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MANAGEMENT AGREEMENT SUBORDINATION
AND
ATTORNMENT AGREEMENT
Dated as of February 7, 1991
BETWEEN
XXXXXXXX HOSPITALITY MANAGEMENT CORPORATION,
AND
THE MITSUBISHI BANK, LIMITED
acting through its
New York Branch
Relating to
The El Conquistador Resort and Country Club,
located in Fajardo, Puerto Rico
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TABLE OF CONTENTS
PAGE
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SECTION 1. Subordination; Bank's Right to Terminate; Attornment;
Assignment of Licenses......................................... 3
SECTION 2. Default by Partnership under Management Agreement.............. 7
SECTION 3. Representations, Warranties, Covenants and Agreements.......... 10
SECTION 4. Liability of Bank.............................................. 12
SECTION 5. Termination of Agreement....................................... 12
SECTION 6. Notices........................................................ 12
SECTION 7. Miscellaneous.................................................. 13
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MANAGEMENT AGREEMENT SUBORDINATION
AND
ATTORNMENT AGREEMENT
THIS MANAGEMENT AGREEMENT SUBORDINATION AND ATTORNMENT AGREEMENT (this
AGREEMENT), dated as of the 7th day of February, 1991, by and between THE
MITSUBISHI BANK, LIMITED, acting through its New York Branch, a banking
corporation organized under the laws of Japan having an office at 000 Xxxxxxx
Xxxxxx, Two World Financial Center, New York, New York 10281 (the BANK), and
XXXXXXXX HOSPITALITY MANAGEMENT CORPORATION, a Delaware corporation having an
office at 000 Xxxx Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxx Xxxx 00000 (the MANAGER).
W I T N E S S E T H:
WHEREAS, El Conquistador Partnership L.P., a Delaware limited
partnership (the PARTNERSHIP) and the Manager have entered into that certain
Development Services and Management Agreement, dated January 12, 1990, as
amended by that certain First Amendment to the Development Services and
Management Agreement dated as of September 30, 1991 and that certain Second
Amendment dated as of January 31, 1991 (together with any additional amendment
or supplements thereto from time to time as permitted hereby, the MANAGEMENT
AGREEMENT), pursuant to which the Manager agreed to, among other things, provide
technical assistance and development services during the renovation of and to
control, supervise and direct the operation and management of the resort and
related golf course and other facilities to be known as The El Conquistador
Resort and Country Club (together with the tracts of real property on which the
foregoing
is located, the PROPERTY);
WHEREAS, pursuant to that certain Letter of Credit and Reimbursement
Agreement of even date herewith between the Bank and the Partnership (such
agreement, as amended and supplemented from time to time, the LETTER OF CREDIT
AGREEMENT), the Bank has agreed to issue a letter of credit (the LETTER OF
CREDIT) to secure the repayment of the principal of, and accrued interest on,
the Loan (such term and all other capitalized terms used but not defined herein
having the respective meanings ascribed to them in the Letter of Credit
Agreement) in accordance with their terms;
WHEREAS, pursuant to that certain Assignment of Management Agreement of
even date herewith between the Partnership and the Bank (the ASSIGNMENT), the
Partnership assigned its rights and interests under the Management Agreement to
the Bank as security for the obligations of the Partnership under the Letter of
Credit Agreement; and
WHEREAS, one of the conditions precedent to the obligation of the Bank
to issue the Letter of Credit is the agreement of the Manager to subordinate the
Management Agreement and all of its rights, interests and benefits thereunder to
the liens and charges of the Mortgage, the Pledge Agreement and the other
Operative Documents in the manner hereinafter provided; and
WHEREAS, the financing of the Project, as contemplated by the
Letter of Credit Agreement and the other Operative Documents, is in furtherance
of the purposes of the Management Agreement.
NOW, THEREFORE, for and in consideration of the issuance of
the
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Letter of Credit and the entering into of the Letter of Credit Agreement by the
Bank, the mutual promises and covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto further agree as follows:
SECTION 1. SUBORDINATION; BANK'S RIGHT TO TERMINATE; ATTORNMENT;
ASSIGNMENT OF LICENSES.
(a) The Manager hereby covenants and agrees for the benefit of
the Bank that the Management Agreement, the Manager's rights thereunder and the
lien for the payment of any and all fees to the Manager or otherwise under the
Management Agreement (the MANAGEMENT AGREEMENT FEES) are hereby made and shall
unconditionally continue to be and remain at all times subject and subordinate
in all respects to the liens, charges, terms, covenants and provisions of the
Mortgage, the Pledge Agreement, the Letter of Credit Agreement and the other
Operative Documents and any extensions, modifications, amendments and renewals
thereof and the rights and benefits of the Bank thereunder.
(b) At any time after the occurrence of a default or event of
default under the Mortgage, the Pledge Agreement, the Letter of Credit Agreement
or any of the other Operative Documents and the commencement of the exercise by
the Bank of any remedies for such default the result of which would be the
termination of the Partnership's ownership or operation of the Property, the
Bank may, upon written notice to the Manager that such events have occurred and
that it elects to exercise its option under this paragraph by reason thereof,
terminate the Management Agreement.
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(c) If the Bank becomes the owner of the Partnership's
interest in the Property (whether pursuant to the Mortgage and the Pledge
Agreement, by voluntary conveyance, by agreement of the parties, or otherwise,
and whether in its own name, through its nominee, or otherwise), or if the
interest of the Partnership in the Property is acquired by any third party as a
result of any action taken by the Bank or the holder of the Mortgage relating to
a default by the Partnership in its obligations to the Bank or to the holder of
the Mortgage (such third party being referred to as a PURCHASER), then, provided
the Management Agreement shall not previously have been terminated in accordance
with its provisions or the provisions of this Agreement, the Manager shall fully
and completely recognize and attorn to the Bank or the purchaser, as applicable,
under the Management Agreement for the balance of the term thereof, including
any extensions and renewals thereof, upon all terms and conditions therein
provided (exclusive of any provisions thereof which have theretofore been fully
performed or which depend upon the identity or involvement of or performance by
any named individuals, insofar as the same relate to the obligations of the
Partnership, or other Persons controlling, controlled by or under common control
with the Partnership), so as to establish direct privity of contract between the
Bank or the purchaser, as applicable, and the Manager; and the Manager shall
thereafter make all payments required thereunder to be made to the Partnership
directly to the Bank or the purchaser, as applicable; PROVIDED, HOWEVER, that
the Bank or the purchaser, as applicable, shall not:
(i) be liable for any act or omission of the
Partnership or be liable for any sums due and payable to the Manager under the
Management Agreement
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prior to the Bank's or the purchaser's taking possession of the Property or
otherwise acquiring or succeeding to the interest of the Partnership under the
Management Agreement;
(ii) be obligated to pay any deferred fees due solely
by reason of the acceleration thereof (it being understood that, in such event,
the provisions of the Management Agreement providing for the deferral of fees
shall continue in full force and effect);
(iii) be subject to any offsets or defenses which the
Manager may be entitled to assert against the Partnership; or
(iv) be bound by any amendment or modification of the
Management Agreement made without the consent of the Bank.
(d) Notwithstanding anything to the contrary in the Management
Agreement, the Bank or the purchaser, as applicable, shall be obligated under
the Management Agreement pursuant to this Section 1 only for the period of time
during which the Bank or the purchaser, as applicable, has an interest in the
Property, and shall not have any liability with respect to any obligations
accruing prior to or following such period; provided, however, that any such
purchaser shall continue to be liable for obligations accruing under the
Management Agreement after the sale of the Property by such purchaser to another
party to the extent so provided in the Management Agreement.
(e) The Manager hereby covenants and agrees for the benefit of
the Bank that upon its receipt of a notice of default on the part of the
Partnership under the Letter of Credit Agreement or any of the Operative
Documents, the Manager shall, upon
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written notice from the Bank that the Bank invokes the provisions of this
paragraph by reason thereof (without the necessity for the Bank to obtain from
the Partnership any authorization or direction of the Manager to satisfy the
Manager that any such default exists), hold all amounts received by the Manager
in connection with the operation of the Project or otherwise received on behalf
of the Partnership in trust for the Bank and/or turn same over to the Bank, as
the Bank shall direct, or open new bank accounts in banks and in names
designated by the Bank into which the Manager shall transfer all funds then in
the bank accounts established pursuant to Section 4.8 of the Management
Agreement, which new accounts shall thereafter be considered to be the operating
accounts of the Project. The foregoing shall not be interpreted to prevent the
Manager from paying its management fees in accordance with the provisions of the
Management Agreement (provided it is not in default thereunder or hereunder) or
from paying bills to third parties incurred in connection with the operations of
the Property, as same become due and payable, pursuant to the terms of the
Management Agreement.
(f) This Agreement and the provisions of the Mortgage, the
Pledge Agreement and the Letter of Credit Agreement shall supersede, to the
extent inconsistent with, any provisions of the Management Agreement relating to
the priority or subordination of the Management Agreement and the interests and
estates created thereby to the liens or charges of the Mortgage, the Pledge
Agreement and any of the other Operative Documents. Without limiting the
generality of the foregoing, the Manager acknowledges that it has been furnished
with copies of the Operative Documents and is familiar with the terms thereof,
and the Manager hereby waives any provisions of the
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Management Agreement relating to insurance requirements, the application of
insurance proceeds and/or condemnation awards or similar payments which are
inconsistent with the terms of the Mortgage, Pledge Agreement and/or the Letter
of Credit Agreement.
(g) At the Bank's request, the Manager shall enter into
collateral assignments, in form and substance satisfactory to the Bank, of the
Manager's rights, title and interest in and to any transportation permits
relating to the Property. In addition, if the Bank or a purchaser becomes the
owner of the Partnership's interest in the Property then, upon the written
request of the Bank or such purchaser, the Manager shall directly assign its
rights, title and interest in and to any transportation permits relating to the
Property to the Bank or the purchaser, as the case may be, to the extent
permitted by law.
SECTION 2. DEFAULT BY PARTNERSHIP UNDER MANAGEMENT AGREEMENT.
(a) The Manager hereby covenants and agrees for the benefit of the Bank
that upon the occurrence of any event which would, under the terms of the
Management Agreement, give rise to a right on the part of the Manager to
terminate the Management Agreement (herein called a MANAGEMENT AGREEMENT
DEFAULT), the Manager shall notify the Partnership thereof immediately upon the
Manager's becoming aware of such Management Agreement Default, and shall not
exercise such right to terminate until:
(i) the Manager has first given the Bank written notice (the
DEFAULT NOTICE) setting forth (A) the occurrence of such Management Agreement
Default, describing the same in reasonable detail, (B) the provision of the
Management
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Agreement violated by such Management Agreement Default, (C) the applicable cure
period, if any, and (D) the Manager's intent to terminate the Management
Agreement by reason thereof; and
(ii) except as otherwise provided in the following paragraph
(b), the Bank has failed to cure such management Agreement Default within thirty
(30) days after the later of (x) the receipt of the Default Notice or (y) the
expiration of the applicable cure period specified in the Default Notice or
otherwise permitted under the Management Agreement or, if a stay, order or
decree of a court of competent jurisdiction enjoining the termination by the
Manager of the Management Agreement shall have been obtained by the Partnership
prior to the expiration of the applicable cure period specified in the Default
Notice or otherwise permitted under the Management Agreement, within thirty (30)
days after such stay, order or decree (including any preliminary or permanent
injunction in substance continuing in effect the provisions of a temporary
restraining order or stay) shall have been vacated, dissolved or terminated,
whichever shall be the later (any such thirty (30) day period being hereinafter
called the BANK CURE PERIOD); PROVIDED that if such Management Agreement Default
cannot be cured by the payment of money and cannot with due diligence be cured
prior to the expiration of the Bank Cure Period but is nevertheless reasonably
curable, then the Manager shall not exercise such right to terminate if, and the
Bank Cure Period shall be extended for so long as, the Bank and/or the
Partnership commences to cure such Management Agreement Default within the Bank
Cure Period and thereafter prosecutes to completion the curing of such
Management Agreement Default with diligence and continuity.
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(b) If a Management Agreement Default is not reasonably curable by the
Bank or if the Bank requires possession of the Property or any portion thereof
to effect such cure, Manager agrees that so long as the fees and other amounts
thereafter arising under the Management Agreement and payable to the Manager are
paid by the Bank or otherwise, Manager shall not exercise its right to terminate
the Management Agreement until sixty (60) days after the Bank has secured the
appointment of a receiver with respect to the Property (and the Bank hereby
agrees to apply promptly for such appointment) or the Bank has gained possession
thereof; PROVIDED, HOWEVER, that if such Management Agreement Default cannot
with due diligence be cured prior to the expiration of such sixty (60) day
period, the Manager shall not exercise such right to terminate if, and such
sixty (60) day period shall be extended for as long as, the Bank and/or
Partnership commences to cure such Management Agreement Default within such
sixty (60) day period and thereafter prosecutes to completion the curing of such
Management Agreement Default with diligence and continuity.
(c) In the event of the occurrence of any default by the Partnership
under the Management Agreement, the Bank may, in its sole discretion, take any
and all acts and measures which may be required to cure any such default,
including, without limitation, the expenditure of money; PROVIDED, HOWEVER,
nothing in this Section shall be construed to require the Bank to remedy or
correct any default of the Partnership or any other condition relating to or
arising in respect of the Management Agreement. In addition, the Bank shall have
the right, but not the obligation, to appear in and defend any action or
proceeding purporting to affect the security hereof or the rights and powers
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of the Bank hereunder.
(d) For the purposes of this Agreement, any provision of the Management
Agreement providing for automatic termination of such Management Agreement or
for termination without notice or other action by the Manager, upon the
occurrence of a particular event, shall be ineffective with respect to the
rights of the Bank hereunder for so long as the Letter of Credit or the Letter
of Credit Agreement shall remain in effect, and upon the happening of any such
event the Manager shall promptly notify the Bank as provided in paragraph (a)
above and the Bank shall have the rights provided in paragraphs (a), (b) and (c)
above, and the Manager agrees, notwithstanding any termination of the Management
Agreement as to the Partnership, to continue to perform under the Management
Agreement for the benefit of the Bank as if the Management Agreement were still
in effect.
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The Manager hereby represents and warrants to and covenants and agrees
for the benefit of the Bank that:
(i) The Management Agreement is the only agreement
between the Partnership and the Manager with respect to the management of the
Project, and the Management Agreement embodies the entire agreement between the
Partnership and the Manager with respect to the management of the Project;
(ii) the Management Agreement is valid and in full
force and effect and has not been amended, modified or supplemented in any
respect except by the First Amendment thereto dated as of September 30, 1990 and
the Second Amendment
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thereto dated as of January 31, 1991;
(iii) neither the Manager nor, to the best knowledge
of the Manager, the Partnership is in default with respect to its obligations to
the other under the Management Agreement, nor is any condition now existing
which, with notice or lapse of time or both, would constitute a default
thereunder, and all terms and conditions have been performed as required under
the Management Agreement;
(iv) the Manager has the unencumbered right to enter
into this Agreement;
(v) the Manager has not received notice of any prior
assignment or transfer of the Partnership's interest under the Management
Agreement;
(vi) the Manager shall not alter, modify, amend or
otherwise change the terms, covenants or conditions of the Management Agreement
or cancel or terminate the Management Agreement (except in accordance with the
terms hereof) or accept a surrender thereof or waive, reduce or in any manner
release the Partnership from any obligation thereunder, without the prior
written approval of the Bank, which approval may be granted or withheld by the
Bank in its sole discretion;
(vii) the Manager will within ten (10) days after
request therefor from the Bank deliver to the Bank a certificate, executed on
behalf of the Manager by the chief financial officer of the Manager, stating
that as of the date of such certificate, no default or event of default under
the Management Agreement by the Partnership has occurred and is continuing, or
if any such default or event of default has occurred and is continuing,
describing in reasonable detail each such default or event of default and
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the action, if any and if known, taken or being taken to cure the same; and
(viii) notwithstanding anything to the contrary
contained in the Management Agreement, the Manager shall not make or accept, as
the case may be, any prepayments of any portion of the Manager's fees under the
Management Agreement.
SECTION 4. LIABILITY OF BANK.
Except as expressly provided in Sections 1 and 2 of this Agreement,
neither this Agreement nor any action on the part of the Bank shall constitute
an assumption by the Bank of any of the obligations of the Partnership under the
Management Agreement, and the Partnership shall continue to be liable to the
Manager for all of its obligations thereunder.
SECTION 5. TERMINATION OF AGREEMENT.
This Agreement shall terminate upon the expiration or termination of
the Letter of Credit Agreement and the Letter of Credit and the satisfaction of
all obligations, both monetary and otherwise, of the Partnership under the
Letter of Credit Agreement and the Letter of Credit. The Bank, at the
Partnership's expense, shall execute and deliver such instruments as the Manager
may reasonably request to evidence such termination.
SECTION 6. NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing and mailed (registered
or certified mail, return receipt requested, and postage prepaid),
hand-delivered, with signed receipt, or sent by nationally-recognized overnight
courier, if to the Bank, at its address
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at 000 Xxxxxxx Xxxxxx, Two World Financial Center, New York, New York 10281,
Attention: Real Estate Finance Group (Mr. Xxxxx Xxxxx or Xx. Xxxx XxXxxxx), with
a copy similarly delivered to Xxxx, Scholer, Fierman, Xxxx & Handler, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, Esq. and if
to the Manager, at c/o Xx. Xxxx X. Xxxxxxx, Xxxxxxxx Hospitality Management
Corp., 000 Xxxx Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxx Xxxx 00000, with a copy to
Xxxxxxx and Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Esq., or to such other address with respect to any party as
such party shall notify the other party in writing. All such notices and other
communications shall be effective when received at the address specified
aforesaid.
SECTION 7. MISCELLANEOUS.
(a) All covenants and agreements herein shall apply to, inure to the
benefit of, and bind the respective successors and assigns of the Bank and the
Manager. Upon any assignment or transfer by the Bank of its rights and interests
under this Agreement, the Bank shall be relieved of all obligations and
liabilities hereunder thereafter accruing.
(b) In the event any term or provision of this Agreement or the
application thereof to any person or circumstance shall, for any reason or to
any extent be invalid or unenforceable, the remaining terms and provisions of
this Agreement, or the application of any such provision to persons or
circumstances other than those as to whom or which it has been determined to be
invalid or unenforceable, shall not be affected thereby, and every provision of
this Agreement shall be valid and enforceable
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to the fullest extent permitted by law.
(c) The Manager hereby covenants and agrees to execute and deliver, in
recordable form if necessary, any and all further documents and instruments
reasonably requested by the Bank to give effect to the terms and provisions of
this Agreement and to take such further acts or actions as may be necessary to
effectuate the provisions hereof or any transaction contemplated hereby.
(d) Any provision of this Agreement to the contrary notwithstanding,
this Agreement shall not create, or be construed as evidence of, any right,
interest or estate of the Manager in or with respect to the Project not
expressly set forth in or created by the Management Agreement.
(e) This Agreement may be amended or modified only by an instrument in
writing executed by the parties hereto.
(f) This Agreement shall be governed by and construed according to the
laws of the Commonwealth of Puerto Rico.
(g) The captions in this Agreement are for convenience of reference
only and in no way define, limit or describe the scope of this Agreement or the
intent of any provision hereof.
(h) By the execution hereof, the Manager hereby represents that it has
received a copy of the Assignment and hereby consents to the provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
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THE MITSUBISHI BANK, LIMITED,
acting through its New York Branch
By: /s/
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
XXXXXXXX HOSPITALITY
MANAGEMENT CORPORATION
By: /s/
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
Affidavit No. 106 (Copy)
Acknowledged and subscribed before me by Xxxx X. Xxxxxxx, of legal age,
married, business executive and resident of San Xxxx, Puerto Rico, in his
capacity as President of Xxxxxxxx Hospitality Management Corporation and by
Xxxxxxx Xxxxxx, of legal age, married, banker and resident of Wyckoff, New
Jersey, in his capacity as Senior Vice President of The Mitsubishi Bank,
Limited, acting through its New York Branch identified by the means set forth in
Article 17(c) of the Notarial Law of Puerto Rico in San Xxxx, Puerto Rico, this
7th day of February, 1991.
_________________________________________
Notary Public
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