FORBEARANCE
AGREEMENT
THIS
FORBEARANCE AGREEMENT (this "Agreement" ) is made
as of this ____ day of February, 2007 by and among LASALLE BANK,
NATIONAL ASSOCIATION, AS TRUSTEE OF MARATHON REAL ESTATE CDO 2006-1
GRANTOR TRUST, successor-in-interest to Marathon Structured Finance
Fund L.P., a Delaware limited partnership (the
“Lender” ), SOUTH BEACH RESORTS, LLC,
a Florida limited liability company (the
“Borrower” ), FRED PAUZAR, an
individual resident of the State of Florida ("
Pauzar ") and MALCOLM WRIGHT, an individual
resident of the State of Florida (" Wright ", and
together with Pauzar, the " Principals ", and the
Principals together with Borrower, the " Borrowing
Parties ").
RECITALS
A. Lender
and Borrower are parties to that certain Loan Agreement dated as of
June 30, 2005 (the " Loan Agreement "), pursuant
to which Lender agreed to make a loan to Borrower (the "
Loan ") the sum of up to Nine Million and NO/100
Dollars ($9,000,000.00).
B.
The Loan is evidenced by that
certain Promissory Note dated June 30, 2005 (the "
Note "), and is secured by the lien of that
certain Mortgage, Assignment of Rents and Security Agreement dated
June 30, 2005 and recorded among the land records of Dade County,
Florida July 11, 2005 in Official Records Book 23557, Page 3073
(the " Mortgage ").
C. Payment
of certain of the obligations of Borrower pursuant to the Loan
Documents is guaranteed by Pauzar and Wright pursuant to the terms
of, inter alia, that certain Guaranty (Exceptions to Nonrecourse
Liability) dated as of June 30, 2005 (the "
Guaranty "). As used herein, the term "
Loan Documents " shall mean the Loan Agreement,
the Note, the Mortgage, the Guaranty and any and all other
documents evidencing, securing and/or governing the Loan whether
now existing or hereafter executed and delivered.
D. The Loan
matured by its terms on January 11, 2007, and Borrower has failed
to repay the Loan in accordance with the terms of and as required
by the Loan Documents, which failure is an "Event of Default" (as
defined in the Loan Agreement) under the Loan Documents (the "
Existing Default ").
E.
Borrower is indebted to Lender for the outstanding principal
balance of the Note, accrued interest thereon, late charges, the
"Exit Fee" (as defined in the Loan Agreement) and costs, expenses
and attorneys' fees (collectively, all liabilities of Borrower to
Lender, whether now existing or hereafter arising, including
accrued interest and all reasonable costs and attorneys' fees,
shall be referred to herein as the " Obligations
").
F.
Borrower has requested that Lender waive the Existing Default, and
Lender has conditionally agreed to waive such Existing Default, on
the terms set forth below provided that, in the event that any
Event of Default or Other Default occurs during the Forbearance
Period (as hereinafter defined) or prior to the payment in full of
the Obligations of the Borrower to Lender, such waiver shall be
null and void.
NOW, THEREFORE,
in consideration of the mutual undertakings set forth below, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1.
Incorporation of Recitals; Defined Terms
.
(a)
The foregoing Recitals are
incorporated herein as though set forth at length below.
(b)
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the respective Loan Documents.
(c) As
used herein, the term " Bankruptcy Code " shall
have the meaning set forth in Section 4(a) of this
Agreement.
(d) As
used herein, the term " Forbearance Period " shall
mean the Initial Forbearance Period or the Extended Forbearance
Period, as the case may be.
(e) As
used herein, the term " Interest Differential "
shall have the meaning set forth in Section 6(d) of this
Agreement.
(e) As
used herein, the term " Interests " shall have the
meaning set forth in Section 10(h) of this Agreement.
(f)
As used herein, the term " Liabilities " shall
have the meaning set forth in Section 5(g) of this
Agreement.
(g) As
used herein, the term " Mezzanine Lender " shall
mean International Property Investors AG, or another entity owned
and/or controlled by Sir David Garrard.
(h) As
used herein, the term " Mezzanine Loan " shall
mean a loan secured by the equity interests in Borrower (and not by
a lien on the Property) in form and content satisfactory to
Lender.
(i)
As used herein, the terms " Released Parties " and
" Releasing Parties " shall have the meanings set
forth in Section 5(a) of this Agreement.
2.
Acknowledgements . Borrowing Parties hereby
acknowledge, ratify, admit, stipulate, and agree, without
precondition or qualification, as follows:
a. Each of the Recitals
contained above in this Agreement is true, correct and complete in
all material respects.
b. Borrower and
Principals (i) entered into the Loan Documents to which they are
parties and (ii) are entering into this Agreement of their own free
will, without coercion or threat of any kind from Lender or from
any other person, fully understanding the terms hereof (including
the waiver of certain material rights afforded by law), and are
fully aware that they may have potentially advantageous
alternatives to entering into this Agreement. Borrower and
Principals acknowledge, stipulate and agree that any other
alternative would present a material risk to their
detriment.
c. The Loan
Documents constitute valid and binding obligations of Borrower and
Principals, enforceable against each of them in accordance with
their respective terms.
d. As of February
7, 2007, the Obligations consisted of the following:
Interest Due $ ____________
Default Interest $ ____________
Late Charges $ ____________
In addition,
Borrower is obligated to pay to and reimburse Lender for all
amounts incurred in connection with the Obligations and/or the
Existing Defaults, including, without limitation, costs and
expenses of Lender's legal counsel, which amounts constitute part
of the aggregate Obligations.
e. Except as
specifically provided in Section 6 (c) and (d) below, Borrower's
obligation to repay the Obligations is unconditional and is without
defense, counterclaim, recoupment or offset. The Obligations are
immediately due and payable in full.
f. There exist one
or more defaults under the terms of the Loan Documents, any and all
notices required to be given by Lender have in fact been given and
received, all applicable grace periods have expired without cure
having been effected, and Borrowing Parties hereby waive all such
notice provisions and grace periods in connection with Existing
Default.
g. Borrower has no
defenses, rights of set-off or recoupment, causes of action or
claims or counterclaims with respect to the Obligations and/or the
liens and security interests granted to Lender pursuant to the
terms of the Loan Documents, and all of such liens and security
interests are enforceable by Lender.
h. Borrowing
Parties shall derive material benefit by virtue of the execution
and delivery of this Agreement and the performance of the parties'
obligations hereunder.
3.
Reaffirmation of Obligations .
Borrowing Parties reaffirm and ratify that Borrower is indebted and
obligated, directly or indirectly, to Lender in an amount equal to
the Obligations as set forth in Section 2(d) above. Interest shall
continue to accrue on and forms a part of the Obligations pursuant
to the terms of the Loan Documents as set forth herein. Borrower
reaffirms and ratifies that, pursuant to the terms of the Loan
Documents, it is liable to pay or reimburse applicable costs, fees
and reasonable attorneys' fees and expenses related to the
Obligations incurred by Lender, all of which form a part of the
Obligations. Borrower hereby promises to pay to the order of Lender
the Obligations, plus any and all accrued interest thereon and
accrued costs, fees and reasonable attorneys’ fees and
expenses in accordance with the Loan Documents as modified by the
terms hereof.
4.
Bankruptcy Proceedings .
a. Each of Borrowing Parties hereby agrees that if
such party becomes a debtor or debtor-in-possession under Chapter
7, Chapter 11 or Chapter 13 of Title 11, U.S.C. and/or any Federal
or state statutes/or and regulations related thereto (the "
Bankruptcy Code "), as the case may be, he/she
will not seek injunctive relief against Lender, or otherwise oppose
or take action to, object to, hinder or delay, the exercise of
Lender's rights and remedies under the Loan Documents or hereunder.
Without limiting the generality of the foregoing, it is the intent
of the parties that no injunctive relief against Lender shall be
sought under Section 105 or any other provision of the Bankruptcy
Code by Borrowing Parties, and that no Borrowing Party shall seek
any expansion of the stay provided by Section 362 of the Bankruptcy
Code. In exchange for the consideration provided hereunder to the
Borrowing Parties, each of the Borrower Parties hereby expressly
waives with prejudice the effect of the automatic stay of section
362 of the Bankruptcy Code with respect to the Loan and the
Guaranty.
b. Each of Borrowing Parties for him/herself (a)
represents that such Borrowing Party has no present or current
intent (i) to file any voluntary petition under the Bankruptcy Code
or in any instance to seek relief, protection, reorganization,
liquidation, dissolution or similar relief for debtors under any
local, state, federal or other insolvency law or laws providing for
relief of debtors in equity, or (ii) directly or indirectly to
cause any involuntary petition under any Chapter of the Bankruptcy
Code to be filed against a Borrowing Party or directly or
indirectly cause such Borrowing Party to become the subject of any
proceedings pursuant to any local, state, federal or other
bankruptcy, dissolution, liquidation or insolvency law or laws,
either at the present time or at any time hereafter. Borrower
Parties each represent and acknowledge that (i) they will be unable
to confirm a plan of reorganization in a bankruptcy case that they
may become the subject of, (ii) they will not seek to use Lender's
cash collateral (as that term is defined in Section 361 of the
Bankruptcy Code), and (iii) they will not seek to obtain
post-petition debtor-in-possession financing with lien priority
senior to that of Lender pursuant to Section 364 of the Bankruptcy
Code.
c. Each of Borrowing Parties covenants and
acknowledges that in the event such Borrowing Party shall (i) be
the subject of any petition under the Bankruptcy Code, (ii) be the
subject of any order for relief issued under the Bankruptcy Code
which is not dismissed within sixty (60) days of the filing
thereof, (iii) file or be the subject of any petition seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, (iv) seek or consent to or
fail to contest the appointment of any trustee, receiver,
conservator, or liquidator, (v) be the subject of any order,
judgment, or decree entered by any court of competent jurisdiction
approving a petition filed against such party for any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy,
insolvency, or relief for debtors, Borrowing Parties shall not
oppose Lender's attempt to seek relief from any automatic stay
imposed by Section 362 of the Bankruptcy Code, and acknowledges and
agrees that such Borrowing Party has not right or basis to oppose
motion seeking relief from the automatic stay brought by the
Lender. Each Borrower Party hereby specificall
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