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 first day of January, 1999, by EL
CONQUISTADOR PARTNERSHIP L.P., a Delaware limited partnership, having an address
at 1000 El Conquistador Avenue, Las Croabas, Fajardo, Puerto Rico 00738
("Borrower"), to CITICORP REAL ESTATE, INC., a Delaware corporation, having an
address at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Lender"), and is
acknowledged and consented to by XXXXXXXX HOSPITALITY GROUP INC. (formerly known
as Xxxxxxx of America Central, Inc.), a Delaware corporation, having its
principal place of business at 0000 Xxxx Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx
Xxxx 00000 ("Agent").
RECITALS:
A. Lender is the owner and holder of certain reimbursement obligations in
the principal amount of $90,000,000 (collectively, the "Reimbursement
Obligations") which are outstanding pursuant to a Letter of Credit and
Reimbursement Agreement, dated as of February 7, 1991, by and between The Bank
of Tokyo-Mitsubishi, Ltd. (f/k/a The Mitsubishi Bank, Limited) ("Mitsubishi")
and the Borrower (as heretofore amended and as amended on the date hereof by the
Modification Agreement (as hereinafter defined), the "Reimbursement Agreement").
B. The Reimbursement Obligations are secured, in part, by certain
Collateral Pledge Agreements more particularly described in the Reimbursement
Agreement (collectively, the "Security Instruments") and by certain other notes,
deeds of mortgage, assignments, guaranties and other documents and instruments
executed in connection with the Reimbursement Agreement (including the
Modification Agreement) or otherwise with respect to the Reimbursement
Obligations (collectively, the "Other Security Documents").
C. At the request of Borrower and pursuant to the terms of that certain
Assignment and Modification Agreement, dated as of August 3, 1998, by and among
the Lender, the Borrower, Mitsubishi and certain other parties (the
"Modification Agreement"), the term for payment of the Reimbursement Obligations
is being extended and certain terms and provisions of the Reimbursement
Agreement, the Security Instruments and the Other Security Documents, among
other things, are being amended and modified at the request of the Borrower (the
Reimbursement Agreement, the Security Instruments, the Other Security Documents
and each of the other documents evidencing, securing or otherwise relating to
the Reimbursement Obligations or any of the foregoing documents are hereinafter
sometimes collectively referred to as the "Loan Documents").
D. Pursuant to a certain Amended and Restated Management Agreement dated
January 1, 1999 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 Hotel (as defined
in the Reimbursement Agreement) and Agent is entitled to certain management fees
(the "Management Fees")
thereunder, including without limitation, the Hotel Marketing Contribution and
the Condominium Marketing Contribution (both as defined in the Management
Agreement).
E. Lender requires as a condition to its entering into the Modification
Agreement and modifying the Reimbursement Obligations that Borrower assign all
of rights in and to the Management Agreement as additional security for all of
Borrower's obligations under the Reimbursement Agreement, the Security
Instruments and the other Loan Documents.
AGREEMENT:
For good and valuable consideration the parties hereto agree as follows:
1. Assignment of Management Agreement.
(a) Assignment by Borrower. 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 Hotel (as defined in the Reimbursement Agreement)
(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 Hotel,(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
Hotel and Agent knows of no event which, but for the passage of time or the
giving
2
of notice or both, would constitute an event of default under the
Management Agreement with respect to the Hotel, (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
Hotel and the (d)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 Hotel.
5. Covenants.
(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 Hotel 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 Hotel 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 Hotel.
(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 Hotel.
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 Reimbursement Agreement, the Modification 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: 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 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 7
by reason thereof, and require Agent to transfer its responsibility for the
management of the Hotel 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
3
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 Hotel 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 Hotel.
10. Gaming Licenses. (a) Borrower and Agent hereby acknowledge and confirm
that the Agent holds in its name, as agent for, on behalf of and for the benefit
of the Borrower, the casino license attached as Exhibit B hereto (as the same
may hereafter be renewed, extended, substituted, replaced, supplemented, amended
or modified, the "Gaming License"), which Gaming License constitutes the only
license maintained by Agent in connection with the operation of the casino and
other gaming activities currently being operated at the Hotel (collectively, the
"Gaming Operations").
(b) As further security for the Loan, Agent hereby assigns and
transfers all of its right, title, interest and benefits in, to and under each
of the Gaming Licenses to Lender, and Borrower hereby agrees and consents to
such assignment and transfer. The foregoing assignment shall not be effective to
the extent that such assignment would constitute a default or grounds for
revocation of the Gaming License but the balance of the provisions contained
herein shall nevertheless remain effective. Agent and Borrower hereby agree to
cooperate with and assist Lender in creating, perfecting and/or enforcing its
security interest in the Gaming License and agree to execute any instruments
which may be necessary or required in connection with any such creation,
perfection and/or enforcement.
(c) Neither Borrower nor Agent shall in any way hinder, impede or
delay any procedure undertaken by the Lender or any agent of the Lender
("Lender's Agents"), at any time hereafter and prior to the payment and
performance in full of all of the obligations of Borrower
4
under the Loan Documents, to obtain approval from any applicable gaming
commission or commissions for the issuance to Lender or Lender's Agent of all
necessary gaming licenses to enable the Lender to continue to operate the Gaming
Operations immediately upon Lender's acquiring possession of the Hotel.
(d) Borrower and Agent hereby agree that Agent shall not transfer any
of the Gaming Licenses to any other party, including to the Borrower, without
the prior written consent of the Lender, which consent may be denied in Lender's
sole and absolute discretion (except with respect to any transfer of all the
Gaming Licenses to the Borrower, which consent shall not be unreasonably
withheld).
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: El Conquistador Partnership, L.P.
c/o Patriot America Hospitality, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, III
Facsimile No. (000) 000-0000
With a copy to: Shack & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
If to Lender: Citicorp Real Estate, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Reference: Condado Plaza, Puerto Rico
Facsimile No.: (000) 000-0000
5
With a copy to: Citicorp/Citibank REILD
000 Xxxxxxxxx Xxxxxx
20th Floor/Zone 1
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Reference: Condado Plaza, Puerto Rico
With a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Reference: Condado Plaza, Puerto Rico
Attention: Xxxxxxx X. Xxxxxxxx, Esq. (BEO)
Facsimile No.:(000) 000-0000
If to Agent: Xxxxxxxx Hospitality Group Inc.
0000 Xxxx Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx Xxxx 00000
Attention: President
Facsimile No. (000) 000-0000
Wyndham International
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
With a copy to: Shack & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
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.
6
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, AGENT AND LENDER 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 HOTEL (INCLUDING,
WITHOUT LIMITATION, WITH RESPECT TO ANY ACTION TO RESCIND OR CANCEL THIS
ASSIGNMENT, AND WITH RESPECT TO ANY CLAIM
7
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.
20. Borrower and Lender agree to cooperate in good faith to bifurcate any
of the Assigned Contracts that relate to a property other than the Hotel.
21. Replacement. This Assignment is in substitution and replacement of the
Assignment of Management Agreement and Subordination of Management Fees dated
August 3, 1998 made by Borrower in favor of Lender and acknowledged and
consented to by Agent.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
8
IN WITNESS WHEREOF Borrower and Agent have executed this Assignment as
of the date and year first written above.
BORROWER:
XXXXXXX DE PUERTO RICO ASSOCIATES,
INCORPORATED, a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
Vice President
AGENT:
XXXXXXXX HOSPITALITY GROUP INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
Vice President
9
STATE OF TEXAS )
) ss.
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 29 day of
Jan., 1999, by Xxxxx X. Xxxxxx, as Vice President of XXXXXXX DE PUERTO RICO
ASSOCIATES, INCORPORATED, a Delaware corporation, on behalf of the corporation.
He is personally known to me or has produced _______________________________ as
identification.
/s/ Xxxxxxx Xxx Xxxxxxx
-----------------------------------
Notary Public
My commission expires:
----------------------
STATE OF TEXAS )
) ss.
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 29 day of
Jan., 1999, by Xxxxx X. Xxxxxx, as Vice President of XXXXXXXX HOSPITALITY
GROUP, INC., a Delaware corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
/s/ Xxxxxxx Xxx Xxxxxxx
---------------------------------
Notary Public
My commission expires:
----------------------
10
