resort or insurance claims
or matters related thereto, or any successor to such attorney-in-fact,
or any changes with respect to any of the foregoing, Borrower shall
take all steps as may be necessary (and, after turnover, if any, of
control of the Resort to the Timeshare Owners' Association, Borrower
shall use its best efforts) to ensure that Lender shall at all times
have a co-equal right, with such other lender (including, without
limitation, Borrower or any third-party lender), to approve all such
matters and any proposed changes in respect thereof; and Borrower
shall not cause or permit any changes with respect to any insurance
policies, insurers, coverage, attorney-in-fact, or insurance trustee,
if any, without Lender's prior written approval.
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In the event of any insured loss or claim in respect
of the Resort, Borrower shall apply (or cause to be applied), and
Borrower covenants that the Timeshare Owners' Association shall apply
(or cause to be applied), all proceeds of such insurance policies in a
manner consistent with the Timeshare Documents and the Timeshare Act.
All insurance policies required pursuant to this
Agreement (or the Timeshare Documents or Timeshare Act) shall provide
that the coverage afforded thereby shall not expire or be amended,
canceled, modified or terminated without at least thirty (30) days
prior written notice to Lender. At least thirty (30) days prior to the
expiration date of each policy maintained pursuant to this Section
7.1(d), a renewal or replacement thereof satisfactory to Lender shall
be delivered to Lender. Borrower shall deliver or cause to be
delivered to Lender receipts evidencing the payment for all such
insurance policies and renewals or replacements.
In the event of any fire or other casualty to or with respect
to the improvements on or at the Resort, Borrower covenants that
Borrower or the Timeshare Owners' Association, as the case may be,
will promptly restore or repair (or cause to be restored, repaired or
replaced) the damaged improvements and repair or replace any other
personal property to the same condition as immediately prior to such
fire or other casualty and, with respect to the improvements and
personal property on the Resort, in accordance with the terms of the
Timeshare Documents or Timeshare Act. The insufficiency of any net
insurance proceeds shall in no way relieve the Borrower or, as
applicable, Borrower and Timeshare Owners' Association, of its
obligation to restore, repair or replace such improvements and other
personal property in accordance with the terms hereof, of the
Declaration or other Timeshare Documents or of the Timeshare Act, and
Borrower covenants that Borrower or, as the case may be, the Timeshare
Owners' Association, shall promptly comply and cause compliance with
the provisions of the Declaration and other Timeshare Documents, or of
the Timeshare Act relating to such restoration, repair or replacement
In Lender's sole discretion, all insurance proceeds payable to or
received by Lender pursuant to the Declaration or the applicable
policies may be applied to the payment of the Obligations, whether or
not due and in whatever order Lender elects.
(e) MAINTENANCE OF SECURITY. Borrower shall execute and
deliver (or cause to be executed and delivered) to Lender all security
agreements, financing statements, assignments and such other
agreements, documents, instruments and certificates, and supplements
and amendments thereto, and take such other actions, as Lender deems
necessary or appropriate in order to maintain as valid, enforceable
and perfected first priority liens and security interests, all Liens
and security interests in the Collateral granted to Lender to secure
the Obligations. The Borrower shall not grant extensions of time for
the payment of, compromise for less than the full
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face value or release in whole or in part, any Purchaser or other
Person liable for the payment of, or allow any credit whatsoever
except for the amount of cash to be paid upon, any Collateral or any
instrument, chattel paper or document representing the Collateral.
(f) PAYMENT OF TAXES AND CLAIMS. Borrower will pay, and,
as applicable pursuant to the Declaration, Borrower covenants that the
Timeshare Owners' Association will pay when due, all taxes imposed
upon the Resort, the Collateral, the Borrower, the Timeshare Owners'
Association, or any of its or their property, or with respect to any
of its or their franchises, businesses, income or profits, or with
respect to the Loan or any of the Loan Documents; and Borrower and the
Timeshare Owners' Association, as the case may be, shall pay all other
charges and assessments against Borrower, the Collateral and the
Resort before any claim (including, without limitation, claims for
labor, service materials and supplies) arises for sums which have
become due and payable. Except for the Liens in favor of Lender
granted pursuant to the Loan Documents, and except as otherwise
specifically provided for herein, Borrower covenants that no statutory
or other liens whatsoever (including, without limitation, mechanics',
materialmens', judgment or tax liens) shall attach to any of the
Collateral or the Resort except for such Liens as are expressly
provided for pursuant to the Declaration, which shall, in any event,
be subordinate to the Lien of Lender. In the event any such Lien
attaches to any of the Collateral or the Resort Borrower shall, within
thirty (30) days after any such Lien attaches, either (i) cause such
Lien to be released of record or (ii) provide Lender with a bond in
accordance with the applicable laws of the State, issued by a
corporate surety acceptable to Lender, in an amount and form
acceptable to Lender.
(g) INSPECTIONS. Borrower shall, at any time and from
time to time and at the expense of Borrower, permit Lender or its
agents or representatives to inspect the Resort, the Collateral and if
necessary, in Lender's opinion, to ascertain or assure Borrower's
compliance with the terms of this Agreement, any of the Borrower's
other assets or Property, and to examine and make copies of and
abstracts from its and, to the extent it has access thereto or
possession thereof, the Timeshare Owners' Association's, books,
accounts, records, original correspondence, computer tapes, disks,
software, and other papers as it may desire; and to discuss its
affairs, finances and accounts with any of its officers, employees,
Affiliates, contractors or independent public accountants (and by this
provision Borrower authorizes said accountants to discuss with Lender,
its agents or representatives, the affairs, finances and accounts of
Borrower). Lender agrees to use reasonable efforts not to unreasonably
interfere with Borrower's business operations in connection with any
such inspections. Without limiting the foregoing, Lender shall have
the right to make such credit investigations as Lender may deem
appropriate in connection with its review of Notes Receivable, and
Borrower shall make available to Lender all credit information in
Borrower's possession or under its control or to which it may have
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access, with respect to Purchasers or other obligors under Notes
Receivable as Lender may request.
(h) REPORTING REQUIREMENTS. So long as any portion of the
obligations remain unsatisfied, Borrower shall furnish (or cause to be
furnished, as the case may be) to Lender the following:
(i) MONTHLY FINANCIAL REPORTS. As soon as
available and in any event within ten (10) days after the end
of each calendar month, a report showing (i) the trial balance
of the Pledged Notes Receivable, (ii) an aging report on the
Pledged Notes Receivable, (iii) a report detailing the
collections on each of the Pledged Notes Receivable, (iv) an
Borrowing Base Report and (v) monthly reports from the Lockbox
Agent required pursuant to the Lockbox Agreement;
(ii) QUARTERLY FINANCIAL REPORTS. As soon as
available and in any event within forty-five (45) days after
the end of each fiscal quarter, copies of income statements
and balance sheets for the operations of each Resort and for
Borrower, certified by the General Partner of Borrower.
(iii) ANNUAL FINANCIAL REPORTS. As soon as
available and in any event within ninety (90) days after the
end of each of calendar year or other fiscal year as may be
applicable with respect to the Borrower (a "Fiscal Year"), a
statement of income and expense of Borrower for the annual
period ended as of the end of such Fiscal Year, and a balance
sheet of Borrower as of the end of such Fiscal Year, all in
such detail and scope as may be reasonably required by Lender
and prepared in accordance with GAAP and on a basis consistent
with prior accounting periods. Each annual financial statement
of Borrower shall be prepared by an independent certified
public accountant and certified by Borrower and Guarantor to
be true, correct and complete, and shall otherwise be in form
acceptable to Lender. In the event that Lender, acting in good
faith, is not satisfied with any such Financial Statement, and
if Borrower fails to provide Lender with new Financial
Statements acceptable to Lender within fifteen (15) days after
Lender delivers written notice of such dissatisfaction to
Borrower, then, at Lender's request, Borrower shall furnish to
Lender copies of audited income statements and balance sheets
certified by an independent certified public accountant
acceptable to Lender and prepared in accordance with GAAP and
on a basis consistent with prior accounting periods. Such
audited annual statements shall also be in form and content
satisfactory to Lender. If the figures for net and total
operating income (as such terms are defined in accordance with
GAAP) in the audited annual statements do not vary by more
than five percent (5%) from the figures in the unaudited
annual statements, Lender
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shall bear the cost of the certified public accountant's
audit. If, however, such figures vary by more than five
percent (5%), Borrower shall bear the cost of such certified
public accountant's audit;
(iv) GUARANTOR'S FINANCIAL STATEMENT. Within
ninety (90) days of the end of each calendar year, the
corporate Guarantor shall deliver to Lender such Guarantor's
statement of income and expense and balance sheet. The
Guarantor's Financial Statement shall be in such detail and
scope as may reasonably be required by Lender and prepared in
accordance with GAAP on a basis consistent with prior
accounting periods. The Guarantor's Financial Statement shall
be dated as of the end of the immediately preceding calendar
year or fiscal year as applicable to such Guarantor, and shall
be certified as being true, correct and complete by such
Guarantor;
(v) OFFICER'S CERTIFICATE. Each set of annual
Financial Statements or reports delivered to the Lender
pursuant to Sections 7.1(h)(i) and (ii) of this Agreement will
be accompanied by a certificate of the President or the
Treasurer of the Borrower (and, as applicable the corporate
Guarantor) setting forth that the signers have reviewed the
relevant terms of the Agreement (and all other agreements and
exhibits between the parties) and have made, or caused to be
made, under their supervision, a review of the transactions
and conditions of the Borrower from the beginning of the
period covered by the Financial Statements or reports being
delivered therewith to the date of the certificate and that
such review has not disclosed the existence during such period
of any condition or event which constitutes a Default or Event
of Default or, if any such condition or event existed or
exists or will exist, specifying the nature and period of
existence thereof and what action the Borrower has taken or
proposes to take with respect thereto;
(vi) SALES REPORTS. Concurrently with the
financial statements required pursuant to Section 7.1(h)(i)
and (ii), Borrower shall deliver to Lender, annually, an
annual sales report, detailing the sales of all Intervals at
the Resorts for the period covered thereby, certified by
Borrower and Guarantor to be true, correct and complete and
otherwise in a form approved by Lender;
(vii) AUDIT REPORTS. Promptly upon receipt thereof,
one (1) copy of each other report submitted to the Borrower by
independent public accountants or other Persons in connection
with any annual, interim or special audit made by them of the
books of the Borrower;
(viii) NOTICE OF DEFAULT OR EVENT OF DEFAULT.
Immediately upon becoming aware of the existence of any
condition or event which constitutes
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a Default or an Event of Default, a written notice specifying
the nature and period of existence thereof and what action the
Borrower is taking or proposes to take with respect thereto;
(ix) NOTICE OF CLAIMED DEFAULT. Immediately upon
becoming aware that the holder of any material obligation or
of any evidence of material indebtedness of the Borrower has
given notice or taken any other action with respect to a
claimed default or event of default thereunder, a written
notice specifying the notice given or action taken by such
holder and the nature of the claimed default or event of
default and what action the Borrower is taking or proposes to
take with respect thereto;
(x) MATERIAL ADVERSE DEVELOPMENTS. Immediately
upon becoming aware of any claim, action, proceeding,
development or other information which may materially and
adversely affect the Borrower, the Guarantor, the Collateral,
the Resort, or the business, prospects, profits or condition
(financial or otherwise) of the Borrower or the ability of the
Borrower to perform its Obligations under the Agreement,
Borrower shall provide Lender with telephonic or telegraphic
notice, followed by telefaxed and mailed written confirmation,
specifying the nature of such development or information and
such anticipated effect; and
(xi) OTHER INFORMATION. Borrower will promptly
deliver to Lender any other information related to the Loan,
the Collateral, the Resort, Borrower or Guarantor as Lender
may in good faith request including, without limitation,
annually, federal call reports relating to Lockbox Agent. In
addition, concurrently with the financial statements described
in Section 7.1(h) above, Borrower and Guarantor shall cause to
be furnished to Lender the financial statements as described
and provided in the Guaranty from time to time.
(i) RECORDS. Borrower shall keep adequate records and
books of account reflecting all financial transactions of Borrower and
with respect to the Resort in which complete entries will be made in
accordance with GAAP. In addition, Borrower shall keep, and shall
promptly deliver to Lender upon Lender's request therefor, complete,
timely and accurate records of all sales of Intervals and all payments
in respect of Pledged Notes Receivable.
(j) MANAGEMENT. The Borrower and the Guarantor shall
cause Borrower to remain engaged in the active management of the
Resort and, unless Borrower notifies Lender in writing at least 30
days in advance of its new location, to retain its executive offices
at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, and to
continue to perform duties substantially similar to those presently
performed, as
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provided in the "Management Agreement" relating to the Resorts which
is included among the Operating Contracts. In the event of the
resignation, termination, retirement or death of Xxxxxx X. Xxxx, Chief
Executive Officer of the General Partner of Borrower, the Borrower and
Guarantor shall, within six (6) months after the date of any such
event, cause to be engaged in his place, a Person or Persons who have
substantially equivalent experience, background and demonstrated
ability to perform, on terms satisfactory to Lender, the duties
performed by Xx. Xxxx at the time of the Closing Date and who is in
all other respects reasonably satisfactory to the Lender.
(k) FICA. Borrower shall furnish to Lender within thirty
(30) days after the expiration of each calendar quarter proof
reasonably satisfactory to Lender that Borrower's obligations to make
deposits for F.I.C.A, social security and withholding taxes have been
satisfied.
(l) OPERATING CONTRACTS. Subject to the rights of the
Timeshare Owners' Association as set forth in the Timeshare Documents,
no Operating Contract listed in Exhibit D shall be modified, extended,
terminated or entered into, without the prior written approval of
Lender, if any such modification, extension, termination or new
agreement could have an adverse impact on the operating of the Resort
or the Collateral.
(m) GUARANTOR. Xxxxxx X. Xxxx shall remain owner and
holder of 100% of the authorized, issued and outstanding shares of
stock of the Guarantor (unless Lender approves in each instance any
such change in ownership in advance in writing, provided, however,
that Lender shall not unreasonably withhold its approval) and
Guarantor shall continue as sole general partner of the Borrower. The
Borrower shall not enter into proxies, voting trusts, shareholders
agreements or similar arrangements for the purpose of vesting voting
rights, authority or discretion in any other Person.
(n) NOTICES. Borrower shall notify Lender within five (5)
Business Days of the occurrence of any event (i) as a result of which
any representation or warranty of Borrower contained in any Loan
Documents would be incorrect or materially misleading if made at that
time, or (ii) as a result of which Borrower is not in full compliance
with all of its covenants and agreements contained in this Agreement
or any Loan Document, or (iii) which constitutes or, with the passage
of time, notice or a determination by Lender would constitute, an
Event of Default.
(o) MAINTENANCE. Borrower shall maintain, or shall
cause to be maintained, or to the extent provided for pursuant to the
Declaration, shall use its best efforts to cause the Timeshare Owners'
Association to maintain, the Resort in good repair, working order and
condition and shall make all necessary replacements
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and improvements to the Resort so that the value and operating
efficiency of the Resort will be maintained at all times and so that
the Resort remains in compliance in all respects with the Timeshare
Act, the Timeshare Documents and other applicable law.
(p) CLAIMS. Borrower shall promptly notify Lender of any
claim, action or proceeding affecting the Resort or Collateral, or any
part thereof, or any of the security interests or rights granted in
favor of Lender hereunder or under any of the Loan Documents. At the
request of Lender, Borrower shall appear in and defend in favor of
Lender, at Borrower's sole expense, with regard to any such claim,
action or proceeding.
(q) REGISTRATION AND REGULATIONS
(i) LOCAL LEGAL COMPLIANCE. The Borrower will
comply, and will cause the Resort to comply, with all
applicable servitudes, restrictive covenants, applicable
planning, zoning or land use ordinances and building codes,
all applicable health and Environmental Laws and regulations,
and all other applicable laws, rules, regulations, agreements
or arrangements.
(ii) REGISTRATION COMPLIANCE. The Borrower will
maintain, or cause to be maintained, all necessary
registrations, current filings, consents, franchises,
approvals, and exemption certificates, and the Borrower will
make or pay, or cause to be made or paid, all registrations,
declarations or fees with the Division and any other
government or any agency or department thereof, whether in the
state or another jurisdiction, required in connection with the
Resort and the occupancy use and operation thereof, the
incorporation of Units into the time-share plan established
pursuant to the Declaration and the other Timeshare Documents,
and the sale, advertising, marketing, and offering for sale of
Intervals. All such registrations, filings and reports will be
truthfully completed; and true and complete copies of such
registrations, applications, consents, licenses, permits,
franchises, approvals, exemption certificates, filings and
reports will be delivered to the Lender. Borrower shall advise
Lender of any changes with respect to its marketing or sales
programs in any jurisdiction, including jurisdictions other
than the state, and at Lender's request from time to time,
Borrower shall deliver to Lender (A) written statements by the
applicable state authorities, in form acceptable to Lender,
stating that no registration is necessary for the sale of
Intervals in the particular state, (B) an opinion of counsel
in form acceptable to Lender and rendered by counsel
acceptable to Lender, stating that no such registration is
necessary, or (C) such other evidence of compliance with
applicable laws as Lender may require; and
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(iii) OTHER COMPLIANCE. The Borrower has in all
material respects, complied with and will comply with all laws
and regulations of the United States, the State of Texas, the
State of Missouri, any political subdivision of either such
state and any other governmental, quasi-governmental or
administrative jurisdiction in which Intervals have been sold
or offered for sale, or in which sales, offers of sale or
solicitations with respect to the Resort have been or will be
conducted, including to the extent applicable, but not limited
to: (1) the Timeshare Act; (2) the Consumer Credit Protection
Act; (3) Regulation Z of the Federal Reserve Board; (4) the
Equal Credit Opportunity Act; (5) Regulation B of the Federal
Reserve Board; (6) the Federal Trade Commission's 3-day
cooling-off Rule for Door-to-Door Sales; (7) Section 5 of the
Federal Trade Commission Act; (8) ILSA; (9) federal postal
laws; (10) applicable state and federal securities laws; (11)
applicable usury laws; (12) applicable trade practices, home
and telephone solicitation, sweepstakes, anti-lottery and
consumer credit and protection laws; (13) applicable real
estate sales licensing, disclosure, reporting and escrow laws;
(14) the ADA; (15) RESPA; (16) all amendments to and rules and
regulations promulgated under the foregoing acts or laws; and
(17) other applicable federal statutes and the rules and
regulations promulgated thereunder; and (18) any state law or
law of any state (and the rules and regulations promulgated
thereunder) relating to ownership, establishment or operation
of the Resort, or the sale, offering for sale, or financing of
Intervals.
(r) OTHER DOCUMENTS. The Borrower will maintain to the
satisfaction of the Lender, and make available to Lender, accurate and
complete files relating to the Resort, the Pledged Notes Receivable
and other Collateral, and such files will contain true copies of each
Pledged Note Receivable, as amended from time to time, copies of all
relevant credit memoranda relating to such Notes Receivable and all
collection information and correspondence relating thereto.
(s) FURTHER ASSURANCES. Borrower will execute and
deliver, or cause to be executed and delivered, such other and further
agreements, documents, instruments, certificates and assurances as, in
the judgment of Lender exercised in good faith may be necessary or
appropriate to more effectively evidence or secure, and to ensure the
performance of, the Obligations. In addition, Borrower shall deliver
to Lender from time to time upon each request by Lender such
documents, instruments or other matters or items as Lender may require
to evidence Borrower's compliance with the covenants set forth in this
Section 7.l.
(t) UTILITIES. The Borrower will cause, or to the extent
provided for pursuant to the Declaration, covenants to use its best
efforts to ensure that the Timeshare Owners' Association, or the
manager of the Resort, as applicable, will cause, electric, sanitary
and stormwater sewer, water facilities, drainage facilities,
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solid waste disposal, telephone and other necessary utilities to be
available to the Resort in sufficient capacity to service the Resort.
(u) AMENITIES. The Borrower will cause, or to the extent
provided for pursuant to the Declarations, will use its best efforts
to ensure that the Timeshare Owners' Association, or the manager of
the Resort, as applicable, will cause, the Resort to be maintained in
good condition and repair, and in accordance with the provisions of
the applicable Timeshare Documents, and the Borrower will cause each
Purchaser of an Interval at the Resort to have continuing access to,
and the use of, to the extent of such Purchaser's time-share periods,
all of the Common Elements and related or appurtenant services, rights
and benefits, all as provided in the Declaration and the Timeshare
Documents.
(v) EXPENSES AND CLOSING FEES. Whether or not the
transactions contemplated hereunder are completed, the Borrower shall
pay all expenses of the Lender relating to negotiating, preparing,
documenting, closing and enforcing this Agreement, including, but not
limited to:
(i) the cost of preparing, reproducing and
binding this Agreement, the other Loan Documents and all
Exhibits and Schedules thereto;
(ii) the fees and disbursements of Lender's
counsel provided, however, that Borrower's obligation to pay
Lender's counsel fees in connection with the negotiation,
preparation, documentation and closing of this Agreement shall
not exceed $20,000.00;
(iii) Lender's out-of-pocket expenses;
(iv) all fees and expenses (including fees and
expenses of the Lender's counsel) relating to any amendments,
waivers, consents or subsequent closings pursuant to the
provisions hereof;
(v) all costs, outlays, legal fees and expenses
of every kind and character had or incurred in (1) the
interpretation or enforcement of any of the provisions of, or
the creation, preservation or exercise of rights and remedies
under, any of the Loan Documents including the costs of appeal
(2) the preparation for, negotiations regarding, consultations
concerning, or the defense or prosecution of legal proceedings
involving any claim or claims made or threatened against the
Lender arising out of this transaction or the protection of
the Collateral securing the Loan or Advances made hereunder,
expressly including, without limitation, the defense by Lender
of any legal proceedings instituted or threatened by any
Person to seek to recover or set aside any payment or setoff
theretofore received or applied by the Lender
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with respect to the Obligations, and any and all appeals
thereof; and (3) the advancement of any expenses provided for
under any of the Loan Documents;
(vi) all expenses relating to the maintenance and
administration of the Lockbox and Lockbox Account by the
Lockbox Agent and Servicing and any escrow by the Title Company
or any other escrow agent;
(vii) the custodial fees payable to Lender with
respect to the original Pledged Notes Receivable and related
Collateral;
(viii) all costs and expenses incurred by Lender
under the Note, and all late charges under the Note; and
(ix) all real and personal property taxes and
assessments, documentary stamp and intangible taxes, sales
taxes, recording fees, title insurance premiums and other title
charges document copying, transmittal and binding costs,
appraisal fees, lien and judgment search costs, fees of
architects, engineers, environmental consultants, surveyors
and any special consultants, construction inspection fees,
brokers fees, escrow fees, wire transfer fees, and all travel
and out-of-pocket expenses of Lender to conduct inspections or
audits; Without limitation of the foregoing, Borrower shall
pay the costs of UCC and other searches, UCC and other Loan
Document recording fees and applicable taxes, and premiums on
each Mortgagee Policy of Title Insurance delivered to Lender
pursuant to this Agreement.
(w) INDEMNIFICATION OF LENDER. In addition to (and not in
lieu of) any other provisions of any Loan Document providing for
indemnification in favor of Lender, the Borrower shall defend,
indemnify and hold harmless Lender, its subsidiaries, affiliates,
officers, directors, agents, employees, representatives, consultants,
contractors, servants, and attorneys, as well as the respective heirs,
personal representatives, successors or assigns of any or all of them
(hereafter collectively the "Indemnified Lender Parties"), from and
against, and promptly pay on demand or reimburse each of them with
respect to, any and all liabilities, claims, demands, losses, damages,
costs and expenses (including without limitation, reasonable
attorneys' and paralegals' fees and costs), actions or causes of
action of any and every kind or nature whatsoever asserted against or
incurred by any of them by reason of or arising out of or in any way
related or attributable to (i) this Agreement, the Loan Documents, the
Commitment or the Collateral; (ii) the transactions contemplated under
any of the Loan Documents or any of the Timeshare Document, including
without limitation, those in any way relating to or arising out of the
violation of any federal or state laws, including the Timeshare Act;
(iii) any breach of any covenant or agreement or the incorrectness or
inaccuracy of any representation and warranty of the Borrower
contained in this Agreement or any
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of the Loan Documents (including without limitation any certification
of the Borrower delivered to the Lender; (iv) any and all taxes,
including real estate, personal property, sales, mortgage, excise,
intangible or transfer taxes, and any and all fees or charges,
including, without limitation under the Timeshare Act, which may at
any time arise or become due prior to the payment, performance and
discharge in full of the Obligations; (v) the breach of any
representation or warranty as set forth herein regarding any
Environmental Laws; (vi) the failure of any Borrower to perform any
obligation or covenant herein required to be performed pursuant to any
Environmental Laws; (vii) the use, generation, storage, release,
threatened release, discharge, disposal or presence on, under or about
the Resort of any Hazardous Materials; (viii) the removal or
remediation of any Hazardous Materials from the Resort required to be
performed pursuant to any Environmental Laws or as a result of
recommendations of any environmental consultant or as required by
Lender; (ix) claims asserted by any Person (including without
limitation any governmental or quasi-governmental agency, commission,
department, instrumentality or body, court, arbitrator or
administrative board [collectively, a "Governmental Agency"], in
connection with or any in any way arising out of the presence, use,
storage, disposal, generation, transportation release, or treatment of
any Hazardous Materials on, in, under or affecting the Resort; (x) the
violation or claimed violation of any Environmental Laws in regard to
the Resort; or (id) the preparation of an environmental audit or
report on the Resort, whether conducted by Lender, Borrower or a
third-party, or the implementation of environmental audit
recommendations. Such indemnification shall not give Borrower or the
Guarantor any right to participate in the selection of counsel for
Lender or the conduct or settlement of any dispute or proceeding for
which indemnification may be claimed. Lender agrees to give Borrower
written notice of the assertion of any claim or the commencement of
any action or lawsuit described in this Section. It is the express
intention of the parties hereto that the indemnity provided for in
this Section, as well as the disclaimers of liability referred to in
this Agreement, are intended to and shall protect and indemnify Lender
from the consequences of Lender's own negligence, whether or not that
negligence is the sole or concurring cause of any liability,
obligation. loss, damage, penalty, action, judgment, suit, claim,
cost, expense or disbursement provided, however, that Borrower shall
not be required to protect and indemnify Lender from the consequences
of Lender's gross negligence, where that gross negligence is the sole
cause of the liability, obligation, loss, damage, penalty, action,
judgment, suit, claim, cost, expense or disbursement for which
indemnification or protection would otherwise be required. The
provisions of this Section shall survive the fall payment, performance
and discharge of the Obligations and the termination of this
Agreement, and shall continue thereafter in full force and effect.
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7.2 NEGATIVE COVENANTS. So long as any portion of the Obligations
remain unsatisfied, Borrower hereby covenants and agrees with Lender as
follows:
(a) LIMITATION ON OTHER DEBT/FURTHER ENCUMBRANCES.
Without the prior written consent of Lender which may be granted,
withheld or conditioned in Lender's sole discretion, Borrower will not
obtain financing or grant liens with respect to the Collateral.
Provided that such financing is in the ordinary course of Borrower's
business, Borrower may, however, obtain arms length financing in a
manner consistent with Lender's rights under this Agreement with
respect to any Units or Intervals, the Resorts or any Properties used
in connection with the Resorts, or any Notes Receivable or other
accounts receivable (whether now existing or created hereafter) other
than those included among the Collateral.
(b) RESTRICTIONS ON TRANSFERS. Except as hereinafter
specifically provided, Borrower shall not, whether voluntarily or
involuntarily, by operation of law or otherwise, (i) without obtaining
the prior written consent of Lender (which consent may be given,
withheld or conditioned by Lender in Lender's sole discretion),
transfer, sell, pledge, convey, hypothecate, factor or assign all or
any portion of the Collateral, the Encumbered Intervals, the Common
Elements relating to the Encumbered Intervals or any Resort facilities
or amenities, or contract to do any of the foregoing, including,
without limitation, pursuant to options to purchase, and so-called
"installment sales contracts", "land contracts", or "contracts for
deed", (ii) without obtaining the prior written consent of Lender
(which consent may be given, withheld or conditioned by Lender in
Lender's sole discretion), lease or license all or any portion of the
Collateral, the Encumbered Intervals, the Common Elements relating to
the Encumbered Intervals or any Resort facilities or amenities, or
change the legal or actual possession or use thereof, (iii) permit the
dilution, transfer, pledge, hypothecation or encumbrance of any
interest in Borrower without obtaining the prior written consent of
Lender (which consent shall not be unreasonably withheld), (iv) permit
the assignment, transfer, delegation, change, modification or
diminution of the duties or responsibilities of Borrower, the
Guarantor or, to the extent within the control of Borrower, of any
manager of the Resort approved by Lender as manager of the Resort
(except for an assignment of such duties to a professional management
company or companies reasonably acceptable to Lender in advance)
without obtaining the prior written consent of Lender (which consent
shall not be unreasonably withheld), or (v) without obtaining the
prior written consent of Lender (which consent may be given, withheld
or conditioned by Lender in Lender's sole discretion), cause or permit
the assignment, pledge or other encumbrance of any of the Operating
Contracts or all or any portion of Borrower's right, title or interest
in the Declaration. Without limiting the generality, of the preceding
sentence, and subject to the terms of this Agreement, the prior
written consent of Lender (as specified above) shall be required for
(A) any transfer of the Encumbered Intervals, the Common Elements
relating to the
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Encumbered Intervals or any Resort facilities or amenities or any part
thereof made to a subsidiary or Affiliate or otherwise, (B) any
transfer of all or any part of the Encumbered Intervals, the Common
Elements relating to the Encumbered Intervals or any Resort facilities
or amenities by Borrower to its stockholders or Affiliates or vice
versa, (C) any corporate merger or consolidation, disposition or other
reorganization, and (D) any change in the ownership of stock of the
Borrower that would result in a change in control of the Borrower. In
the event that Lender is willing to consent to a transfer which would
otherwise be prohibited by this Section 7.2(b) Lender may condition
its consent on such terms as it desires, including, without
limitation, an increase in the Interest Rate and the requirement that
Borrower pay a transfer fee, together with any expenses incurred by
Lender in connection with the granting of such consent (including,
without limitation, attorneys' fees and expenses). If Borrower
violates the terms of this Section 7.2(b), in addition to any other
rights or remedies which Lender may have herein, in any other Loan
Document, or at law or in equity, Lender may by written notice to
Borrower increase, effective immediately as of the date of such
violation, the Interest Rate to the Default Rate.
(c) USE OF THE LENDER'S NAME. Borrower will not, and will
not permit any Affiliate to, without the prior written consent of the
Lender, use the name of the Lender or the name of any affiliate of the
Lender in connection with any of their respective businesses or
activities, except in connection with internal business matters and as
required in dealings with governmental agencies.
(d) TRANSACTIONS WITH AFFILIATES. Without the prior
written consent of Lender which shall not unreasonably be withheld,
Borrower will not enter into any transaction with any Affiliate in
connection with the Resorts, including, without limitation, relating
to the purchase, sale or exchange any assets or properties or the
rendering of any service, except in the ordinary course of, and
pursuant to the reasonable requirements of, the operations of the
Resorts and upon fair and reasonable terms.
(e) RESTRICTIVE COVENANTS. Borrower will not without
Lender's prior written consent seek, consent to, or otherwise
acquiesce in, any change in any private restrictive covenant, planning
or zoning law or other public or private restriction, which would
limit or alter the use of the Resort.
(f) SUBORDINATED OBLIGATIONS. Borrower will not,
directly or indirectly, (i) permit any payment to be made in respect
of any indebtedness, liabilities or obligations, direct or contingent,
(the "Subordinated Debt") including without limitation, the
Subordinated Indebtedness (as defined in the Guaranty Agreement) to
any of its shareholders or their affiliates or which are subordinated
by the terms thereof or by separate instrument to the payment of
principal of, and interest on, the
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Note, except that the Borrower may make and the Subordinated Lender
may receive, accept and retain such payments so long as no Default or
Event of Default under, and as defined, in the Loan Agreement shall
have occurred and be continuing and such payments are in respect of
regularly scheduled payments of principal and/or interest under the
Subordinated Debt (the terms of which regularly scheduled payments
shall have previously been approved, in writing by the Lender in its
sole discretion) provided that in no case may the Borrower make, or
the Subordinated Lender accept, a prepayment of any principal and/or
interest in respect of the Subordinated Debt, (ii) permit the
amendment, rescission or other modification of any such subordination
provisions of any of the Borrower's subordinated obligations in such a
manner as to affect adversely the Lender's Lien in and to the
Collateral or Lender's senior priority position and entitlement as to
payment and rights with respect to the Note and the Obligations, or
(iii) permit the prepayment or redemption, except for mandatory
prepayments, of all or any part of Borrower's obligations to its
shareholders, or of any subordinated obligations of the Borrower
except in accordance with the terms of such subordination.
(g) TIMESHARE REGIME. Without Lender's prior written
consent, Borrower shall not amend, modify or terminate the
Declarations or other Timeshare Documents, or any other restrictive
covenants, agreements or easements regarding the Resorts (except for
routine non-substantive modifications which have no impact on the
Collateral); nor shall Borrower assign its rights as "developer" under
the Declarations without Lender's prior written consent, or file or
permit to be filed any additional covenants, conditions, easements or
restrictions against or affecting the Resorts (or any portion thereof)
without Lender's prior written consent, which consent shall not be
unreasonably withheld.
(h) NAME CHANGE. Borrower will not change its name.
(i) COLLATERAL. Borrower shall not take any action (nor
permit or consent to the taking of any action) which might impair the
value of the Collateral or any of the rights of Lender in the
Collateral, nor shall Borrower cause or permit any amendment to or
modification of the form or terms of any of the Pledged Notes
Receivable, Mortgages or, except as specifically provided hereinabove,
the other Timeshare Documents.
(j) MARKETING/SALES. Borrower shall not market, attempt to
sell or sell or permit or justify any sales or attempted sales of any
Intervals except in compliance with the Timeshare Act and applicable
laws in state and other jurisdictions where marketing, sales or
solicitation activities occur.
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SECTION 8 -- EVENTS OF DEFAULT
8.1 NATURE OF EVENTS. An "Event of Default" shall exist if any of
the following shall occur:
(a) PAYMENTS. If Borrower shall fail to make, as and when
due, any payment or mandatory prepayment of principal, interest, fees
or other amounts with respect to the Loan and such failure shall
continue for five (5) days after notice of such failure is provided by
Lender.
(b) COVENANT DEFAULTS. If Borrower shall fail to perform
or observe any covenant, agreement or warranty contained in this
Agreement or in any of the Loan Documents, (other than with respect to
the failure to make timely payments in respect of the Loan as provided
in Section 8.1(a) or violation of any negative covenants in Section
7.2) and, such failure shall continue for fifteen (15) days after
notice of such failure is provided by Lender, provided however, that
if Borrower commences to cure such failure within such 10 day period,
but, because of the nature of such failure, cure cannot be completed
within 10 days notwithstanding diligent effort to do so, then,
provided Borrower diligently seeks to complete such cure, an Event of
Default shall not result unless such failure continues for a total of
thirty (30) days.
(c) WARRANTIES OR REPRESENTATIONS. If any representation
or other statement made by or on behalf of Borrower or Guarantor in
this Agreement, in any of the Loan Documents or in any instrument
furnished in compliance with or in reference to the Loan Documents, is
false, misleading or incorrect in any material respect as of the date
made or reaffirmed.
(d) ENFORCEABILITY OF LIENS. If any lien or security
interest granted by Borrower to Lender in connection with the Loan is
or becomes invalid or unenforceable or is not, or ceases to be, a
perfected first priority lien or security interest in favor of Lender
encumbering the asset to which it is intended to encumber, and
Borrower fails to cause such lien or security interest to become a
valid, enforceable, first and prior lien or security interest in a
manner satisfactory to Lender within ten (10) days after Lender
delivers written notice thereof to Borrower.
(e) INVOLUNTARY PROCEEDINGS. If a case is commenced or a
petition is filed against Borrower or Guarantor under any Debtor
Relief Law; a receiver, liquidator or trustee of Borrower or Guarantor
or of any material asset of Borrower or Guarantor is appointed by
court order and such order remains in effect for more than forty-five
(45) days; or if any material asset of Borrower or Guarantor is
sequestered by court order and such order remains in effect for more
than forty-five (45) days.
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(f) PROCEEDINGS. If either Borrower or Guarantor
voluntarily seek, consent to or acquiesce in the benefit of any
provision of any Debtor Relief Law, whether now or hereafter in
effect; consent to the filing of any petition against it under such
law; make an assignment for the benefit of its creditors; admit in
writing its inability to pay its debts generally as they become due;
or consents or suffers to the appointment of a receiver, trustee,
liquidator or conservator for it, him or her or any part of its, his
or her assets.
(g) ATTACHMENT, JUDGMENT, TAX LIENS. The issuance,
filing, levy or seizure against the Collateral, or, with respect to
the Resort or the Obligations, against the Borrower or the Guarantor,
of one or more attachments, injunctions, executions, tax liens or
judgments for the payment of money cumulatively in excess of $50,000,
which is not discharged in full or stayed within thirty (30) days
after issuance or filing.
(h) FAILURE TO DEPOSIT PROCEEDS. If Borrower shall fail
to deliver payments made under the Pledged Notes Receivable directly
to Lender as required pursuant to Section 2.3 above, or if Borrower
shall take any other act which Lender shall deem to be a conversion of
the Collateral or fraudulent with respect to Lender.
(i) TIMESHARE DOCUMENTS. If the Declaration, any of the
other documents creating or governing the Resort, its timeshare
regime, or the Timeshare Owners' Association, or the restrictive
covenants with respect to the Resort, shall be terminated, amended or
modified without Lender's prior written consent (except for routine
non-substantive modifications which have no impact on the Collateral).
(j) REMOVAL OF COLLATERAL. If Borrower conceals, removes,
transfers, conveys, assigns or permits to be concealed, removed,
transferred, conveyed or assigned, any of the Collateral in violation
of the terms of the Loan Documents or with the intent to hinder, delay
or defraud its creditors or any of them including, without limitation,
Lender.
(k) OTHER DEFAULTS. If a material default shall occur in
any of the covenants or Obligations set forth in any of the Loan
Documents.
(l) MATERIAL ADVERSE CHANGE. Any material adverse change
in the financial condition of the Borrower or the Guarantor or in the
condition of the Collateral. For purposes of this provision, a decline
in the net worth of the Borrower of $100,000.00 or less shall not be
considered a material adverse change.
(m) DEATH OR DISABILITY OF XXXXXX XXXX OR DEFAULT OF
GUARANTOR. (i) Death or disability of Xxxxxx Xxxx, unless within
ninety (90) days thereafter Borrower provides Lender with written
information setting forth the replacement management personnel of
Borrower together with a description of those Persons'
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experience, ability and reputation, and Lender, acting in good faith,
determines that the replacement management personnel's experience,
ability and reputation is equal to or greater than that of the
Borrower prior to such death or disability; or (ii) Any default under
the Guaranty Agreement or the revocation or attempted revocation or
repudiation thereof, in whole or part, by the Guarantor; or (iii)
except with Lender's prior written consent, which consent shall not be
unreasonably withheld, any change in the ownership structure of the
corporate Guarantor, or in the Guarantor's administrative,
operational, management or marketing responsibilities with respect to
the Borrower or the Resort.
(n) DEFAULT BY BORROWER IN OTHER AGREEMENTS. Any default
by the Borrower (i) in the payment of any indebtedness to Lender; (ii)
in the payment or performance of other indebtedness for borrowed money
or obligations secured by any part of the Resort; or (iii) in the
payment or performance of other material indebtedness or obligations
(material indebtedness or obligations being defined for purposes of
this provision as any indebtedness or obligation in excess of $50,000)
where such default accelerates or permits the acceleration (after the
giving of notice or passage of time or both) of the maturity of such
indebtedness, or permits the holders of such indebtedness to elect a
majority of the board of directors of Borrower (whether or not such
default[s] have been waived by such holder).
(o) LOSS OF LICENSE. The loss, revocation or failure to
renew or file for renewal of any registration, approval, license,
permit or franchise now held or hereafter acquired by the Borrower or
with respect to any Resort, or the failure to pay any fee, which is
necessary for the continued operation of any Resort or the Borrower's
business in the same manner as it is being conducted at the time of
such loss, revocation, failure to renew or failure to pay.
(p) SUSPENSION OF SALES. The issuance of any stay order,
cease and desist order, injunction, temporary restraining order or
similar judicial or nonjudicial sanction limiting or otherwise
materially adversely affecting any Interval sales activities, other
business operations in respect of the Resorts, or the enforcement of
Lender's remedies.
(q) VIOLATION OF NEGATIVE COVENANTS. Borrower violates
any negative covenants set forth in Section 7.2.
SECTION 9 -- REMEDIES
9.1 REMEDIES UPON DEFAULT. Should an Event of Default occur,
Lender may take any one or more of the actions described in this Section 9, all
without notice to Borrower:
(a) ACCELERATION. Without demand or notice of any nature
whatsoever, declare the unpaid balance of the Loan, or any part
thereof, immediately due and payable, whereupon the same shall be due
and payable.
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(b) TERMINATION OF OBLIGATION TO ADVANCE. Terminate any
commitment of Lender to lend under this Agreement in its entirety, or
any portion of any such commitment, to the extent Lender shall deem
appropriate, all without notice to Borrower
(c) JUDGMENT. Reduce Lender's claim to judgment,
foreclose or otherwise enforce Lender's security interest in all or
any part of the Collateral by any available judicial or other
procedure under law.
(d) SALE OF COLLATERAL. After notification, if any,
provided for in Section 9.2 below, sell or otherwise dispose of, at
the office of Lender, or elsewhere, as chosen by Lender, all or any
part of the Collateral, and any such sale or other disposition may be
as a unit or in parcels, by public or private proceedings, and by way
of one or more contracts (it being agreed that the sale of any part of
the Collateral shall not exhaust Lender's power of sale, but sales may
be made from time to time until all of the Collateral has been sold or
until the Obligations have been paid in full and fully performed), and
at any such sale it shall not be necessary to exhibit the Collateral.
Borrower and the Guarantor hereby acknowledge and agree that a private
sale or sales of the Collateral, after notification as provided for in
Section 9.2, shall constitute a commercially reasonable disposition of
the Collateral sold at any such sale or sales, and otherwise,
commercially reasonable action on the part of the Lender.
(e) RETENTION OF COLLATERAL. At its discretion, retain
such portion of the Collateral as shall aggregate in value to an
amount equal to the Loan, in satisfaction of the Obligations, whenever
the circumstances are such that Lender is entitled and elects to do so
under applicable law.
(f) RECEIVER. Apply by appropriate judicial proceedings
for appointment of a receiver for the Collateral, or any part thereof,
and Borrower hereby consents to any such appointment.
(g) PURCHASE OF COLLATERAL. Buy the Collateral at any
public or private sale.
(h) EXERCISE OF OTHER RIGHTS. Lender shall have all the
right and remedies of a secured party under the Code and other legal
and equitable rights to which it may be entitled, including, without
limitation, and without notice to the Borrower, the right to continue
to collect all payments made on the Pledged Notes Receivable, and to
apply such payments to the Obligations, and to xxx in its own name the
maker of any defaulted pledged Notes Receivable. Lender may also
exercise any and all other rights or remedies afforded by any other
applicable laws or by the Loan Documents as Lender shall deem
appropriate, at law, in equity or otherwise, including, but not
limited to, the right to bring suit or other proceeding, either for
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specific performance of any covenant or condition contained in the
Loan Documents or in aid of the exercise of any right or remedy
granted to Lender in the Loan Documents. Lender shall also have the
right to require the Borrower to assemble any of the Collateral not in
Lender's possession, at Borrower's expense, and make it available to
Lender at a place to be determined by Lender which is reasonably
convenient to both parties, and Lender shall have the right to take
immediate possession of all of the Collateral, and may enter the
Resort or any of the premises of Borrower or wherever the Collateral
shall be located, with or without process of law wherever the
Collateral may be, and, to the extent such premises are not the
property of Lender, to keep and store the same on said premises until
sold (and if said premises be the property of Borrower, Borrower
agrees not to charge Lender for use and occupancy, rent, or storage of
the Collateral, for a period of at least ninety (90) days after sale
or disposition of the Collateral).
9.2 NOTICE OF SALE. Reasonable notification of time and place of
any public sale of the Collateral or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made shall be sent to Borrower and to any other person entitled under the Code
to notice; provided, however, that if the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender may sell or otherwise dispose of the Collateral without notification,
advertisement or other notice of any kind. It is agreed that notice sent not
less than five (5) calendar days prior to the taking of the action to which
such notice relates is reasonable notification and notice for the purposes of
this Section 9.2. Lender shall have the right to bid at any public or private
sale on its own behalf. Out of money arising from any such sale, Lender shall
retain an amount equal to all costs and charges, including attorneys' fees for
advice, counsel or other legal services or for pursuing, reclaiming, seeking to
reclaim, taking, keeping, removing, storing and advertising such Collateral for
sale, selling same and any and all other charges and expenses in connection
therewith and in satisfying any prior Liens thereon. Any balance shall be
applied upon the Obligations, and in the event of deficiency, the Borrower
shall remain liable to Lender. In the event of any surplus, such surplus shall
be paid to the Borrower or to such other Persons as may be legally entitled to
such surplus. If, by reason of any suit or proceeding of any kind, nature or
description against the Borrower, or by the Borrower or any other party against
Lender, which in Lender's sole discretion makes it advisable for Lender to seek
counsel for the protection and preservation of its security interest, or to
defend its own interest, such expenses and counsel fees shall be allowed to
Lender and the same shall be made a further charge and Lien upon the
Collateral.
In view of the fact that federal and state securities laws may
impose certain restrictions on the methods by which a sale of Collateral
comprised of Securities may be effected after an Event of Default, Borrower
agrees that upon the occurrence or existence of an Event of Default, Lender
may, from time to time, attempt to sell all or any part of such Collateral by
means of a private placement restricting the bidding and prospective
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purchasers to whose who will represent and agree that they are purchasing for
investment only and not for, or with a view to, distribution. In so doing,
Lender may solicit offers to buy such Collateral, or any part of it for cash,
from a limited number of investors deemed by Lender, in its reasonable judgment,
to be responsible parties who might be interested in purchasing the Collateral
and if Lender solicits such offers from not less than two (2) such investors,
then the acceptance by Lender of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposition of such
Collateral.
9.3 APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS. Upon the
occurrence of any Event of Default, Lender may, with or without proceeding with
such sale or foreclosure or demanding payment or performance of the
Obligations, without notice, terminate Lender's further performance under this
Agreement or any other agreement or agreements between Lender and the Borrower,
without further liability or obligation by Lender, and may also, at any time,
appropriate and apply on any Obligations any and all Collateral in its (or the
Lockbox Agent's) possession, any and all balances, credits, deposits, account,
reserves, indebtedness or other moneys due or owing to the Borrower held by
Lender hereunder or under any other financing agreement or otherwise, whether
accrued or not. Neither such termination, nor the termination of this Agreement
by lapse of time, the giving of notice or otherwise, shall absolve, release or
otherwise affect the liability of the Borrower in respect of transactions prior
to such termination, or affect any of the Liens, security interests, rights,
powers and remedies of Lender, but they shall, in all events, continue until
all of the Obligations are satisfied.
9.4 RIGHTS OF LENDER REGARDING COLLATERAL. In addition to all
other rights possessed by Lender, Lender, at its option, may from time to time
after there shall have occurred an Event of Default, and so long as such Event
of Default remains uncured, at its sole discretion, take the following actions:
(a) Transfer all or any part of the Collateral into the
name of Lender or its nominee;
(b) Take control of any proceeds of any of the
Collateral;
(c) Extend or renew the Loan and grant releases,
compromises or indulgences with respect to the Obligations, any
portion thereof, any extension or renewal thereof, or any security
therefor, to any obligor hereunder or thereunder; and
(d) Exchange certificates or instruments representing or
evidencing the Collateral for certificates or instruments of smaller
or larger denominations for any purpose consistent with the terms of
this Agreement.
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9.5 DELEGATION OF DUTIES AND RIGHTS. Lender may execute any of its
duties and/or exercise any of its rights or remedies under the Loan Documents
by or through its officers, directors, employees, attorneys, agents or other
representatives.
9.6 LENDER NOT IN CONTROL. None of the covenants or other
provisions contained in this Agreement or in any Loan Document shall give
Lender the right or power to exercise control over the affairs and/or
management of Borrower.
9.7 WAIVERS. The acceptance by Lender at any time and from time to
time of partial payments of the Loan or performance of the Obligations shall
not be deemed to be a waiver of any Event of Default then existing. No waiver
by Lender of any Event of Default shall be deemed to be a waiver of any other
or subsequent Event of Default. No delay or omission by Lender in exercising
any right or remedy under the Loan Documents shall impair such right or remedy
or be construed as a waiver thereof or an acquiescence therein, nor shall any
single or partial exercise of any such right or remedy preclude other or
further exercise thereof, or the exercise of any other right or remedy under
the Loan Documents or otherwise. Further, except as otherwise expressly
provided in this Agreement or by applicable law, Borrower and each and every
surety, endorser, guarantor and other party liable for the payment or
performance of all or any portion of the Obligations, severally waive notice of
the occurrence of any Event of Default, presentment and demand for payment,
protest, and notice of protest, notice of intention to accelerate, acceleration
and nonpayment, and agree that their liability shall not be affected by any
renewal or extension in the time of payment of the Loan, or by any release or
change in any security for the payment or performance of the Loan, regardless
of the number of such renewals, extensions, releases or changes.
9.8 CUMULATIVE RIGHTS. All rights and remedies available to Lender
under the Loan Documents shall be cumulative of and in addition to all other
rights and remedies granted to Lender under any of the Loan Document, at law or
in equity, whether or not the Loan is due and payable and whether or not Lender
shall have instituted any suit for collection or other action in connection
with the Loan Documents.
9.9 EXPENDITURES BY LENDER. Any sums expended by or on behalf of
Lender pursuant to the exercise of any right or remedy provided herein shall
become part of the Obligations and shall bear interest at the Default Rate,
from the date of such expenditure until the date repaid.
9.10 DIMINUTION IN VALUE OF COLLATERAL. Lender shall not have any
liability or responsibility whatsoever for any diminution or loss in value of
any of the Collateral, specifically including that which may arise from
Lender's negligence or inadvertence, whether such negligence or inadvertence is
the sole or concurring cause of any damage, but specifically excluding any
diminution or loss in value which is actually and proximately
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caused by Lender's failure to retain the Pledged Notes Receivable in a
fire-resistant filing cabinet as provided in Section 3.6 above.
SECTION 10 -- CERTAIN RIGHTS OF LENDER
10.1 PROTECTION OF COLLATERAL. Lender may at any time and from time
to time take such actions as Lender deems necessary or appropriate to protect
Lender's Liens and security interests in and to preserve the Collateral, and to
establish, maintain and protect the enforceability of Lender's rights with
respect thereto, all at the expense of Borrower. Borrower agrees to cooperate
fully with all of Lender's efforts to preserve the Collateral and Lender's
Liens, security interests and rights and will take such actions to preserve the
Collateral and Lender's Liens, security interests and rights as Lender may
direct, including, without limitation, by promptly paying upon Lender's demand
therefor, all documentary stamp taxes or other taxes that may be or may become
due in respect of any of the Collateral. All of Lender's expenses of
preserving the Collateral and its liens and security interests and rights
therein shall be added to the Loan.
10.2 PERFORMANCE BY LENDER. If Borrower fails to perform any
agreement contained herein, Lender may itself perform or cause the performance
of, such agreement, and the expenses of Lender incurred in connection therewith
shall be payable by Borrower under Section 10.5 below. In no event, however,
shall Lender have any obligation or duties whatsoever to perform any covenant
or agreement of Borrower contained herein or in any of the Loan Documents,
Timeshare Documents or Operating Contracts, and any such performance by Lender
shall be wholly discretionary with Lender. The performance by Lender, of any
agreement or covenant of Borrower on any occasion shall not give rise to any
duty on the part of Lender to perform any such agreements or covenants on any
other occasion or at any time. In addition, Borrower acknowledges that Lender
shall not at any time or under any circumstances whatsoever have any duty to
Borrower or to any third party to exercise any of Lender's rights or remedies
hereunder.
10.3 NO LIABILITY OF LENDER. Neither the acceptance of this
Agreement by Lender, nor the exercise of any rights hereunder by Lender, shall
be construed in any way as an assumption by Lender of any obligations,
responsibilities or duties of Borrower arising in connection with any Resort or
under the Timeshare Documents or Timeshare Acts, or under any of the Operating
Contracts, or in connection with any other business of Borrower, or the
Collateral, or otherwise bind Lender to the performance of any obligations with
respect to any Resort or the Collateral; it being expressly understood that
Lender shall not be obligated to perform, observe or discharge any obligation,
responsibility, duty, or liability of Borrower with respect to any Resort or
any of the Collateral, or under any of the Timeshare Documents, the Timeshare
Acts or under any of the Operating Contracts, including, but not limited to,
appearing in or defending any action, expending any money or incurring any
expense in connection therewith. Without limitation of the foregoing, neither
this
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Agreement, any action or actions on the part of Lender taken hereunder, nor the
acquisition of the Pledged Notes Receivable and the Mortgages by Lender prior
to or following the occurrence of an Event of Default shall constitute an
assumption by Lender of any obligations of Borrower with respect to any Resort
or the Pledged Notes Receivable, the Mortgages or any documents or instruments
executed in connection therewith, and Borrower shall continue to be liable for
all of its obligations thereunder or with respect thereto. Borrower agrees to
indemnify, protect, defend and hold Lender harmless from and against any and
all claims, demands, causes of action, losses, damages, liabilities, suits,
costs and expenses, including, without limitation, attorneys' fees and court
costs, asserted against or incurred by Lender by reason of, arising out of, or
connected in any way with (i) any failure or alleged failure of Borrower to
perform any of its covenants or obligations with respect to each Resort or to
the Purchasers of any of the Intervals, (ii) a breach of any certification,
representation, warranty or covenant of Borrower set forth in any of the Loan
Documents, (iii) the ownership of the Pledged Notes Receivable, the Mortgages
and the rights, titles and interests assigned hereby, or intended so to be,
(iv) the debtor-creditor relationships between Borrower on the one hand, and
the Purchasers or Lender, as the case may be, on the other, or (v) the Pledged
Notes Receivable, the Mortgages or the operation of the Resorts or sale of
Intervals. The obligations of Borrower to indemnify, protect, defend and hold
Lender harmless as provided in this Agreement are absolute, unconditional,
present and continuing, and shall not be dependent upon or affected by the
genuineness, validity, regularity, or enforceability of any claim, demand or
suit from which Lender is indemnified. The indemnity provisions in this Section
10.3 shall survive the satisfaction of the Obligations and termination of this
Agreement, and remain binding and enforceable against the Borrower, or its
successors or assigns. Borrower hereby waives all notices with respect to any
losses, damages, liabilities, suits, costs and expenses, and all other demands
whatsoever hereby indemnified, and agrees that its obligations under this
Agreement shall not be affected by any circumstances, whether or not referred
to above, which might otherwise constitute legal or equitable discharges of its
obligations hereunder.
10.4 RIGHT TO DEFEND ACTION AFFECTING SECURITY. Lender may, at
Borrower's expense, appear in and defend any action or proceeding at law or in
equity which Lender in good faith believes may affect the security interests
granted under this Agreement, including without limitation, with respect to
Pledged Notes Receivables or Mortgages, the value of the Collateral or Lender's
rights under any of the Loan Documents.
10.5 EXPENSES. All expenses payable by Borrower, under any
provision of this Agreement shall be an Obligation of the Borrower and shall be
paid by Borrower to Lender, upon demand, and shall bear interest at the Default
Rate from the date of expense until repaid by Borrower.
10.6 LENDER'S RIGHT OF SET-OFF. Lender shall have the right to
set-off against any Collateral any Obligations then due and unpaid by Borrower.
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10.7 NO WAIVER. No failure or delay on the part of Lender in
exercising any right, remedy or power under this Agreement or in giving or
insisting upon strict performance by Borrower hereunder or in giving notice
hereunder shall operate as a waiver of the same or any other power or right,
and no single or partial exercise of any such power or right shall preclude any
other or further exercise thereof or the exercise of any other such power or
right. Lender, notwithstanding any such failure, shall have the right
thereafter to insist upon the strict performance by Borrower of any and all of
the terms and provisions of this Agreement to be performed by Borrower. The
collection and application of proceeds, the entering and taking possession of
the Collateral, and the exercise of the rights of Lender contained in the Loan
Documents and this Agreement shall not cure or waive any default, or affect any
notice of default or invalidate any acts done pursuant to such notice. No
waiver by Lender of any breach or default of or by any party hereunder shall be
deemed to alter or affect Lender's right hereunder with respect to any prior or
subsequent default.
10.8 RIGHT OF LENDER TO EXTEND TIME OF PAYMENT SUBSTITUTE, RELEASE
SECURITY, ETC. Without affecting the liability of any Person or entity
including without limitation, any Purchasers, for the payment of any of the
Obligations or without affecting or impairing Lender's Lien on the Collateral,
or the remainder thereof, as security for the full amount of the Loan unpaid
and the Obligations, Lender may from time to time, without notice: (a) release
any Person liable for the payment of the Loan, (b) extend the time or otherwise
alter the terms of payment of the Loan, (c) accept additional security for the
Obligations of any kind, including deeds of trust or mortgages and security
agreements, (d) alter, substitute or release any property securing the
Obligations, (e) realize upon any collateral for the payment of all or any
portion of the Loan in such order and manner as it may deem fit, or (f) join in
any subordination or other agreement affecting this Agreement or the lien or
charge thereof.
10.9 ASSIGNMENT OF LENDER'S INTEREST. Lender shall have the right
to assign the Loan and all or any portion of its rights in or pursuant to this
Agreement or any of the Loan Documents to any subsequent holder or holders of
the Note or the Obligations.
10.10 NOTICE TO PURCHASER. The Borrower authorizes any of the
Lender, the Lockbox Agent or Servicing Agent (but none of the Lender, the
Lockbox Agent nor Servicing Agent shall be obligated) to communicate at any
time and from time to time with any Purchaser or any other Person primarily or
secondarily liable under a Pledged Note Receivable with regard to the Lien of
the Lender thereon and any other matter relating thereto, and by no later than
the Closing Date, Borrower shall deliver to Lender a notification to the
Purchasers executed in blank by the Borrower and in form acceptable to Lender,
pursuant to which the Purchasers (or other obligors) may be directed to remit
all payments in respect of the Collateral as Lender may require.
10.11 COLLECTION OF THE NOTES. Borrower hereby directs and authorizes
each party liable for the payment of the Pledged Notes Receivable, and by no
later than the Closing
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Date shall direct in writing each such party, to pay each installment thereon
to Lockbox Agent pursuant to the Lockbox Agreement, unless and until directed
otherwise by written notice from Lender or, at Lender's direction, from
Borrower, after which such parties are and shall be directed to make all
further payments on the Pledged Notes Receivable in accordance with the
directions of Lender. Following the occurrence of an Event of Default, Lender
shall have the right to require that all payments becoming due under the
Pledged Notes Receivable be paid directly to Lender, and Lender is hereby
authorized to receive, collect, hold and apply the same in accordance with the
provisions of this Agreement. In the event that following the occurrence of an
Event of Default, Lender or Lockbox Agent does not receive any installment of
principal or interest due and payable under any of the Pledged Notes Receivable
on or prior to the date upon which such installment becomes due, Lender may, at
its election (but without any obligation to do so), give or cause Lockbox Agent
to give notice of such default to the defaulting party or parties, and Lender
shall have the right (but not the obligation), subject to the terms of such
Notes, to accelerate payment of the unpaid balance of any of the Pledged Notes
Receivable in default and to foreclose each of the Mortgages securing the
payment thereof, and to enforce any other remedies available to the holder of
such Pledged Notes Receivable with respect to such default. Borrower hereby
further authorizes, directs and empowers Lender (and Lockbox Agent or any other
Person as may be designated by Lender in writing) to collect and receive all
checks and drafts evidencing such payments and to endorse such checks or drafts
in the name of Borrower and upon such endorsements, to collect and receive the
money therefor. The right to endorse checks and drafts granted pursuant to the
preceding sentence is irrevocable by Borrower, and the banks or banks paying
such checks or drafts upon such endorsements, as well as the signers of the
same, shall be as fully protected as though the checks or drafts have been
endorsed by Borrower.
10.12 POWER OF ATTORNEY. Borrower does hereby irrevocably constitute
and appoint Lender as Borrower's true and lawful agent and attorney-in-fact,
with full power of substitution, for Borrower and in Borrower's name, place and
stead, or otherwise, to (a) endorse any checks or drafts payable to Borrower in
the name of Borrower and in favor of Lender as provided in Section 10.11 above,
(b) to demand and receive from time to time any and all property, rights,
titles, interests and liens hereby sold, assigned and transferred, or intended
so to be, and to give receipts for same, (c) from time to time to institute and
prosecute in Lender's own name any and all proceedings at law, in equity, or
otherwise, that Lender may deem proper in order to collect, assert or enforce
any claim, right or title, of any kind, in and to the property, rights, titles,
interests and liens hereby sold, assigned or transferred, or intended so to be,
and to defend and compromise any and all actions, suits or proceedings in
respect of any of the said property, rights, titles, interests and liens, (d)
upon an Event of Default to change the Borrower's post office mailing address,
and (e) generally to do all and any such acts and things in relation to the
Collateral as Lender shall in good xxxxx xxxx advisable. Borrower hereby
declares that the appointment made and the powers granted pursuant to this
Section 10.12 are coupled with an interest and are and shall be irrevocable by
Borrower in any manner, or for any reason, unless and until a
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release of the same is executed by Lender and duly recorded in the appropriate
public records of Dallas County, Texas.
10.13 RELIEF FROM AUTOMATIC STAY, ETC. To the fullest extent
permitted by law, in the event the Borrower or Guarantor shall make application
for or seek relief or protection under the federal bankruptcy code ("Bankruptcy
Code") or other Debtor Relief Laws, or in the event that any involuntary
petition is filed against the Borrower or Guarantor under such Code or other
Debtor Relief Laws, and not dismissed with prejudice within 45 days, the
automatic stay provisions of Section 362 of the Bankruptcy Code are hereby
modified as to Lender to the extent necessary to implement the provisions
hereof permitting set-off and the filing of financing statements or other
instruments or documents; and Lender shall automatically and without demand or
notice (each of which is hereby waived) be entitled to immediate relief from
any automatic stay imposed by Section 362 of the Bankruptcy Code or otherwise,
on or against the exercise of the rights and remedies otherwise available to
Lender as provided in the Loan Documents. In addition, in the event relief is
sought by or against Guarantor under the Bankruptcy Code, such Guarantor agrees
to not seek, directly or indirectly, in any ensuing bankruptcy proceeding, any
extension of the exclusivity period otherwise available to a debtor under the
Bankruptcy Code, including, without limitation, the exclusivity period provided
for under Section 1121(b) of the Bankruptcy Code. Guarantor agrees not to
contest the validity or enforceability of this Section.
SECTION 11 -- TERM OF AGREEMENT
This Agreement shall continue in full force and effect and the
security interests granted hereby and the duties, covenants and liabilities of
the Borrower hereunder and all the terms, conditions and provisions hereof
relating thereto shall continue to be fully operative until all of the
Obligations have been satisfied in full. The Borrower expressly agrees that if
either the Borrower or the Guarantor makes a payment to the Lender, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, or otherwise required to be repaid to a trustee,
receiver or any other party under any Debtor Relief Laws, state or federal law,
common law or equitable cause, then to the extent of such repayment, the
Obligations or any part thereof intended to be satisfied and the liens provided
for hereunder securing the same shall be revived and continued in full force
and effect as if said payment had not been made.
SECTION 12 -- MISCELLANEOUS
12.1 NOTICES. All notices, requests and other communications to
either party hereunder shall be in writing and shall be given to such party at
its address set forth below or at such other address as such party may
hereafter specify for the purpose of notice to Lender or Borrower. Each such
notice, request or other communication shall be effective
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(a) if given by mail, when such notice is deposited in the United States Mail
with first class postage prepaid, addressed as aforesaid, provided that such
mailing is by registered or certified mail, return receipt requested, (b) if
given by overnight delivery, when deposited with a nationally recognized
overnight delivery service such as Federal Express or Airborne with all fees
and charges prepaid, addressed as provided below, or (c) if given by any other
means, when delivered at the address specified in this Section 12.1.
IF TO BORROWER: Ascension Resorts, Ltd.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Mr. Xxxxxx Xxxx, CEO
WITH A COPY TO: Meadows, Owens, Collier, Reed, Cousins and Blau
3700 Nations Bank Plaza
000 Xxxx Xx.
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
IF TO LENDER: Textron Financial Corporation
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Collections
WITH A COPY TO: Textron Financial Corporation
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000
Attention: Vice President - Law
AND TO: Textron Financial Corporation
000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Vice President
Notwithstanding the foregoing, copies of the requests or notices from
Borrower to Lender which are specified in the Sections of this Agreement listed
below shall not be delivered to Providence, Rhode Island as provided above, but
rather shall be delivered in accordance with this Section 12.1 to Textron
Financial Corporation, 000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxxxxx, Vice President. The
applicable Sections of this Agreement are Section 2.4(a) Voluntary Prepayments,
Section 5(a) Request for Advances, and Section 12.10 Return of Notes
Receivable. In addition, all documents, instruments and other items to be
delivered to Lender from time to time pursuant to this Agreement shall be
delivered to Lender's office at 000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxx,
Xxxxxxxxxxx 00000.
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12.2 SURVIVAL. All representations, warranties, covenants and
agreements made by Borrower herein, in the other Loan Documents or in any other
agreement, document, instrument or certificate delivered by or on behalf of
Borrower under or pursuant to the Loan Documents shall be considered to have
been relied upon by Lender and shall survive the delivery to Lender of such
Loan Documents (and each part thereof), regardless of any investigation made
by or on behalf of Lender.
12.3 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(EXCEPT AS MAY BE EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND,
EXCLUSIVE OF ITS CHOICE OF LAWS PRINCIPLES.
12.4 LIMITATION ON INTEREST. Lender and Borrower intend to comply
at all times with applicable usury laws. All agreements between Lender and
Borrower, whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by reason of demand
or acceleration of the maturity of the Note or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to Lender exceed
the highest lawful rate permissible under applicable usury laws. If, from any
circumstance whatsoever fulfillment of any provision hereof, of the Note or of
any other Loan Documents shall involve transcending the limit of such validity
prescribed by any law which a Court of Competent jurisdiction may deem
applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if from any circumstance Lender
shall ever receive anything of value deemed interest by applicable law which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal of the Loan and not
to the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal of the Loan, such excess shall be refunded to Borrower. All
interest paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full period until payment in full of the principal so that the interest on the
Loan for such full period shall not exceed the highest lawful rate. Borrower
agrees that in determining whether or not any interest payment under the Loan
Documents exceeds the highest lawful rate, any non-principal payment (except
payments specifically described in the Loan Documents as "interest") including
without limitation, prepayment fees and late charges, shall to the maximum
extent not prohibited by law, be an expense, fee, premium or penalty rather
than interest. Lender hereby expressly disclaims any intent to contract for,
charge or receive interest in an amount which exceeds the highest lawful rate.
The provisions of the Note, this Agreement, and all other Loan Documents are
hereby modified to the extent necessary to conform with the limitations and
provisions of this Section, and this Section shall govern over all other
provisions in any document or agreement now or hereafter existing. This Section
shall never be superseded or waived unless there is a written document executed
by the Lender and the Borrower, expressly declaring the usury
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limitation of this Agreement to be null and void, and no other method or
language shall be effective to supersede or waive this paragraph.
12.5 INVALID PROVISIONS. If any provision of this Agreement or any
of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws effective during the term thereof, such provision
shall be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of this Agreement and/or
the Loan Documents (as the case may be) a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
12.6 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns; provided that Borrower may not
transfer or assign any of its rights or obligations under this Agreement, the
Commitment or the other Loan Documents without the prior written consent of
Lender. This Agreement and the transactions provided for or contemplated
hereunder or under any of the Loan Documents are intended solely for the
benefit of the parties hereto. No third party shall have any rights or derive
any benefits under or with respect to this Agreement, the Commitment or the
other Loan Documents except as provided in advance in a writing signed on
behalf of Lender.
12.7 AMENDMENT. This Agreement may not be amended or modified, and
no term or provision hereof may be waived, except by written instrument signed
by the parties hereto.
12.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were on the same instrument. This
Agreement shall become effective upon Lender's receipt of one or more
counterparts hereof signed by Borrower and Lender.
12.9 LENDER NO FIDUCIARY. The relationship between Borrower and
Lender is solely that of debtor and creditor, and Lender has no fiduciary or
other special relationship with Borrower, and no term or provision of any of
the Loan Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.
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12.10 RETURN OF NOTES RECEIVABLE.
(a) In the event Borrower complies with its Obligations
under Section 2.4(b) of this Agreement with respect to Pledged Notes
Receivable that cease to be Eligible Notes Receivable, and Borrower
thereafter desires to enforce such ineligible Note Receivable against
the Purchaser thereof, then provided that no Event of Default has
occurred which has not been cured to Lender's satisfaction (as
evidenced by a written acceptance of such cure executed by Lender),
and no event has occurred which with notice, the passage of time or
both, would constitute an Event of Default, then within thirty (30)
days after its receipt of a written request from Borrower, Lender
shall endorse the ineligible Note Receivable "Pay to the order of
Ascension Resorts, Ltd., without recourse," and deliver such
ineligible Note Receivable to Borrower.
(b) In the event that all Obligations hereunder are fully
satisfied, then within a reasonable thereafter, Lender shall endorse
the Pledged Notes Receivable "Pay to the order of Ascension Resorts,
Ltd. without recourse", and deliver such Pledged Notes Receivable,
together with any other nonrecourse Collateral reassignment documents
requested and prepared by Borrower, at Borrower's sole cost and
expense. In addition, if requested by Borrower in its written request,
Lender shall execute and deliver to Borrower UCC-3 termination
statements covering the ineligible Note Receivable being returned to
Borrower, provided that such termination statements are limited to the
specific ineligible Notes Receivable being released, are prepared by
Borrower at Borrower's sole cost and expense.
12.11 ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be determined or made in
accordance with GAAP consistently applied at the time in effect, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
12.12 TOTAL AGREEMENT. This Agreement and the other Loan Documents,
including the Exhibits and Schedules to them, is the entire agreement between
the parties relating to the subject matter hereof, incorporates or rescinds all
prior agreements and understandings between the parties hereto relating to the
subject matter hereof, cannot be changed or terminated orally or by course of
conduct, and shall be deemed effective as of the date it is accepted by the
Lender at the offices set forth above.
12.13 LITIGATION. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE BORROWER, THE GUARANTOR AND LENDER
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO A
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TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY ANY
RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN,
WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OR ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY. EACH OF THE BORROWER, GUARANTOR
AND LENDER FURTHER WAIVES ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION
IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY
TRIAL CANNOT OR HAS NOT BEEN WAIVED. FURTHER, THE BORROWER AND GUARANTOR HEREBY
CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER, NOR LENDER'S COUNSEL, HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF
SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
THE BORROWER AND THE GUARANTOR ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION
ARE A MATERIAL INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
The waiver and stipulations of the Borrower, the Guarantor,
and Lender in this Section 12.13 shall survive the final payment or performance
of all of the Obligations of the Borrower and the resulting termination of this
Agreement.
12.14 INCORPORATION OF EXHIBITS. This Agreement, together with all
Exhibits and Schedules hereto, constitute one document and agreement which is
referred to herein by the use of the defined term "Agreement." Such Exhibits
and Schedules are incorporated herein as to fully set out in this Agreement.
The definitions contained in any part of this Agreement shall apply to all
parts of this Agreement.
12.15 CONSENT TO ADVERTISING AND PUBLICITY OF TIMESHARE DOCUMENTS.
The Borrower hereby consents that the Lender may issue and disseminate to the
public information describing the credit accommodation entered into pursuant to
this Agreement, including the names and addresses of Borrower and any
subsidiaries and Affiliates, the amount and a general description of the
Borrower's business.
12.16 DIRECTLY OR INDIRECTLY. Where any provision in the Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provisions shall be applicable whether such action is taken
directly or indirectly by such Person.
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12.17 HEADINGS. Section headings have been inserted in the Agreement
as a matter of convenience of reference only; such section headings are not a
part of the Agreement and shall not be used in the interpretation of this
Agreement.
12.18 GENDER AND NUMBER. Words of any gender in this Agreement shall
include each other gender and the singular shall mean the plural and vice versa
where appropriate.
IN WITNESS WHEREOF, Borrower, Lender and the Guarantor have caused
this Agreement to be duly executed and delivered effective as of the date first
above written.
BORROWER:
ASCENSION RESORTS, LTD., a Texas
limited partnership
By: Ascension Capital Corporation,
a Texas corporation, its sole
general partner
By /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
LENDER:
TEXTRON FINANCIAL CORPORATION
A Delaware corporation
By /s/ XXXXXXX X. XXXXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
GUARANTOR:
ASCENSION CAPITAL CORPORATION,
a Texas corporation
By /s/ XXXXXX X. XXXX
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
65
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STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 15th day of August,
1995 by Xxxxxx X. Xxxx, Chief Executive Officer of Ascension Capital
Corporation, a Texas corporation, sole General Partner of ASCENSION RESORTS,
LTD., a Texas limited partnership, on behalf of the partnership.
[SEAL] /s/ XXXXXX XXXXXXX
XXXXXX XXXXXXX -----------------------------------
NOTARY PUBLIC Notary Public
STATE OF TEXAS My Commission Expires
COMM. EXP. 08/14/98
STATE OF CONNECTICUT )
) ss: East Hartford
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 11th day of
September, 1995 by Xxxxxxx X. Xxxxxxxxxx, Vice President of TEXTRON FINANCIAL
CORPORATION, a Delaware Corporation, on behalf of the corporation.
/s/ XXXXX X. XXXXXX
-----------------------------------
Commissioner of the Superior Court
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 15th day of
August, 1995 by Xxxxxx X. Xxxx, Chief Executive Officer of ASCENSION CAPITAL
CORPORATION, a Texas corporation, on behalf of the corporation.
[SEAL] /s/ XXXXXX XXXXXXX
XXXXXX XXXXXXX -----------------------------------
NOTARY PUBLIC Notary Public
STATE OF TEXAS My Commission Expires
COMM. EXP. 08/14/98
66
