NUMBER THREE (3)
OPTION
In the City of San Juan, Puerto Rico, this fifth (5th) day of May,
nineteen hundred ninety five (1995).
BEFORE ME
SILVESTRE M. MIRANDA
Attorney-At-Law and Notary in and for the Commonwealth of Puerto Rico
with offices and residence located in San Juan, Puerto Rico.
APPEARS
AS PARTY OF THE FIRST PART: POSADAS DE PUERTO RICO ASSOCIATES
INCORPORATED, taxpayer number 66-040-1424, a Delaware corporation duly
authorized to do business in Puerto Rico, (hereinafter referred to as the
"Optionee"), represented in this act by its Assistant Treasurer, MANUEL PEREDO
LARA, Social Security Number ###-##-####, of legal age, married, executive and
resident of San Juan, Puerto Rico, who agrees to show evidence that he has been
authorized to appear on behalf and in representation of Optionee whenever and
wherever so required and
AS PARTY OF THE SECOND PART: POSADAS DE FLAMBOYAN ASSOCIATES L.P., a
limited partnership organized under the laws of the State of New York
(hereinafter referred to as the "Optionor"), representered herein by its
Managing Partner, Marco Industrial, Inc., a Delaware corporation duly authorized
to do business in the Commonwealth of Puerto Rico, taxpayer number 66-037-3092,
represented herein by its General Partner, Marco Industrial, Inc., a New York
corporation duly authorized to do business in Puerto Rico, taxpayer
number 13-2922304, represented by its Vice President, STEVEN KOFFMAN, Social
Security Number ###-##-####, of legal age, single, and resident of San Juan,
Puerto Rico, who agrees to show evidence that he has been authorized to appear
on behalf and in representation of Optionor whenever and whereever so required.
I, the Notary, certify that I personally know the appearing parties as
through their statements also test to their age, civil status, professions and
residence. The appearing parties assure me that they have the legal capacity for
the execution of the present document and nothing to the contrary being known to
me, the appearing parties freely
STATE
FIRST: The Optionor is the owner of record, with valid good and
marketable fee simple title ("pleno dominio") of the property described in the
Spanish language as follows (the "Property"):
"URBANA: Parcela de terreno situada en sitio denominado El Condado de la
Seccion Norte del Barrio de Santurce de la Ciudad de San Juan, Puerto Rico, con
un area superficial de CUATRO MIL SETECIENTOS SETENTA Y OCHO METROS CUADRADOS
CON SEIS MIL CUATROCIENTOS TREINTA Y DOS DIEZ MILESIMAS DE METRO CUADRADO
(4,778.6432 m.c.), en lindes por el NORTE, en una distancia de Ochenta y Dos
punto Cincuenta Metros (82.50 m.), que es su frente, con la Avenida Las Nereidas
antes, hoy denominada Avenido Doctor Ashford; por el SUR, que es su fondo, en
linea irregular y con una distancia total de Noventa y Siete punto Sesenta y
Nueve metros (97.69 m.), con la Ensenada o Laguna del Condado; por el OESTE, con
terrenos propiedad de Behn Brothers, en una distancia de Cuarenta y Cuatro punto
Ochenta y Ocho metros (44.88 m.); y por el ESTE en una distancia de Sesenta y
Uno punto Sesenta y Dos metros (61.62 m.), con terrenos de la Sucesion de
Francisco Maria Franceschi, antes, luego propiedad de Jack's Beach Resort, Inc.
Enclava un edificio de varias plantas dedicado a hotel y se conoce como
Hotel Flamboyan."
SECOND: TITLE: The Optionor acquired the Property from the Puerto Rico
Tourism Company pursuant to the terms of Deed Number One (1), executed at San
Juan, Puerto Rico,
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on September nineteen (19), nineteen seventy seven (1977) before Notary Public
Santiago C. Soler Favale, and clarified Deed Number One (1) executed on January
thirty first (31st), nineteen seventy eight (1978) before Notary Public Carlos
Santos Correa, recorded at page seventy six (76) of volume six hundred and fifty
six (656) of Santurce North, property number seventeen thousand two hundred
eighty six (17,286), fourth (4th) inscription.
THIRD: LIENS AND ENCUMBRANCES: The Property is subject to the following
liens and encumbrances:
One: Mortgage in the amount of Three Million Two Hundred Thousand
Dollars ($3,200,000.00), securing a series of three (3) mortgages notes payable
to the bearer, in the amounts of One Million Seven Hundred Thousand Dollars
($1,700,000.00), One Million Dollars ($1,000,000.00) and Five Hundred Thousand
Dollars ($500,000.00), respectively, constituted by Deed Number Sixty Two (62)
executed at San Juan, Puerto Rico on September nineteen (19) nineteen seventy
seven (1977) before Notary Public Alfredo Martinez Alvarez and clarified by Deed
Number Four (4), executed at San Juan, Puerto Rico on January thirty (30),
nineteen seventy eight (1978), before the same Notary Public, recorded at page
seventy three (73), of volume six hundred fifty six (656), North Section of
Santurce, Property number seventeen thousand two hundred and eighty six
(17,286), (hereinafter, the "Existing Mortgage").
Two: Mortgage in the principal amount of One Million Dollars
($1,000,000.00) securing a mortgage note payable to the order of The Puerto Rico
Development Fund on demand, constituted pursuant to the terms of Deed Number Two
(2), executed at San Juan, Puerto Rico, on February second (2nd), nineteen
seventy eight (1978) before Notary Public Carlos Santos Correa, recorded at page
two hundred ninety three (293) of volume seven hundred
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sixty eight (768) of Santurce Norte, Property number seventeen thousand two
hundred and eighty six (17,286).
Three: Lease in favor of Posadas de Puerto Rico Associates, Inc.
(d/b/a Condado Holiday Inn), for a term of ten (10) years, commencing on October
first (1st), nineteen eighty three (1983) and ending on September thirty (30),
nineteen ninety three, renewable for ten and a half (10 1/2) additional years,
expiring on March thirty first (31st), two thousand and four (2004) and
renewable for four and half (4 1/2) additional years expiring on September
thirty (30) two thousand and eight (2008), constituted pursuant to Deed number
fifteen (15), executed at San Juan, Puerto Rico, on September twenty third (23)
nineteen eighty three (1983), before Notary Public Eugenio Otera Silva, recorded
at page two hundred ninety four (294) of volume seven hundred sixty eight (768)
of Santurce Norte, Property number seventeen thousand two hundred and eighty six
(17,286).
Four: Leasehold Mortgage in the principal amount of Five Million
Five Hundred Thousand Dollars ($5,500,000.00) securing a note payable to
Scotiabank de Puerto Rico or its order, constituted pursuant to Deed Number Four
Hundred Sixty Three (463), executed at San Juan, Puerto Rico on August thirty
(30) nineteen eighty eight (1988) before Notary Public Roberto L. Cordova,
recorded at page two hundred ninety six (296) of volume seven hundred sixty
eight (768) of Santurce Norte, Property number seventeen thousand two hundred
and eighty six (17,286).
Five: Mortgage in the principal amount of Five Million Dollars
($5,000,000.00) securing a promissory note in favor of American Express Bank
Limited constituted pursuant to Deed of protocolization Number Twenty Five (25)
executed in San Juan, Puerto Rico on August
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twenty third (23rd), nineteen ninety one (1991) before Notary Public Enel M.
Perez Montes, modified pursuant to Deeds Numbers eleven (11), executed in San
Juan, Puerto Rico, on August twenty fourth (24th) nineteen ninety two (1992)
before Notary Public Pablo L. Dardet and Deed Number Seven (7) executed in San
Juan, Puerto Rico, on April twenty first (21st), nineteen ninety four (1994)
before Notary Public Pablo L. Dardet. This mortgage is pending recording at
entry four hundred sixty five (465) of Book of Daily Entries eight hundred and
twelve (812) and the modifications thereto pending recording at entries two
hundred ninety four (294) and five hundred thirty eight (538) of book of daily
entries eight hundred twenty three (823) and eight hundred forty two (842),
respectively.
Six: Mortgage securing a note payable to Scotiabank de Puerto
Rico in the principal sum of Five Million Dollars ($5,000,000.00) plus interest
at ten percent (10%) per annum, constituted pursuant to the terms of Deed of
Mortgage Number Two (2), executed on May fifth (5th), nineteen hundred ninety
five (1995), before Notary Public Thelma Rivera Laboy, pending recording (the
"Scotiabank Mortgage").
The Optionor warrants and represents that concurrently with the
execution of this deed it will cancel the mortgages described in Sub-sections
Two (2) and Five (5).
FOURTH: GRANT OF OPTION; OPTION PRICE: The Optionor hereby grants
to the Optionee an exclusive option (the "Option") to purchase the Property
subject and pursuant to the terms set forth in this Deed, for a purchase price
of FIVE MILLION DOLLARS ($5,000,000.00) (the "Purchase Price"). This Option is
being granted in consideration of certain consents and other accommodations
being made by Optionee in connection with that certain loan agreement dated May
fifth (5th), nineteen hundred ninety five (1995) (the "Loan Agreement")
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between Optionor and Scotiabank de Puerto Rico ("Scotiabank") and the Scotiabank
Mortgage, which secures a mortgage note payable to the order of Scotiabank in
the principal sum of Five Million Dollars ($5,000,000.00) plus interest at a
rate of ten percent (10%) per annum (the foregoing documents and instruments,
together with all documents and instruments executed in connection therewith are
referred to herein as the "Scotiabank Loan Documents"). This Option shall expire
upon the earlier to occur of (i) payment in full and release of the Scotiabank
Mortgage or (ii) the subordination of the Scotiabank Mortgage to the Lease or
(iii) Optionee or its successors and assigns shall cease to be lessee of the
Property.
FIFTH: OPTION PERIOD: In the event that a default shall occur under any
of the Scotiabank Loan Documents, this Option shall become immediately
exercisable and shall remain exercisable for a period of sixty (60) days (the
"Option Period").
SIXTH: EXERCISE OF OPTION: The Option may be exercised by the
Optionee by giving written notice to the Optionor during the Option Period of
its election to exercise the Option. After the Option has been so exercised,
Optionee shall specify a closing date, which shall not be later than sixty (60)
days after the date of exercise of the Option. At the closing, Optionor shall
convey good and marketable title to the Property to Optionee or its designee,
free of all liens, claims and encumbrances other than those of Optionee, by deed
of purchase sale, subject only to real estate taxes not yet due and payable; and
Optionee shall pay the full Purchase Price by certified or official bank
check(s) or by wire transfer. The adjustment of real estate taxes and other
customary matters shall be made in accordance with local custom. Optionee shall
have the right to pay and apply the Purchase Price directly to the holders of
the Existing Mortgage and the Scotiabank Mortgage.
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SEVENTH: REPRESENTATION AND CONVENTS OF OPTIONOR: The Optionor
represents and warrants as follows:
(a) Prior to the expiration of this Option, the Optionor
will not incur any additional indebtedness, or encumber, transfer, convey, or
enter into any lease with respect to all or any portion of, or any interest in,
the Property except with Optionee.
(b) The Optionor shall not (i) without the prior written
consent of the Optionee, which shall not be unreasonably withheld, change the
present zoning classification of the Property or (ii) cause or knowingly permit
to be placed on occur on the Property any hazardous waste, toxic spill or other
environmental contamination.
(c) In the event Optionor does not within the five years
immediately following the date of this deed pay in full and release the
Scotiabank Mortgage or obtain the subordination of the Scotiabank Mortgage to
the Lease; and the Optionee or its successors and assignor continue to be the
lessee of the Property, then Optionor shall cause at its cost and expense, the
refiling of this deed for recording in the Registry of the Property, First
Section of San Juan.
EIGHTH: OPTION PRICE: For recording purposes only, the
parties agree that this option is extended for a consideration of One Thousand
Dollars ($1,000.00).
NINTH: RECORDING OF OPTION: Optionor shall promptly record
this Option at its expense in the proper registry.
TENTH: GENERAL PROVISIONS:
A. This Option shall be binding upon and inure to the
benefit of Optionor and Optionee and their respective successors and assigns.
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B. This Option Agreement may not be modified, amended or
terminated nor may any provision hereof be waived except by a writing signed by
the party against whom such amendment, modification, termination or waiver is to
be enforced.
C. This Option Agreement shall be construed in accordance
with the laws of the Commonwealth of Puerto Rico.
ACCEPTANCE
I, the Notary, do hereby certify that I advised the appearing
parties of the legal effect of the present deed, who waived their right to have
attesting witnesses in this instrument, after having duly advised them of such
right.
I, the Notary, also certify and attest that this document was
read by the parties and having found it in accordance with their wishes and
instructions they approve and ratify the contents thereof and sign before me
after placing their initials on each and every page of the original of this
deed.
I, the Notary, also certify and attest that the appearing parties
and I know and fully understand the English language and I attest as to my
personal knowledge of the persons appearing herein and to their personal
qualifications.
TO ALL OF WHICH, under my signature, sign and seal, signing and
sealing the same according to law, I, the undersigned Notary, ATTEST.
/s/
/s/
/s/
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SCOTIABANK
SCOTIABANK DE PUERTO RICO
Commercial Banking - Plaza Scotiabank, Hato Rey Branch, 2
PO Box 362649, San Juan PR 00936-2649
May 5, 1995
Posadas de Puerto Rico Associates, Inc.
c/o Williams Hospitality Group, Inc.
187 East Isla Verde Road
Isla Verde, Puerto Rico 00913
Gentlemen:
Reference is made to that certain credit agreement dated May 5, 1995 (the
"Credit Agreement") between Scotiabank de Puerto Rico ("Scotiabank") and Posadas
de Flamboyan Associates, L.P. Capitalized terms as used herein and not otherwise
defined shall have the same meaning ascribed to such terms in the Credit
Agreement.
In connection with the entry into the Credit Agreement and other Loan
Documents, Scotiabank has requested that you ("Posadas") consent to the
assignment by the borrower to Scotiabank, as collateral security, of the Lease
Agreement constituted by virtue of Deed No. 15 of September 23, 1983 before
Notary Public Eugenio Otero Silva, as amended (the "Lease") and any monies due
or to become due thereunder and to subordinate the Lease to the lien of
Scotiabank under the Mortgage constituted by deed number 2 executed on the 5th
day of May, 1995 before Notary Public Thelma Rivera Laboy (the "Scotiabank
Mortgage").
Scotiabank also acknowledges that it is the owner of that certain
leasehold mortgage (the "Leasehold Mortgage") with respect to the Lease to
secure a mortgage note for the principal sum of $5,500,000 payable to
Scotiabank, constituted by virtue of deed number 463, executed in San Juan on
August 30, 1988 before Notary Public Robert L. Cordova.
Scotiabank also acknowledges that it has been advised that in
consideration of certain concessions being made by Posadas in connection with
the Credit Agreement, the Borrower is granting to Posadas an option (the
"Option") to purchase the Property for $5 million in the event that there is a
default under the Credit Agreement or other Loan Documents.
In consideration for Posadas consenting to the subordination of the Lease
to the Scotiabank Mortgage, Scotiabank hereby agrees to give to Posadas a copy
of any and all notices
Posadas de Puerto Rico Associates, Inc
May 5, 1995
Page -2-
sent to the Borrower under the Loan Documents, including, without limitation,
the notice to the Borrower under Section 10.2 of the Credit Agreement.
In addition, Scotiabank agrees that for a period of thirty (30) days
following the occurrence of an Event of Default, other than an Event of Default
under Section 10.1(a) or 10.1(f) (as it relates to Borrower) of the Credit
Agreement, Scotiabank shall not commence proceedings to foreclose the Scotiabank
Mortgage or otherwise interfere with Posadas' possession of the Property under
the Lease. If Posadas shall notify Scotiabank in writing during such 30 day
period that Posadas has exercised the Option, then Scotiabank shall not, for a
period of 60 days from its receipt of such notice, commence proceedings to
foreclose the Scotiabank Mortgage or otherwise interfere with Posadas'
possession of the Property under the Lease. The obligation of Scotiabank as
aforesaid is expressly conditioned upon the continued payment of rent by Posadas
on a current basis as required by the Lease. If at any time during the first 30
day period or during the second 60 day period, any monetary defaults under the
Lease shall have occurred and are not cured, then Scotiabank will be entitled to
proceed with any and all of its available remedies under the Credit Agreement,
other Loan Documents or applicable law, including commencement of foreclosure
proceedings. Nothing herein is intended to limit or prevent Scotiabank from
giving any notice under Section 10.2 of the Credit Agreement or from pursuing
any other remedies which may be available to it.
Scotiabank's agreement to delay commencement of foreclosure proceedings is
intended to afford Posadas an opportunity to exercise the Option and after such
exercise, to close the purchase of the Property and apply the purchase price to
payment of the indebtedness under the Credit Agreement.
Scotiabank, as owner of the Leasehold Mortgage, hereby notifies Posadas,
pursuant to Section SEVENTH: (c) of the Leasehold Mortgage, that Posadas shall
not continue paying, when due, the principal amortization payments plus interest
to the holders of the notes securing the Existing Mortgages but shall instead
pay the full amount of the rent under the Lease to Scotiabank to be credited, to
Borrower's obligations under the Credit Agreement, as required pursuant to the
Assignment of lease. In addition, Scotiabank, as holder of the Leasehold
Mortgage, pursuant to Section EIGHT of the Leasehold Mortgage, hereby consents
to the execution and delivery by Posadas of all consents, deeds, documents and
instruments being executed by Posadas in connection with the Credit Agreement.
If the foregoing is in accordance with your agreement and understanding,
please execute a copy of this letter below under the words "Accepted and Agreed
To" and return it to the
Posadas de Puerto Rico Associates, Inc
May 5, 1995
Page -3-
undersigned.
Very truly yours,
SCOTIABANK DE PUERTO RICO
By: /s/
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Nestor Vale
ACCEPTED AND AGREED TO:
POSADAS DE PUERTO RICO ASSOCIATES, INC.
By:
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