ASSIGNMENT OF MANAGEMENT AGREEMENT AND
SUBORDINATION OF MANAGEMENT FEES
THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND SUBORDINATION OF MANAGEMENT
FEES ("Assignment") is made as of the 3rd day of August, 1998, by POSADAS DE
PUERTO RICO ASSOCIATES, INCORPORATED, a Delaware corporation, having its
principal place of business at 999 Ashford Avenue (Condado), Santurce, Puerto
Rico 00902 ("Borrower"), to CITICORP REAL ESTATE, INC., a Delaware corporation,
having an address at 599 Lexington Avenue, New York, NY 10043 ("Lender"), and
is acknowledged and consented to by WILLIAMS HOSPITALITY GROUP INC. (formerly
known as Posadas of America Central, Inc.), a Delaware corporation, having its
principal place of business at 6063 East Isla Verde Avenue, Carolina, Puerto
Rico 00979 ("Agent").
RECITALS:
A. Borrower by its promissory note of even date herewith given
to Lender (the note together with all extensions, renewals, modifications,
consolidations, substitutions, replacements, restatements and increases thereof
shall collectively be referred to as the "Note") is indebted to Lender in the
principal sum of $55,000,000 in lawful money of the United States of America,
with interest from the date thereof at the rates set forth in the Note (the
indebtedness evidenced by the Note, together with such interest accrued thereon,
shall collectively be referred to as the "Loan"), principal and interest to be
payable in accordance with the terms and conditions provided in the Note and the
Loan Agreement dated the date hereof between Borrower and Lender (the "Loan
Agreement").
B. The Loan is secured by, among other things, a Mortgage Note
Pledge and Security Agreement (the "Security Instrument"), with respect to
certain Mortgage Notes and Mortgages (as such terms are defined in the Security
Instrument), which Mortgages grant Lender a first lien on the property
encumbered thereby (the "Property"). All and any of the documents other than the
Note, the Security Instrument and this Assignment now or hereafter executed by
Borrower and/or others and by or in favor of Lender, which wholly or partially
secure or guarantee payment of the Note are referred to as the "Other Security
Documents". The Note, the Loan Agreement, the Security Instrument, the Other
Security Documents and each of the other documents evidencing, securing or
otherwise relating to the Loan or any of the foregoing documents are hereinafter
sometimes collectively referred to as the "Loan Documents".
C. Pursuant to a certain Management Agreement dated as of
September 23, 1983 between Borrower and Agent (the "Management Agreement") (a
true and correct copy of which Management Agreement is attached hereto as
Exhibit A), Borrower employed Agent exclusively to operate and manage the
Property and Agent is entitled to certain management fees (the
"Management Fees") thereunder, including without limitation all Incentive
Management Fees and Basic Management Fees (both as defined in the Management
Agreement).
D. Lender requires as a condition to the making of the Loan
that Borrower assign all of its rights in and to the Management Agreement as
additional security for the Loan and that Agent subordinate its interest in the
Management Fees in lien and payment to the Security Instrument as set forth
below.
AGREEMENT:
For good and valuable consideration the parties hereto agree
as follows:
1. Assignment of Management Agreement. (a) As additional
collateral security for the Loan, Borrower hereby unconditionally transfers,
sets over and assigns to Lender all of Borrower's right, title and interest in
and to the Management Agreement, said transfer and assignment to automatically
become a present, unconditional assignment, at Lender's option, upon the
occurrence of an Event of Default (as hereinafter defined).
(b) Assignment by Agent. As further additional
collateral security for the Loan, Agent hereby unconditionally transfers, sets
over and assigns to Lender all of Agent's right, title and interest in and to
all permits, license agreements, operating contracts, licenses (including
liquor, gaming and other licenses), franchise agreements and all management,
service, supply and maintenance contracts and agreements, and any other
agreements, permits or contracts of any nature whatsoever now or hereafter
obtained or entered into by Agent on behalf of Borrower with respect to the
operation, maintenance and administration of the Property (collectively, the
"Agent Contracts").
2. Subordination of Management Fees. The Management Fees and
all rights and privileges of Agent to the Management Fees are hereby and shall
at all times continue to be subject and unconditionally subordinate in all
respects in lien and payment to the lien and payment of the Loan Documents and
to any renewals, extensions, modifications, assignments, replacements, or
consolidations thereof and the rights, privileges, and powers of Lender
thereunder.
3. Termination. At such time as the Loan is paid in full and
the Security Instrument is released or assigned of record, this Assignment and
all of Lender's right, title and interest hereunder with respect to the
Management Agreement shall terminate. Lender, at Borrower's expense, shall
execute and deliver such instruments as Agent may reasonably request to evidence
such termination.
4. Estoppel. Agent represents and warrants that (a) the
Management Agreement is in full force and effect and has not been modified,
amended or assigned with respect to the
Property (other than the assignment to Scotiabank being terminated concurrently
herewith), (b) except with respect to the payment of certain deferred Management
Fees reflected in Borrower's financial statements, to the best of Agent's
knowledge, neither Agent nor Borrower is in default under any of the terms,
covenants or provisions of the Management Agreement with respect to the Property
and Agent knows of no event which, but for the passage of time or the giving of
notice or both, would constitute an event of default under the Management
Agreement with respect to the Property, (c) neither Agent nor to Agent's
knowledge, Borrower, has commenced any action or given or received any notice
for the purpose of terminating the Management Agreement with respect to the
Property and (d) the Management Fees and all other sums due and payable to the
Agent under the Management Agreement have been paid in full with respect to the
Property.
5. (a) Borrower's Covenants. Borrower hereby covenants with
Lender that during the term of this Assignment: (i) Borrower shall not transfer
the responsibility for the management of the Property from Agent to any other
person or entity without prior written notification to Lender and the prior
written consent of Lender, which consent may be withheld by Lender in Lender's
sole discretion except that Lender shall not unreasonably withhold its consent
to the transfer of the responsibility for management of the Property to an
entity wholly owned by Wyndham International or Wyndham International Operating
Partnership L.P. pursuant to a management agreement acceptable to Lender in its
reasonable discretion and provided that Borrower and transferee shall execute
and deliver to Lender any agreement in substantially the same form as this
Assignment on or prior to such transfer and (ii) Borrower shall not terminate or
amend any of the terms or provisions of the Management Agreement without the
prior written consent of Lender, which consent may be withheld by Lender in
Lender's sole discretion; and (iii) Borrower shall, in the manner provided for
in this Assignment, give notice to Lender of any notice or information that
Borrower receives which indicates that Agent is terminating the Management
Agreement or that Agent is otherwise discontinuing its management of the
Property.
(b) Agent's Covenants. Agent hereby covenants with
Lender that during the term of this Assignment, Agent shall not assign, pledge,
sell or transfer the Agent Contracts to any party except to Borrower, which
transfer to Borrower shall be subject to the assignment to Lender made by Agent
herein. Further, Agent agrees as long as the Management Agreement remains in
effect, to comply with the terms, covenants and provisions of all Agent
Contracts and to keep all Agent Contracts in full force and effect to the extent
necessary or desirable to the operation and management of the Property.
6. Agreement by Borrower and Agent. Borrower and Agent hereby
agree that in the event of a default by Borrower (beyond any applicable grace
period) under the Note, the Loan Agreement or any of the other Loan Documents
("Event of Default") during the term of this Assignment, at the option of Lender
exercised by written notice to Borrower and Agent: (a) Agent shall not collect
or be entitled to any Management Fees or other fee or commission due under the
Management Agreement following termination thereof; and (b) Lender may exercise
its rights under this Assignment and may immediately terminate the Management
Agreement by written notice to
the Agent that such Event of Default has occurred and that Lender elects to
exercise its option under this Section 6 by reason thereof, and require Agent to
transfer its responsibility for the management of the Property to Lender or to a
management company selected by Lender in Lender's sole and absolute discretion.
7. Lender's Right to Replace Agent. In addition to the
foregoing, in the event that (a) Agent becomes insolvent, or (b) an Event of
Default occurs, Lender may exercise its rights under this Assignment and direct
Borrower to terminate the Management Agreement and to replace Agent with a
management company acceptable to Lender in Lender's sole and absolute
discretion.
8. Receipt of Management Fees. Borrower and Agent hereby agree
that Agent shall not be entitled to receive any Management Fees or other fee,
commission or other amount payable to Agent under the Management Agreement for
and during any period of time that any Event of Default has occurred and is
continuing; provided, however, that Agent shall not be obligated to return or
refund to Lender any Management Fees or other fee, commission or other amount
already received by Agent prior to the occurrence of the Event of Default, and
to which Agent was entitled under this Assignment.
9. Consent and Agreement by Agent. Agent hereby acknowledges
and consents to this Assignment and agrees that Agent will act in conformity
with the provisions of this Assignment and Lender's rights hereunder or
otherwise related to the Management Agreement. In the event that the
responsibility for the management of the Property is transferred from Agent in
accordance with the provisions hereof (whether to a new management company
retained by Borrower or after an Event of Default, to Lender or a new management
company retained by Lender), Agent shall, and hereby agrees to, fully cooperate
in transferring its responsibility and the Agent Contracts to Lender or a new
management company, as applicable, and effectuate such transfer no later than
thirty (30) days from the date the Management Agreement is terminated. Further,
Agent hereby agrees (a) not to contest or impede the exercise by Lender of any
right it has under or in connection with this Assignment; and (b) that it shall,
in the manner provided for in this Assignment, give at least thirty (30) days
prior written notice to Lender of its intention to terminate the Management
Agreement or otherwise discontinue its management of the Property.
10. Intentionally Omitted.
11. Governing Law. This Assignment shall be deemed to be a
contract entered into pursuant to the laws of the Commonwealth of Puerto Rico
and shall in all respects be governed, construed, applied and enforced in
accordance with the laws of the Commonwealth of Puerto Rico, without regard to
the principles of conflicts of laws.
12. Notices. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof, (ii) one (1) Business Day (hereinafter defined) after
having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: Posadas de Puerto Rico Associates, Incorporated
c/o Patriot America Hospitality, Inc.
590 Madison Avenue
New York, NY 10022
Attention: William W. Evans, III
Facsimile No. (212) 355-7772
With a copy to: Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attention: Pamela E. Flaherty, Esq.
Facsimile No. (212) 730-1964
If to Lender: Citicorp Real Estate, Inc.
399 Park Avenue
New York, New York 10043
Attention: Jeffrey A. Warner
Reference: Condado Plaza, Puerto Rico
Facsimile No.: (212) 793-6314
With a copy to: Citicorp/Citibank REILD
599 Lexington Avenue
20th Floor/Zone 1
New York, New York 10043
Attention: General Counsel
Reference: Condado Plaza, Puerto Rico
With a copy to: Weil, Gotshal & Manges LLP
701 Brickell Avenue
Suite 2100
Miami, Florida 33131
Reference: Condado Plaza, Puerto Rico
Attention: Richard A. Morrison, Esq. (BEO)
Facsimile No.:(305) 374-7159
If to Agent: Williams Hospitality Group Inc.
6063 East Isla Verde Avenue
Carolina, Puerto Rico 00979
Attention: President
Facsimile No. (787) 791-7500
Wyndham International
1950 Stemmons Freeway, Suite 6001
Dallas, TX 75207
Attention: Carla Moreland, Esq.
Facsimile No. (214) 863-1986
With a copy to: Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attention: Pamela E. Flaherty, Esq.
Facsimile No. (212) 730-1964
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section 12, the term "Business Day"
shall mean a day on which commercial banks are not authorized or required by law
to close in the Commonwealth of Puerto Rico.
Any party by notice to the others may designate additional or
different addresses for subsequent notices or communications.
13. No Oral Change. This Assignment, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
14. Liability. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several. This Assignment shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.
15. Inapplicable Provisions. If any term, covenant or
condition of this Assignment is held to be invalid, illegal or unenforceable in
any respect, this Assignment shall be construed without such provision.
16. Headings, etc. The headings and captions of various
paragraphs of this Assignment are for convenience of reference only and are not
to be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
17. Duplicate Originals; Counterparts. This Assignment may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Assignment may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Assignment. The failure of
any party hereto to execute this Assignment, or any counterpart hereof, shall
not relieve the other signatories from their obligations hereunder.
18. Number and Gender. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
19. Miscellaneous. (a) Wherever pursuant to this Assignment
(i) Lender exercises any right given to it to approve or disapprove, (ii) any
arrangement or term is to be satisfactory to Lender, or (iii) any other decision
or determination is to be made by Lender, the decision of Lender to approve or
disapprove, all decisions that arrangements or terms are satisfactory or not
satisfactory and all other decisions and determinations made by Lender, shall be
in the sole and absolute discretion of Lender and shall be final and conclusive,
except as may be otherwise expressly and specifically provided herein.
(b) Wherever pursuant to this Assignment it is provided that
Borrower pay any costs and expenses, such costs and expenses shall include, but
not be limited to, reasonable legal fees and disbursements of Lender, whether
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
(c) Waiver of Trial by Jury. BORROWER AND AGENT HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS, OR IN RESPECT OF ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY OR ARISING OUT OF ANY
EXERCISE BY ANY PARTY OF ITS RESPECTIVE RIGHTS UNDER ANY SUCH LOAN DOCUMENTS OR
IN ANY WAY RELATING TO THE PROPERTY (INCLUDING, WITHOUT LIMITATION, WITH RESPECT
TO ANY ACTION TO RESCIND OR CANCEL THIS ASSIGNMENT, AND WITH RESPECT TO ANY
CLAIM OR DEFENSE ASSERTING THAT THIS ASSIGNMENT WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE). THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT
FOR LENDER TO ACCEPT THIS ASSIGNMENT.
(d) Borrower and Lender agree to cooperate in good faith to
bifurcate any of the Agent Contracts that relate to a property other than the
Property.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF Borrower and Agent have executed this
Assignment as of the date and year first written above.
BORROWER:
POSADAS DE PUERTO RICO ASSOCIATES,
INCORPORATED, a Delaware corporation
By: /s/ Larry M. Vitale
-------------------------------------------
Larry M. Vitale
Vice President
AGENT:
WILLIAMS HOSPITALITY GROUP INC.,
a Delaware corporation
By: /s/ Larry M. Vitale
------------------------------------------
Name: Larry M. Vitale
Title: Vice President
STATE OF FLORIDA )
) ss.
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 2nd day of
August, 1998, by Larry M. Vitale, as Vice President of POSADAS DE PUERTO RICO
ASSOCIATES, INCORPORATED, a Delaware corporation, on behalf of the corporation.
He is personally known to me or has produced a driver's license as
identification.
/s/ Olga L. Duque
-------------------------------
Notary Public
My commission expires:
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STATE OF FLORIDA )
) ss.
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 2nd day of
August, 1998, by Larry M. Vitale, as Vice President of WILLIAMS HOSPITALITY
GROUP, INC., a Delaware corporation, on behalf of the corporation. He is
personally known to me or has produced a driver's license as identification.
/s/ Olga L. Duque
--------------------------------
Notary Public
My commission expires:
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EXHIBIT A
MANAGEMENT AGREEMENT