AMENDED AND RESTATED INTERCREDITOR,
PAYMENT PRIORITY AND LIEN PRIORITY AGREEMENT
THIS AGREEMENT (the "Agreement") is effective as of the 6th day of May,
1997, by and among ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED PARTNERSHIP, a Louisiana limited
partnership (together with its successors and assigns, "Borrower"), FIRST
NATIONAL BANK OF COMMERCE, a national banking association (together with its
successors and assigns "FNBC" or "Bank"), CANAL STREET DEVELOPMENT CORPORATION,
a Louisiana public benefit corporation (together with its successors and
assigns, "CSDC"), SONESTA LOUISIANA HOTELS CORPORATION, a Louisiana corporation
(together with its successors and assigns "Manager"), and SONESTA INTERNATIONAL
HOTELS CORPORATION, a New York corporation (together with its successors and
assigns, "Sonesta"), as an amendment to and restatement of that certain
Intercreditor, Payment Priority and Lien Priority Agreement . The capitalized
terms used herein, unless otherwise defined, shall have the meanings ascribed to
them in Article I.
W I T N E S S E T H:
WHEREAS, CSDC, pursuant to the terms of the Sixth Amendment and
Restatement of Hotel Lease Agreement, leased the Project, as hereinafter
defined, to Historic Restoration, Incorporated ("HRI"), effective December 1,
1989; and,
WHEREAS, HRI assigned all of its interest in the Hotel Lease to
Borrower by Assignment dated September 15, 1993; and,
WHEREAS, Borrower entered into that certain Loan Agreement dated as of
September 15, 1993 with FNBC (the "Loan Agreement") wherein Bank agreed to
finance the renovation of the Project, in accordance with the terms and
conditions set forth therein; and
WHEREAS, in accordance with the terms of the Loan Agreement, Bank
agreed to advance to Borrower a Loan in the amount of Twelve Million Six Hundred
Thousand and No/100 ($12,600,000.00) Dollars (the "Loan") to partially finance
the Project which is secured by a Collateral Mortgage on the Project; and,
WHEREAS, Borrower entered into on September 15, 1993 that certain Loan
Agreement with CSDC (the "CSDC Loan Agreement") wherein CSDC agreed to provide
supplemental financing for the Project; and,
WHEREAS, Manager and Sonesta entered into that certain Continuing
Guaranty dated September 15, 1993 (the "Manager Guaranty") guarantying a certain
portion of the amounts Borrower owes or would owe to Bank under the Term Note,
as defined in the Loan Agreement; and,
WHEREAS, Bank has agreed to advance additional funds to Borrower in the
amount of up to $1,505,000.00 (the "Additional Loan") in accordance with the
terms of that certain Amendment and Supplement to Loan Agreement executed on the
same date hereof (the "Amended Loan Agreement"); and,
WHEREAS, pursuant to the applicable Collateral Documents, Borrower
granted liens to FNBC, CSDC and Manager on the Collateral, as defined therein,
to secure payment of its respective obligations to Bank, CSDC, and Manager under
the applicable Creditor Agreements; and,
WHEREAS, Borrower has granted an additional Collateral Mortgage and
other security instruments to Bank as security for the Additional Loan, as set
forth under the terms of the Amended Loan Agreement; and,
WHEREAS, Manager and Sonesta have executed an additional guaranty (the
"Additional Guaranty") of certain portions of the Indebtedness owed to Bank
under the Additional Loan;
WHEREAS, Manager has provided to Borrower an advance of up to
$500,000.00 ("Manager Advance") to provide a portion of the funds necessary to
complete the Additional Work, as defined in the Amended Loan Agreement, and
Borrower has agreed to provide additional security to Manager for the repayment
of the Manager Advance and sums paid under the Additional Guaranty (the
"Additional Manager Agreement"); and,
WHEREAS, Bank has agreed to allow Borrower to use the $600,000 payment
to be received from Chevron USA under Investor Note No. 2 (the "Owner Funds") to
provide a portion of the funds necessary to complete the Additional Work.
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WHEREAS, Bank, CSDC, Manager, Sonesta and Borrower wish to, among other
things, (i) recognize the existence of the Additional Loan, the Manager Advance,
the Additional Guaranty, the Bank Agreements, the release by Bank, Manager and
CSDC of, and the use by Owner of, the Owner Funds, and the Manager Advance; (ii)
agree upon the allocations and priority of payments by Borrower to Bank, CSDC
and Manager; (iii) the allocations and priority of payments from proceeds of
Collateral; and (iv) the rights of obligations which each has to the other with
respect to the Collateral and under the Collateral Documents; and,
WHEREAS, it is a condition precedent to the effectiveness of the
Amended Loan Agreement, the advance of Additional Funds by Bank, the Manager
Advance and the Additional Guaranty that this Agreement be entered into by the
parties hereto;
NOW, THEREFORE, for and in consideration of the premises and the mutual
benefits to be received hereunder, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
mutually agree to amend and restate in its entirety the Intercreditor Agreement
as follows.
ARTICLE I
DEFINITIONS
1.1 Terms Defined Above. The terms defined in the recitals hereto shall
have the meanings ascribed thereto.
1.2 Definitions. In addition to the terms defined in the recitals
hereto, the following terms shall have the following meanings. Any capitalized
terms herein not defined shall have the meaning ascribed to same in the Loan
Agreement or the Amended Loan Agreement:
(a) "Additional Continuing Guarantees to Manager" shall mean those
limited guarantees provided by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ to the Manager in
connection with the Manager Advance.
(b) "Additional Manager Collateral Documents" shall mean the
documents whereby a security interest is granted in the Collateral described
therein for the repayment of the Manager Advance, including, without limitation:
(i) that certain Act of Collateral Leasehold Mortgage by Borrower in favor of
Manager (the "Additional Manager Mortgage"), (ii) that certain Collateral
Mortgage Note by Borrower in the amount of $650,000.00 payable to Bearer
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on demand, paraphed for identification with the Additional Manager Mortgage (the
"Additional Manager Mortgage Note"), (iii) that certain junior and subordinate
Collateral Assignment of Leases and Rents (the "Additional Manager Lease
Assignment"), (iv) that certain junior Security Agreement (Possessory
Collateral) (the "Additional Manager Security Agreement") by Borrower in favor
of Manager pledging the Additional Manager Mortgage Note as security for the
repayment of the Manager Advance, (v) the Additional Continuing Guarantees to
Manager of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and M. Pres Kabacoff, and all other documents or
instruments through which collateral is provided to Manager for repayment of the
Manager Advance.
(c) "Adjusted Gross Operating Profit" shall have the meaning
ascribed to same in the Management Agreement.
(d) "Affiliate" shall mean any Person that directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with another Person. The term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. For the purpose hereof, any Person which
owns or controls, directly or indirectly, 10% or more of the equity securities,
voting or otherwise, of another Person shall be deemed to "control" such Person.
(e) "Bank Agreements" shall mean, collectively, (i) the Loan
Agreement, (ii) the Amended Loan Agreement; (iii) the Term Note; (iv) the
Additional Construction Note; (v) the Additional Term Note; (vi) the Manager
Guaranty, (vii) the Additional Guaranty, (viii) the Bank Collateral Documents,
and agreements executed and delivered in connection with the foregoing,
including those documents included in the term "Loan Documents" as defined in
the Loan Agreement and the term "Additional Loan Documents" as defined in the
Amended Loan Agreement.
(f) "Bank Collateral" shall mean all of the Collateral described in
each of the Bank Collateral Documents and where applicable the proceeds of
insurance or escrow accounts covering such Collateral.
(g) "Bank Collateral Documents" shall mean, collectively, the
Collateral Agreements as defined in the Loan Agreement, together with the
Additional Collateral
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Agreements, as defined in the Amended Loan Agreement and all other documents or
instruments through which Collateral is provided to Bank for repayment of the
Bank Indebtedness.
(h) "Bank Indebtedness" shall mean and include individually,
collectively, interchangeably and without limitation, any and all present and
future loans, extensions of credit, liabilities and/or obligations of every
nature and kind whatsoever that Borrower may now and in the future owe to or
incur in favor of Bank and its successors or assigns, under the "Notes", as
defined under the Amended Loan Agreement, and the Bank Collateral Agreements,
whether such loans, extensions of credit, liabilities and/or obligations are
direct or indirect, or by way of assignment, and whether related or unrelated,
or committed or purely discretionary, and whether absolute or contingent,
voluntary or involuntary, determined or undetermined, liquidated or
unliquidated, due or to become due, together with interest, costs, expenses,
attorneys' fees and other fees and charges whether or not any such indebtedness
may be barred under any statute of limitation or may be otherwise unenforceable
or avoidable for any reason.
(i) "Bank/CSDC Estoppel" shall mean that certain Amended and
Restated Estoppel and Non-Disturbance Agreement between Bank and CSDC dated the
date hereof relative to the rights and obligations of Bank under the Hotel Lease
should it succeed to the interest of Borrower under the Hotel Lease.
(j) "Capital Reserve Account" shall mean that certain separate book
account created by Manager to which is credited out of Gross Revenues from the
Hotel an amount equal to the following percentages of Gross Revenues from the
Hotel for the preceding calendar month:
Years in
operation % of Gross Revenues
--------- -------------------
1 - 5 3%
6 and thereafter 4%
The Capital Reserve Account shall be used pursuant to the terms of Section 2.4
hereafter and the Management Agreement for capital additions and replacements
and any such amount not so expended shall be carried forward to subsequent
periods. The percentage of Gross Revenue set forth above is subject to
adjustment under the Management Agreement.
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(k) "Collateral" shall mean all of the Property (whether tangible
or intangible) or interests in Property in respect of which a Lien has been or
will be granted under a Collateral Document.
(l) "Collateral Documents" shall mean the Bank Collateral
Documents, the CSDC Collateral Documents, the Manager Collateral Documents, and
the Additional Manager Collateral Documents, together with all of the related
instruments and documents executed and delivered in connection therewith and all
Uniform Commercial Code financing statements and other filings made in
connection therewith and all other agreements, instruments or documents now or
hereafter executed and delivered by Borrower, granting or evidencing any Liens
on any Property now owned or hereafter acquired by Borrower in favor of Bank or
any Lender.
(m) "Commercial Space" shall mean the ground level commercial space
consisting of approximately 22,521 square feet which Borrower will lease to a
third party, or parties, subject to the approval of Bank, CSDC, and Manager.
(n) "Corner Lot Lease" shall mean the lease between HRI and Mercier
Realty and Investment Company under which space at the corner of Dauphine and
Iberville Streets is leased for the exclusive use of the Hotel which has been
assigned by HRI to Borrower.
(o) "Creditor Agreements" shall mean, collectively, the Bank
Agreements, the CSDC Loan Agreements, the CSDC Lease Agreements and the Manager
Agreements.
(p) "CSDC Collateral" shall mean all of the Collateral described in
each of the CSDC Collateral Documents and where applicable the proceeds of
insurance or escrow accounts covering such Collateral.
(q) "CSDC Collateral Documents" shall mean, collectively, (i) that
certain Act of Collateral Leasehold Mortgage by Borrower in favor of CSDC (the
"CSDC Leasehold Mortgage"), (ii) that certain Collateral Mortgage Note in the
amount of $5,600,000, payable to Bearer on demand, paraphed for identification
with the CSDC Leasehold Mortgage, (iii) that certain Security Agreement
(Possessory Collateral) by Borrower in favor of CSDC, (iv) that certain Pledge
and Assignment of Leases and Rents by Borrower in favor of CSDC, (v) that
certain Commercial Security Agreement by Borrower in favor of CSDC, and (vi)
that certain Louisiana UCC-1 Financing Statement by Borrower, as debtor,
together with all other documents
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or instruments through which collateral is provided to CSDC for repayment of the
CSDC Indebtedness.
(r) "CSDC Debt Reserve" shall mean that certain $500,000 reserve
established and administered pursuant to Section 2.4 hereof, pledged as security
for the Bank Indebtedness.
(s) "CSDC Indebtedness" shall mean, collectively, the CSDC Loan
Indebtedness and the CSDC Lease Indebtedness.
(t) "CSDC Lease Documents" shall mean collectively (i) the Hotel
Lease, together with all amendments and supplements thereto; (ii) the Servitude;
and (iii) any and all documents, instruments and agreements executed and
delivered in connection with the foregoing.
(u) "CSDC Lease Indebtedness" shall mean all debts, liabilities and
obligations of Borrower to CSDC under the CSDC Lease Documents, whether direct
or indirect, absolute or contingent, or due or to become due.
(v) "CSDC Loan" shall mean that certain loan from CSDC to Borrower
of the sum of $5,600,000 for the payment of Soft Costs and other items
identified in the Budget.
(w) "CSDC Loan Agreements" shall mean, collectively (i) the CSDC
Loan Agreement (sometimes referred to as the "Obligor Loan Agreement"), (ii)
that certain promissory note in the amount of $5,600,000.00 by Borrower payable
to the order of CSDC, paraphed for identification with the CSDC Loan Agreement,
(iii) the CSDC Collateral Documents, and (iv) any and all documents,
instruments, and agreements executed and delivered in connection with the
foregoing.
(x) "CSDC Loan Indebtedness" shall mean all debts, liabilities and
obligations of Borrower to CSDC under the CSDC Loan Agreements, whether now
existing or hereafter arising, whether direct or indirect, absolute or
contingent, or due or to become due.
(y) "CSDC/Manager Reserve" shall mean the funds held in an escrow
account (the "CSDC /Manager Reserve Account") pursuant to the Agreement dated
September 15, 1993 (the "CSDC/Manager Reserve Agreement") as security for the
CSDC Loan Indebtedness.
(z) "Debt Service Payment" means with respect to a particular
obligation to repay borrowed money, the monthly payment of principal and/or
interest called for under the terms of such obligation.
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(aa) "Disposition Proceeds" shall mean all cash and non-cash
proceeds of, and all other revenues or receipts, in whatever form, arising from
the enforcement of any of the remedies provided for under the Collateral
Documents or other disposition of, or realization upon, Property, including
without limitation, all claims of Borrower against third parties for loss of,
damage to or destruction of, or for proceeds payable under, or unearned premiums
with respect to, policies of insurance in respect of, any Property, and any
condemnation or requisition payments with respect to any Collateral, and
including proceeds of all such proceeds, in each case whether now existing or
hereafter arising.
(bb) "Event of Default" shall mean any Event of Default as such
term is defined in any of the Creditor Agreements or any Collateral Documents,
and "Default" means any of the events which with the giving of notice, the lapse
of time, or both, or satisfaction of any other condition, would constitute an
Event of Default under any of the Creditor Agreements or Collateral Documents.
(cc) "Expense or Expenses" shall mean any and all expenses paid or
incurred by Manager in connection with the operation of the Project which are
included in determining Net Income, as determined in accordance with the now
current "Uniform System of Accounts for Hotels", Eighth Revised Edition, 1986
("Uniform System of Accounts for Hotels"), on the accrual basis in accordance
with generally accepted accounting principles consistently applied, except that
Expenses shall not include equipment lease charges, income taxes, depreciation
and amortization, the incentive fee or interest expenses. Without limiting the
generality of the foregoing, Expenses shall have the same meaning herein which
is ascribed to that term under the Management Agreement.
(dd) "GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time applied on a consistent
basis.
(ee) "Governmental Authority" shall mean any sovereign state or
nation or government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
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(ff) "Gross Operating Profit" shall mean Gross Revenues less
Expenses, except those Expenses described in subsections (i), (vii), (viii), and
(ix) of the definition of Expenses in the Management Agreement.
(gg) "Gross Revenues" means any and all revenues as is more
particularly defined in the Management Agreement.
(hh) "Hotel" means the Furnishings, Equipment and Inventory,
Operating Equipment, Specialized Hotel Equipment, the Building (other than the
Commercial Space), the Hotel Lease, the Servitude, the Corner Lot Lease, the
Hotel Parking Lease, the Site, Consumable Supplies, the Improvements, and the
Additional Improvements, together with all entrances, exits, rights of egress
and ingress, servitudes, easements and appurtenances thereon belonging to or
pertaining.
(ii) "Hotel Lease" means that certain First Amendment to Sixth
Amendment and Restatement of Hotel Lease Agreement dated May 6, 1997, together
with all amendments, supplements, restatements and modifications thereto by and
between CSDC and Borrower of a portion of the property designated as the "▇.▇.
▇▇▇▇▇▇ Property".
(jj) "Hotel Parking Lease" shall mean that certain sublease between
CSDC and HRI of 150 parking spaces for the Hotel's exclusive use in a garage
located at Iberville Street, New Orleans, Louisiana dated September 15, 1993
assigned to Borrower, as amended.
(kk) "HUD" shall mean the United States Department of Housing and
Urban Affairs.
(ll) "Indebtedness" shall mean the Bank Indebtedness, the CSDC
Indebtedness, and/or the Manager Indebtedness, as applicable.
(mm) "Lien" shall mean any security interest, mortgage, pledge,
hypothecation, assignment, collateral assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any lease obligation which is capitalized on a balance sheet of a
Person prepared in accordance with GAAP, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
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(nn) "Management Agreement" shall mean that certain agreement dated
September 15, 1993 entered into by Borrower with Manager for the management of
the Hotel, as defined therein, as amended by First Amendment to Management
Agreement dated as of May ___, 1997.
(oo) "Management Operating Reserve" shall mean that $500,000
reserve established under the Management Agreement and described in Section 2.1
hereof.
(pp) "Manager Advance" shall mean that certain advance of $500,000
by Manager to Borrower plus interest and costs attributable thereto secured by
the Additional Manager Collateral Documents.
(qq) "Manager Advance Agreement" means that certain Manager Advance
Agreement, dated May ___, 1997, among Borrower, Manager and Sonesta relating to
the terms and conditions under which Sonesta and Manager shall execute and
deliver the Additional Guaranty and make the Manager Advance.
(rr) "Manager Agreements" shall mean, collectively, (i) the Manager
Guaranty, (ii) the Additional Guaranty, (iii) the Manager Collateral Documents,
(iv) the Additional Manager Collateral Documents; (v) the Management Agreement,
(vi) the CSDC/Manager Reserve Agreement, (vii) those portions of the Manager
Advance Agreement that obligate Borrower with respect to repayment of any amount
advanced by Manager or Sonesta under the Additional Guaranty, and (viii) any and
all documents, instruments and agreements executed and delivered in connection
with the foregoing.
(ss) "Manager Collateral" shall mean all of the Collateral
described in each of the Manager Collateral Documents and the Additional Manager
Collateral Documents and where applicable the proceeds of insurance or escrow
accounts covering such Collateral.
(tt) "Manager Collateral Documents" shall mean, collectively, (i)
that certain junior and subordinate Manager Mortgage, (ii) that certain
Collateral Mortgage Note by Borrower in the amount of $8,000,000.00 payable to
Bearer on demand paraphed for identification with the Manager Mortgage, (iii)
that certain junior and subordinate Collateral Assignment of Leases and Rents,
(iv) that certain junior Security Agreement (Possessory Collateral) by Borrower
in favor of Manager, (v) that certain junior Commercial Security
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Agreement by Borrower to Manager, (vi) those certain UCC-1 Financing Statements
relating to the above by Borrower to Manager, and all other documents or
instruments through which collateral is provided to Manager for certain of the
Manager Indebtedness (expressly excluding the Manager Advance).
(uu) "Manager Indebtedness" shall mean all debts, liabilities and
obligations of Borrower to Manager under the Manager Agreements including, but
not limited to, that reflected on one or more of the grid notes executed by
Borrower in favor of Manager, whether now existing or hereafter arising, whether
direct or indirect, absolute or contingent, or due or to become due and the
Manager Advance.
(vv) "Manager Mortgage" shall mean that certain mortgage dated
September 15, 1993 by ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Limited Partnership on the Hotel
leasehold and other collateral related thereto in favor of Manager as security
for the repayment of any sums advanced under the Manager Guaranty, the
Additional Guaranty, and amounts advanced pursuant to or payable to Manager
under the CSDC/Manager Reserve Agreement, up to the amount of the Maximum
Secured Manager Indebtedness, which Manager Mortgage shall not be used to secure
the Manager Advance or any obligation other than those obligations described in
the Manager Collateral Documents, and which Manager Mortgage shall be cancelled
when, after the time the FNBC Loan, as defined in the Obligor Loan Agreement, is
paid in full and all amounts secured by such Mortgage have been paid in full.
(ww) "Manager Non-Disturbance Agreement" shall mean that certain
non-disturbance and attornment agreement between Bank and Manager wherein Bank
agrees to recognize the Management Agreement and allow Manager to perform its
obligations and derive the benefits under the Management Agreement, should Bank
succeed to the interest of Borrower thereunder, and the amendment and supplement
thereto executed this day.
(xx) "Maximum Secured Manager Indebtedness" shall mean the maximum
amount secured at any time by the Manager Collateral Documents, and shall
include only the sum of (i) the total amount of payments which Manager or
Sonesta is required to make under the Manager Guaranty and the Additional
Sonesta Guaranty (collectively, the "Guaranty Obligations"), plus (ii) the
amount of supplemental base fee payable to Manager pursuant to the
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CSDC/Manager Reserve Agreement (the "Supplemental Base Fee"), the form of which
is annexed to the Management Agreement as exhibit 1.11, plus (iii) all interest,
costs and other fees due to Manager and/or Sonesta by Borrower under the Manager
Agreements (other than fees, default interest, costs or penalties incurred or
accrued as a result of Manager's failure to perform under the Sonesta Guaranty
or the Additional Sonesta Guaranty). By way of example, if the maximum amount of
payments paid to FNBC under the Sonesta Guaranty and the Additional Sonesta
Guaranty totals $5,000,000, then the maximum amount secured shall be $5,000,000
plus the Supplemental Base Fee and all interest, costs and other fees then due
to the Manager and/or Sonesta by Borrower under the Manager Agreements (other
than fees, default interests, costs or penalties incurred or accrued as the
result of Manager's failure to perform under the Sonesta Guaranty or the
Additional Sonesta Guaranty). The limitations set forth herein shall not apply
to any amounts due by Borrower to Manager under the Manager Advance, which is
separately secured by the Additional Manager Collateral Documents and which is
not secured by the Manager Collateral Documents.
(yy) "Operating Reserves" shall mean, and include both the
Management Operating Reserve in the amount of $500,000.00 and the CSDC Debt
Reserve in the amount of $500,000.00. Both of the reserves comprising the
Operating Reserves have been funded out of the CSDC Loan and deposited into
accounts maintained with Bank for application in accordance with Section 2.4
hereof and the Management Agreement for payment of Expenses, the Bank
Indebtedness and CSDC Loan Indebtedness.
(zz) "Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
(aaa) "Principal Reduction Payment" shall mean the payment of
$1,500,000.00 in reduction of the principal amount outstanding under the Bank
Indebtedness in accordance with the terms of the Loan Agreement.
(bbb) "Proceeding" shall have the meaning provided in Section 3.4
hereof.
(ccc) "Project" shall mean the construction, renovation and
erection of improvements for development of the former ▇. ▇. ▇▇▇▇▇▇ department
store located in Square
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67, Second Municipal District, New Orleans, Louisiana, as a hotel facility and
related commercial space including the incorporation of the Corner Lot Lease and
the Hotel Parking Lease all in accordance with the Plans and Specifications and
the Additional Plans and Specifications.
(ddd) "Property" shall mean all types of immovable, movable or
mixed property and all types of corporeal or incorporeal property.
(eee) "Requirement of Law" shall mean as to any Person, the
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court of other Governmental Authority, in
each case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
(fff) "Secured Manager Indebtedness" shall mean the amount of
indebtedness owed to Manager by Borrower and which is secured by the Manager
Collateral Documents and the Additional Manager Collateral Documents.
(ggg) "Servitude" shall mean that certain Servitude of Right of Use
dated as of September 15, 1993, entered into by HRI with CSDC and assigned by
HRI to Borrower.
(hhh) "Garage Lease" shall mean the sublease between CSDC and
Borrower for the entire Garage, executed the same day hereof which is intended
to be implemented, in some circumstances, in place of the Hotel Parking Lease.
ARTICLE II.
PAYMENT PRIORITIES
2.1 Payments to Bank. Borrower shall first make all payments due and
owing under the Bank Agreements for scheduled monthly installments of principal
and interest of the Bank Indebtedness and payment of all other Bank Indebtedness
then due and owing to Bank in accordance with the Loan Agreement. The funds in
the Operating Reserves shall be held by Bank as security for the Bank
Indebtedness pursuant to the terms of the Loan Agreement. Should insufficient
Gross Revenues be available to pay all Expenses and sums due under the Bank
Agreements (other than the Manager Guaranty), Manager shall have the right to
use the funds in the Management Operating Reserve to make payments of regular
monthly payments due
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under the Term Note, the Additional Construction Note, the Additional Term Note,
and the payment of Expenses. Notwithstanding anything herein to the contrary,
should Bank determine that the Principal Reduction Payment may be eliminated
from the Loan Agreement, or that payments toward the Principal Reduction Payment
may be decreased, then conditioned upon the approval of CSDC and Sonesta, this
Agreement may be amended as necessary, solely to eliminate or modify any
provisions regarding the distribution of Adjusted Gross Operating Profit
resulting from the elimination, reduction, or modification of the Principal
Reduction Payment.
2.2 Payment Subordination.
(a) Notwithstanding the provisions of any other document or
agreement to the contrary, as long as no Event of Default has occurred and is
continuing, following payment of (1) equipment lease costs as set forth in the
Management Agreement, (2) Landlord Administrative Expenses pursuant to the Hotel
Lease, and rent payable under the ▇▇▇▇▇▇ and Corner Lot Leases, and (3) payment
to Bank of scheduled monthly installments of principal and interest of the Bank
Indebtedness and payment of all other Bank Indebtedness then due, Borrower shall
make payments from Adjusted Gross Operating Profit to be applied in the
following priority:
(i) to CSDC in satisfaction of scheduled monthly
installments of principal and interest on CSDC Loan
Indebtedness;
(ii) to CSDC in satisfaction of the current Fixed Rent,
Percentage Rent, Additional Rent, and Air Rights Rent,
as defined in the Hotel Lease, due under the Hotel
Lease;
(iii) to current Base Commercial Rent Participation;
(iv) repayment of scheduled installments of the Manager
Advance;
(v) to Bank in satisfaction of the Principal Reduction
Payment;
(vi) to CSDC in satisfaction of deferred amounts of CSDC
Loan Indebtedness debt service, including interest;
(vii) to CSDC in satisfaction of deferred amounts of Fixed
Rent and Base Commercial Rent Participation plus
interest, if any, due under the Hotel Lease;
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(viii) to Manager for amounts owed to Manager under the
CSDC/Manager Reserve Agreement. This payment shall only
be made to the extent that the CSDC/Manager Reserve has
not been previously released unto the Manager;
(ix) to repayment of the Sonesta Loan, as defined in the
Management Agreement;
(x) to repayment of Project Expense Loans made to fund
Hotel Project shortfalls (as such term is defined and
as used herein Project Expense Loans shall mean
documented loans made to Borrower by its general or
limited partners to fund Landlord Administrative
Expenses, rent under the ▇▇▇▇▇▇ and Corner Lot Leases,
Rent under the Hotel Lease and debt service on the CSDC
Loan Indebtedness in the event that sufficient revenues
were not available from Hotel operations to pay such
expenses at the time the loans were incurred, as
defined in the ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Limited Partnership
Agreement in effect as of the Signing Date hereof);
(xi) to payment to the Manager of its Incentive Fee and then
any Deferred Incentive Fee (as such terms are defined
in the Management Agreement) and as provided under the
Management Agreement;
(xii) to Manager equal to Base Fees deferred pursuant to
Section 8.4 of the Management Agreement, together with
applicable interest thereon;
(xiii) to payment of Revenue Sharing Rental to Landlord;
(xiv) to distribution to the ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Limited
Partnership. Provided, however, any and all
distributions which would go to the General Partner of
the Partnership or Historic Restoration, Incorporated
hereunder are subject to payment to Landlord in the
event that any funds are owed to Landlord pursuant to
(i) the
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Apartment Lease, (ii) any financial guarantee by HRI to
Landlord, or (iii) any other document which provides
for the payment of HRI's net interest or proceeds from
the Hotel Project to cover other monetary obligations
owed to Landlord;
(xv) to Manager in satisfaction of remaining payments due to
Manager under the Management Agreement; and
(xvi) the remainder to Borrower.
(xvii) The payment of Carrying Costs Rent, as defined in the
Hotel Lease, to the extent it exceeds rent due under
the ▇▇▇▇▇▇ and Corner Lot Leases and Expenses included
under the Management Agreement, shall be paid by
Borrower out of its own funds and not Adjusted Gross
Operating Profit.
(b) The parties hereby acknowledge that the provisions of
Subsection 2.2(a) above apply to the distribution of Adjusted Gross Operating
Profit produced by the Hotel and, in some instances, the Commercial Space. The
provisions set forth hereafter shall apply solely to funds received and expenses
incurred in connection with the Garage under the Garage Lease and shall
terminate upon payment in full of the Garage Improvement Loan, as defined in the
Amended Loan Agreement between Borrower and Bank.
(c) Notwithstanding the provisions of any other document or
agreement to the contrary, as long as no Event of Default has occurred and is
continuing the parties hereto hereby agree that all revenue produced from the
operation of the Garage pursuant to the Garage Lease shall be used first to pay
operating expenses incurred in connection with the operation of the Garage, and
then to pay Fixed Minimum Rent, pursuant to the provisions of Section 4 of the
Garage Lease; thereafter all excess revenues shall be delivered to Bank in
payment of all principal, interest and other fees owed in connection with the
Garage Improvement Loan, but only to the extent that the Garage Improvement Loan
is used by Borrower to construct the Tenant Improvements. CSDC hereby
specifically acknowledges that (i) it has agreed under the provisions of the
Garage Lease to forego receipt of Percentage Rent under the Garage Lease until
Borrower has received reimbursement for its expenses incurred in constructing
the Tenant
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Improvements, as defined under the Garage Lease, and (ii) Borrower is
entitled to withdraw funds out of the Capital Improvement Fund necessary to
recapture its expenses incurred on the Tenant Improvements, with such funds
removed from the Capital Improvement Fund being delivered to Bank in payment of
all sums due in connection with the Garage Improvement Loan.
The provisions of this Section are not intended to expand or in
any way increase the rights of Borrower as Tenant under the Garage Lease, but
rather are intended to acknowledge the rights of Tenant to forego making
Percentage Rent payments and contributions to the Capital Improvement Fund and,
in turn to use those funds in payment of the Garage Improvement Loan.
2.3 Payment Upon Event of Default.
(a) Notwithstanding the provisions of any other document or
agreement to the contrary, upon the occurrence of an Event of Default (or a
Default) under the Bank Agreements, the occurrence of which shall be
conclusively established by Bank giving written notice thereof, if required
herein, to Manager, CSDC and Borrower, which has not been cured in accordance
with the provisions hereinafter which allow such, all of the Bank Indebtedness
shall first be paid in full before any payment of any of the Manager
Indebtedness or the CSDC Lease Indebtedness and CSDC Loan Indebtedness (except
for payment directed by Bank in satisfaction of Landlord Administrative Expenses
and/or Carrying Costs Rent, as defined in the Hotel Lease). Until the Bank
Indebtedness has been paid in full:
(i) any payment, instrument, debenture or security received
by CSDC or Manager in respect of the CSDC Indebtedness
or the Manager Indebtedness, other than the Deferred
Rent Note by Borrower to CSDC (a copy of which is
annexed to the Hotel Lease as Exhibit 13) and those
funds held in the CSDC/Manager Reserve, the Garage
Reserve or the City Reserve, as defined in the Obligor
Loan Agreement, in which Bank has no lien rights, shall
be held in trust by recipient thereof for the benefit
of Bank and shall be forthwith turned over by them to
Bank (except as may otherwise be required by HUD
pursuant to their rights granted in connection
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with their loan to the City of New Orleans which was in
turn advanced to CSDC and now represents the CSDC
Loan);
(ii) CSDC and Manager shall perform any action and execute
any documents relating to any proceeding filed in
connection with, prior or subsequent to an Event of
Default or Default that Bank requests that it perform
or execute to implement this Agreement which is
consistent with the terms of this Agreement; and
(iii) notwithstanding the above, Manager, so long as it
continues to manage the Hotel under the Management
Agreement, may pay all fees and Expenses provided for
under the Management Agreement.
(b) Following the payment of all of the Bank Indebtedness and other
amounts as set forth in subparagraph (a) above, any remaining payments with
respect to the Manager Indebtedness and the CSDC Lease Indebtedness and CSDC
Loan Indebtedness shall be made in accordance with the priority established in
Section 2.2.
2.4 Use of Reserves.
(a) Operating Reserves. The Operating Reserves are composed of the
CSDC Debt Reserve and the Management Operating Reserves. These Operating
Reserves were established at the commencement of the Term Loan, as defined in
the Loan Agreement, with $1,000,000 from the CSDC Loan. To establish the
reserves, $500,000 was deposited into each of two accounts with Bank: the CSDC
Reserve Account and the Management Reserve Account (collectively, the "Operating
Reserve Accounts"). The Operating Reserve Accounts shall be interest bearing
accounts with said interest to be credited to the account of Borrower. Funds in
the Operating Reserve Accounts shall be held by Bank as security for the Bank
Indebtedness pursuant to the terms of the Commercial Security Agreement as set
forth in Section 3.1(b) of the Loan Agreement. So long as no Event of Default
exists, funds in the CSDC Debt Reserve may be used by Manager to pay current
payments (i.e., not deferred payments) due under the CSDC Loan Indebtedness upon
written notice to CSDC and Bank, in the event that the Hotel does not generate
sufficient cash flow to pay all current debt service, including principal and
interest owed to CSDC. Said notice to CSDC and Bank shall contain a
representation that sufficient
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funds were not available to make the payments due on the CSDC Loan and be
supported by documents deemed sufficient by Manager establishing the need for
the use of the CSDC Debt Reserve. The Management Operating Reserve shall be used
in accordance with the provisions of Section 2.1 hereinabove and the Management
Agreement. Upon the occurrence of an Event of Default, all sums which remain in
the Operating Reserve Accounts shall be held by Bank solely as security for the
Bank Indebtedness and may be applied by Bank to its Indebtedness. Except for the
authority of Manager to make disbursements from the Operating Reserves in
accordance with the provisions hereinabove and in addition to the provisions of
the Management Agreement, no third party shall have any claim to the funds or a
security interest therein other than Bank. Manager may use any funds received
under Section 2.2(xiv) above at the end of each year to replenish the Management
Operating Reserve.
(b) Capital Reserve. The Capital Reserve Account shall be
established upon the commencement of the operations of the Hotel and maintained
and continued in accordance with the terms of the Management Agreement. The
funds in this account, if any, shall continue to be the funds of Borrower. Prior
to an Event of Default funds in this account may be used solely for the purposes
set forth in the Management Agreement. The funds in this account shall be
pledged to Bank. Upon the occurrence of an Event of Default, Bank shall be
authorized to exercise any and all remedies it has against the account subject
to any continuing obligation to maintain the Capital Reserve Account under the
terms of the Management Agreement and the Manager Non-Disturbance and Attornment
Agreement between Manager and Bank. Funds actually deposited in the Capital
Reserve Account may be used, prior to an Event of Default, by Manager to fund
its obligations under Section 3.4(a) of the Management Agreement provided
Manager shall repay any such withdrawals during any year either from excess
Adjusted Gross Operating Profit or from Manager's own funds, in which case such
advances will be treated in the same manner as advances under Section 3.4(a) of
the Management Agreement are treated. Should the Capital Reserve Account not
contain actual funds but be maintained as a book account then any funds which
have been credited to the account out of Gross Revenue but which are not
available when capital additions and replacements are to be made due to
deficiency in Adjusted Gross Operating Profit or which are not available to be
delivered to Bank upon the
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occurrence of an Event of Default shall be provided by Manager out of Manager's
own funds and be treated as an advance under Section 3.4(a) of the Management
Agreement.
(c) CSDC/Manager Reserve. Manager and CSDC have agreed to establish
the CSDC Manager Reserve in accordance with the terms of the CSDC/Management
Reserve Agreement by and between Borrower, CSDC and Manager. Under the terms of
said Agreement, two percent (2%) of Gross Revenue is to be deposited into a
reserve account which is to be used for payment of the CSDC Lease Obligations
and CSDC Loan Obligations. The use of these funds shall be in accordance with
the terms of the CSDC/Manager Reserve Agreement.
(d) Priority of Reserves. The reserves set forth under subsections
(a) through (c) above shall be used in accordance with the order of their
listing herein. In other words, funds available under the CSDC Debt Reserve for
the payment of CSDC Loan Indebtedness shall be exhausted prior to the use of any
funds in the other reserves for such purposes. Funds in the CSDC/Manager Reserve
Account shall be used only upon the complete use of all funds in the CSDC Debt
Reserve and the Contingency Reserve allocated for such purpose.
(e) CSDC and Manager hereby recognize that Bank's lien on the
Operating Reserves and Capital Reserve accounts are superior to the Junior Liens
granted to Manager and CSDC, respectively. Bank, however, acknowledges that it
does not have, and shall not obtain, a security interest in the CSDC/Manager
Reserve, the "Garage Reserve", or the "City Reserve" as the last two terms are
defined in the Obligor Loan Agreement.
ARTICLE III.
ENFORCEMENT OF REMEDIES
3.1 Enforcement of Remedies.
(a) Except as provided in Section 3.2 below, upon the occurrence of
an Event of Default under their respective Creditor Agreements, unless the prior
written consent of Bank is obtained, neither CSDC nor Manager shall exercise or
enforce any rights or remedies under their respective Collateral Documents, or
otherwise with respect to the Liens on any Collateral or under their applicable
Creditor Agreements, applicable law or otherwise against Borrower, including,
without limitation, the delivery of any default notice to Borrower and the
acceleration of any of the obligations comprising the Indebtedness held by CSDC
or Manager. CSDC and
-20-
Manager agree that this limitation on their exercise of their remedies under
their respective Collateral Documents shall commence on the date hereof and
expire upon the earlier of (i) the date the Bank's Indebtedness is paid in full,
and (ii) six (6) months after the original maturity date of the Term Note, as
defined in the Loan Agreement. Provided, however, said period shall be extended
to prohibit any exercise of remedies by CSDC or Manager during any period in
which Bank is exercising its remedies under the Bank Collateral Documents.
(b) Except as specifically provided in the Hotel Lease, it is
hereby understood and agreed that CSDC shall not exercise any rights or remedies
to terminate, cancel or evict Borrower on account of any default by Borrower
under the CSDC Lease Documents. Nevertheless, except as provided otherwise in
the FNBC/CSDC Estoppel, CSDC may take the following actions authorized under the
Hotel Lease in accordance with and subject to the terms of the Hotel Lease: (i)
CSDC's right to declare a default under the Hotel Lease by virtue of the
Lessee's failure to pay any Landlord Administrative Expenses or Carrying Costs
Rent, as defined in the Hotel Lease; (ii) CSDC's authority to invoke its
"Protection Right" under Section 41 of the Hotel Lease; and (iii) cure any
default under the Bank Agreements as set forth in Section 20.G(3) of the Hotel
Lease.
(c) Nothing in this Section 3.1 shall be construed to limit or
restrict the ability or right of Bank to enforce any and all rights and remedies
granted to Bank in any one or more of the Bank Agreements. CSDC, Manager and
Borrower expressly acknowledge and agree that notwithstanding the limitations
and restrictions contained herein on their respective rights and remedies, no
such limitation or restriction applies to Bank or the Bank Agreements, and Bank,
in its sole and absolute discretion, except as specified hereinbelow, may
enforce the rights and remedies granted therein in accordance therewith, without
prior notice to or consent by CSDC or Manager and without any obligation to
pursue in any priority the Bank Collateral, if at all. Notice of an Event of
Default under a Bank Agreement shall be provided as follows:
(i) Bank shall provide Manager with the same notice of
default, if any, under the Bank Agreements and the same
time period to cure, if any, if the default can be
cured by Manager, which Borrower is to receive under
the Bank Agreements;
-21-
(ii) Bank shall provide CSDC with the notice and right to
cure set forth in Section 20.G(3)(e) of the Hotel
Lease.
(d) The parties hereto recognize that various entities have been
granted rights to cure defaults arising under certain documents including, but
not limited to, the Mercier Garage Ground Lease, the Hotel Parking Lease, the
Garage Lease, the Corner Lot Lease, and the ▇▇▇▇▇▇ Lease, as such terms are
defined herein or in the Hotel Lease (the "Project Leases"). Without
establishing a priority for the right to cure, the parties recognize that any of
the beneficiaries (the "Benefitted Parties") of the Estoppels, as defined in the
Loan Agreement, executed by the parties to these Project Leases in favor of
Bank, Manager and/or CSDC shall have the right to take action to cure a default
under any Project Lease so long as any benefits which are produced by such
curative action does not prejudice the rights of any other Benefitted Party to
the rights and benefits of the Project Lease; i.e. should a Benefitted Party
cure a default under any of the Project Leases the benefits which are preserved
thereby shall inure to the benefit of all Benefitted Parties (Bank, Manager or
CSDC). The party curing any default shall be entitled to be reimbursed by the
defaulting party as well as by the secured creditor who succeeds to the interest
of the defaulting party after an exercise of its remedies under its Collateral
Documents.
3.2 Action by Junior Lienholder. Notwithstanding the provisions of
subsection 3.1(a) above, Bank hereby agrees that should an event of default
exist under the Manager Collateral Documents, the Additional Manager Collateral
Documents, or the CSDC Collateral Documents due to either Borrower's bankruptcy
(which cannot be cured by Manager's compliance with the General Partner
Substitution Agreement among HRI, Chevron, Sonesta and Contractor) or the
failure of Chevron to make payments when due under any of the Chevron Notes
("Actionable Defaults") then Manager or CSDC may enforce the remedies under
their respective Collateral Documents subject to the rights of Bank, if Bank
does not elect to pursue its remedies under its Collateral Documents within 30
days from the occurrence of the Actionable Defaults, or in the case of a
bankruptcy by Borrower whatever other period Bank may be required by law to wait
before exercising its security rights. Should Bank elect to pursue all of its
remedies then Manager and CSDC, provided Bank is diligently pursuing its
remedies, shall not take any action against the Collateral until the Bank's
Indebtedness is paid off. If Bank
-22-
elects to only pursue a portion of the Collateral, Manager and CSDC shall have
the right to exercise their respective remedies against that portion of the
Collateral not sought by Bank, but subject to any lien in favor of Bank therein.
3.3 Additional Liens. Neither CSDC or Manager shall obtain a Lien on
any Property of Borrower, other than (i) Liens granted to each respective lender
on the Collateral granted pursuant to the terms of the applicable Collateral
Documents, and (ii) Liens granted on the Apartment Lease or the Apartment
Parking Lease, as those terms are defined in the Hotel Lease. Should CSDC or
Manager obtain an additional Lien on any Property of Borrower contrary to the
above provision, said Lien shall be deemed to have been taken by CSDC or
Manager, as the case may be, as agent for Bank and shall benefit Bank as if it
had been granted directly to it and any proceeds received by CSDC or Manager
therefrom shall first be used and applied to the repayment of the Bank
Indebtedness. No document which creates such a Lien, however, can create any
obligations on the part of Bank without the specific assumption of same by Bank.
Borrower shall also be considered a beneficiary of the Manager
Guaranty and the Additional Guaranty to the limited extent of (1) Manager's
agreement to guarantee the scheduled amortized payments under the Term Note, as
provided in the Manager Guaranty and the Additional Term Note, as provided in
the Additional Guaranty, and (2) providing to Borrower the right to declare a
default under the Management Agreement if Manager or Sonesta has not made the
payment demanded by the Bank under the Manager Guaranty or the Additional
Guaranty within three days after the effective date of notice to Manager or
Sonesta of a default on the Indebtedness as defined in the Manager Guaranty and
the Additional Guaranty. The beneficial interest intended to be granted to
Borrower hereby does not extend to or include providing Borrower any right or
advantage not specifically set forth in this paragraph, including the right to
seek and recover any damages for losses that Borrower may sustain as a result of
Manager or Sonesta's performance or failure to perform under the Manager
Guaranty or the Additional Guaranty. In connection therewith, Borrower hereby
waives the right to seek and recover any damages, including any consequential,
compensatory or incidental damages, from Manager or Sonesta in connection with
the Manager Guaranty or the Additional Guaranty, recognizing that the right to
recover damages under such agreement solely reposes in the Bank.
-23-
Borrower may not take any action under either Guaranty without the
prior written consent of Bank.
3.4 Parties' Intent. The parties hereby intend that the provisions of
this Agreement shall be enforceable during any event of any insolvency,
bankruptcy, liquidation, reorganization or other similar proceedings, or any
receivership proceedings in connection therewith, relative to Borrower, and in
the event of any proceedings for voluntary liquidation, dissolution or other
winding up of Borrower, whether or not involving insolvency or bankruptcy
proceedings (a "Proceeding").
ARTICLE IV.
LIEN PRIORITIES AND SUBORDINATION
4.1 Lien Priorities. Notwithstanding the date, manner or order of
perfection of the Liens granted Bank and the Liens granted to CSDC and Manager,
and notwithstanding any provisions of the Uniform Commercial Code in effect in
the State of Louisiana or the Commonwealth of Massachusetts, or any applicable
law or decision, or any provision of the Creditor Agreements, or whether either
Bank, CSDC or Manager holds possession of all or any part of the Collateral, the
following, as between Bank, CSDC and Manager, shall be the relative priority of
the Liens of Bank and the Liens of CSDC and Manager in the Collateral:
(a) Bank shall have a first and prior Lien in and on the Collateral
to secure the Bank Indebtedness. The parties hereto, including, without
limitation, Bank, hereby recognize and acknowledge that, notwithstanding the
fact that the Bank's Additional Collateral Mortgage is in a principal amount in
excess of the Additional Construction Note and/or Additional Term Note, the
subordination of the Liens of CSDC and Manager to the Bank's Liens are limited
solely to amount of funds advanced under the Additional Construction Note, the
Additional Term Note, as defined in the Amended Lease Agreement, together with
advances by Bank to preserve its Collateral pursuant to the Bank Collateral
Agreements. Bank acknowledges that any advances to Borrower in excess of the
Additional Construction Note or Additional Term Note, together with advances by
Bank to preserve its Collateral pursuant to the Bank Collateral Documents, shall
only be secured by the Additional Collateral Mortgage in accordance with the
terms of the Collateral Pledge and Security Agreement, and, otherwise, shall be
subordinate to
-24-
the Liens of CSDC and Manager unless their consent and further subordination
agreement is obtained. Notwithstanding the foregoing, amounts advanced to
Borrower by Manager under the Management Agreement shall not be subordinate to
the portion of the Additional Collateral Mortgage that exceeds the additional
$1,500,000 as the same may be paid down, together with interest, costs and other
sums advanced by Bank under the Bank Collateral Documents;
(b) Manager shall have a second and subordinate Lien therein to
secure the Manager Indebtedness (other than that portion which represents the
Manager Advance) which shall remain superior to the CSDC Lien until the Manager
Mortgage is paid in full and cancelled;
(c) CSDC shall have a third and subordinate Lien therein to secure
the CSDC Loan Indebtedness subordinate to the Lien created by the Bank
Collateral Documents and the Manager Collateral Documents but shall be superior
to the Additional Manager Collateral Documents which secure the Manager Advance;
and
(d) Manager shall have a fourth and subordinate Lien to secure the
Manager Advance which shall remain subordinate to the Bank Indebtedness, the
Manager Indebtedness secured by the Manager Mortgage described in subparagraph
(b) above, and the CSDC Indebtedness.
4.2 Subordination of Hotel Lease.
(a) The CSDC Lease Documents and all rights and privileges granted
thereunder to CSDC shall be subordinate to the Bank Collateral Documents and the
Liens granted to Bank therein.
(b) CSDC acknowledges that it has executed in favor of Bank the
Amended and Restated Bank/CSDC Estoppel which sets forth certain changes in the
Hotel Lease in the event Bank succeeds to the interest of Borrower thereunder.
Likewise, CSDC further acknowledges that Bank and Manager have executed a letter
of consent which sets forth certain changes in the Management Agreement in the
event that Bank succeeds to the position of Borrower thereunder (the "Manager
Consent").
(c) Bank acknowledges that Manager has executed the CSDC/ Manager
Reserve Agreement and agrees that so long as Borrower retains ownership of the
Hotel Lease that it will not interfere or contest the provisions thereof.
However, the parties hereto hereby
-25-
agree that should: (x) Bank execute its rights under its Collateral Documents
and thereby bring about the cancellation of the CSDC Collateral Documents then
(i) any existing collateral which is granted solely to CSDC for its Loan
Indebtedness, i.e., the CSDC/Manager Reserve, may be applied by CSDC to its
outstanding indebtedness; (ii) all obligations to maintain any security for the
CSDC Loan Indebtedness thereafter shall be terminated other than reserves which
are funded by proceeds from sources other than the Hotel or the Manager, i.e.,
Garage Revenues; and (iii) Bank shall have no obligation to reimburse Manager
for funds delivered to CSDC from the CSDC/Manager Reserve which are reimbursable
by Borrower under the CSDC/Manager Reserve Agreement; or (y) a default occur
under the Bank Indebtedness which brings about Rental Subordination under the
Hotel Lease then all funds which are held or generated as security for payment
of the CSDC Lease Indebtedness shall be payable to Bank under the terms of
Section 20 of the Hotel Lease until the FNBC Loan, as defined in the Hotel
Lease, is paid.
Bank further acknowledges that should it accept a dation en
paiement from Borrower that such will have no effect on the validity of the
Manager or CSDC Collateral Documents.
(d) CSDC further agrees that in the event Bank becomes the owner of
the Project that any restrictions on the ability of Manager to modify, extend or
amend the Management Agreement without CSDC's consent shall be inapplicable and
unenforceable so long as Bank remains the Owner/Lessee of the Project. Bank
acknowledges, however, that it has obligations under the Bank/CSDC Estoppel,
however, which will require CSDC's consent to certain changes in the operation
of the Hotel under certain circumstances.
4.3 Subordination.
(a) (i) Subject to the qualification set forth above in Section
4.1(a), Manager and Sonesta do hereby expressly subordinate and make second,
junior and inferior any and all Liens of Manager or Sonesta in or on the
Collateral under, pursuant to or by virtue of the Manager Collateral Documents
and the Additional Manager Collateral Documents to all Liens of Bank in or on
the same Collateral under, pursuant to or by virtue of the Bank Collateral
Documents and Manager and Sonesta agree that all Liens of Bank on the same
Collateral held by Manager shall be unconditionally first, prior and superior to
any and all Liens of Manager
-26-
under, pursuant to or by virtue of the Manager Collateral Documents and the
Additional Manager Collateral Documents.
(ii) Manager, Sonesta, or their successors or assigns or any other
legal holder of the Manager Indebtedness shall not acquire by subrogation,
contract or otherwise any Lien upon or other estate, right or interest in any
Property of Borrower (including but not limited to any which may arise in
respect to real estate taxes, assessments or other governmental charges) which
is or may be prior in right to the Liens granted in favor of Bank.
(b) (i) Subject to the qualifications set forth above in Section
4.1(a), CSDC does hereby expressly subordinate and make junior and inferior (x)
any and all Liens of CSDC in or on the Collateral under, pursuant to or by
virtue of the CSDC Collateral Documents, and (y) except as specifically provided
in the Hotel Lease to the contrary, all rights and privileges of CSDC under,
pursuant to or by virtue of the CSDC Lease Documents, to all Liens of Bank in or
on the same Collateral under, pursuant to or by virtue of the Bank Collateral
Documents and CSDC agrees that all Liens of Bank on the same collateral held by
CSDC shall be unconditionally first, prior and superior to any and all Liens of
CSDC under, pursuant to or by virtue of the CSDC Collateral Documents and those
under the CSDC Lease Documents.
(ii) CSDC, its successors or assigns or any other legal holder of
the CSDC Lease Indebtedness and CSDC Loan Indebtedness shall not acquire by
subrogation, contract or otherwise any Lien upon or other estate, right or
interest in any Property of Borrower (including but not limited to any which may
arise in respect to real estate taxes, assessments or other governmental
charges) which is or may be prior in right to the Liens granted to Bank.
(c) (i) CSDC does hereby expressly subordinate and make junior and
inferior, but only to the extent of the Maximum Secured Manager Indebtedness,
any and all Liens in or on the Collateral of CSDC under, pursuant to or by
virtue of the CSDC Collateral Documents to all Liens of Manager in or on the
Collateral under, pursuant to or by virtue of the Manager Collateral Documents
and CSDC agrees that all Liens of Manager represented by the Manager Collateral
Documents shall be unconditionally prior and superior to any and all Liens of
CSDC under, pursuant to or by virtue of the CSDC Collateral Documents but not in
excess of the Maximum Secured Manager Indebtedness.
-27-
(ii) CSDC, its successors or assigns or any other legal holder of
the CSDC Lease Indebtedness and CSDC Loan Indebtedness shall not acquire by
subrogation, contract or otherwise any Lien upon or other estate, right or
interest in any Property of Borrower (including but not limited to any which may
arise in respect to real estate taxes, assessments or other governmental
charges) which is or may be prior in right to the Liens granted in favor of
Manager as security for the Manager Indebtedness (other than the Manager
Advance) except to the extent CSDC acquires rights of Bank under the Bank
Collateral Documents.
(d) (i) Manager does hereby expressly subordinate and make junior and
inferior, any and all Liens in or on the Collateral of Manager, under, pursuant
to, or by virtue of the Additional Manager Collateral Documents to all Liens of
CSDC in or on the Collateral under, pursuant to or by virtue of the CSDC
Collateral Documents and Manager agrees that all liens of CSDC represented by
the CSDC Collateral Documents shall be unconditionally prior and superior to any
and all Liens of Manager under, pursuant to, or by virtue of the Additional
Manager Collateral Documents.
(ii) With respect to the Manager Advance, Manager, its successors
or assigns, or any other legal holder of the Manager Advance shall not acquire
by subrogation, contract or otherwise any Lien upon or other estate, right or
interest in any Property of Borrower (including, but not limited to, any which
may arise in respect to real estate taxes, assessments or other governmental
charges) which is or may be prior in right to the Liens granted in favor of
CSDC.
4.4 Distribution of Proceeds of Collateral. All Disposition Proceeds
shall be distributed in accordance with the following procedure:
(i) FIRST, to payment of all costs, fees, expenses and
indemnities incurred by Bank pursuant to this Agreement
or any of the Bank Collateral Documents;
(ii) SECOND, to the payment in full of the secured portion
of Bank Indebtedness;
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(iii) THIRD, to discharge, to the extent required by the
Manager Agreements, the Secured Manager Indebtedness
other than the Manager Advance;
(iv) FOURTH, to discharge, all debt and other obligations
owed to CSDC, including all amounts of principal and
interest then outstanding and secured by the CSDC
Collateral Documents, together with any deferred debt
service, interest thereupon, and prepayment penalty or
its equivalent and CSDC Lease Indebtedness;
(v) FIFTH, to payment in full of the Manager Advance and
any sums owed under the Additional Manager Collateral
Documents; and
(vi) SIXTH, the remainder to Borrower.
Until such time as the Bank Indebtedness is paid in full, any
Disposition Proceeds received by CSDC, Manager or Borrower shall be held in
trust for Bank and upon demand by Bank, said amounts shall be disgorged and
shall be promptly distributed to Bank and for application against the Bank
Indebtedness, except as otherwise expressly provided herein.
4.5 Distribution of Property.
(a) Upon any distribution of the Property of Borrower in connection
with any Proceeding (whether in a Proceeding or upon an assignment for the
benefit of creditors or any other marshaling of the assets and liabilities of
Borrower or otherwise), Bank (subject to Manager's right to pay sums which are
provided for under the Management Agreement) shall first be entitled to receive
payment in full of all secured Bank Indebtedness before either Manager or CSDC
shall be entitled to receive any payment in respect of the Manager Indebtedness
or CSDC Lease Indebtedness and CSDC Loan Indebtedness (except for payments
directed by Bank in satisfaction of Landlord Administration Expenses, as defined
in the Hotel Lease and/or Carrying Costs Rent, as defined in the Hotel Lease
charges). Upon any such dissolution, winding up, liquidation or reorganization,
any payment or distribution of the Property of Borrower of any kind or
character, whether in cash, property or securities, to which either Manager or
CSDC would be entitled except for the superior claim thereto by Bank under
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the Bank Collateral Documents (including any such payment or distribution which
may be payable or deliverable by virtue of the provisions of any security
documents which are subordinated as junior in right of payment to the Manager or
CSDC Lease and Loan Indebtedness) shall be made directly to Bank by the
liquidating trustee or agent or other persons making such payment or
distribution (whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise) (a "Paying Party"), or if received by Manager or CSDC, by Manager
or CSDC to Bank, to the extent necessary to pay in full the Bank Indebtedness
remaining unpaid. Manager and/or CSDC hereby authorizes and directs each Paying
Party to pay over to Bank upon demand by Bank, all such payments or
distributions upon receipt from Bank of a statement setting forth the status or
balance of the Bank Indebtedness, and without further notice to or consent of
either Manager or CSDC, provided, however, that Manager and CSDC shall be
entitled to receive notice of the amount claimed by the Bank in the statement
and the amount, if any, which is to be paid by the Paying Party from any amounts
which would otherwise belong to CSDC. In furtherance of the foregoing, but not
by way of limitation thereof, in the event Borrower is subject to any
Proceeding, with the result that Borrower is excused from the obligation to pay
all or part of the interest otherwise payable in respect of the Bank
Indebtedness during the period subsequent to the commencement of any such
Proceeding, Manager and CSDC agree that all or such part of such interest, as
the case may be, shall be payable out of, and to that extent diminish and be at
the expense of, reorganization dividends or distributions in respect of the
Manager Indebtedness and/or the CSDC Lease Indebtedness and CSDC Loan
Indebtedness.
(b) In the event any payment or distribution of the Property of
Borrower of any kind or character, whether in cash, property or securities, and
whether or not pursuant to any Proceeding, not permitted by or in accordance
with the provisions of this Agreement shall be received by Manager or CSDC, such
payment or distribution to Manager or CSDC shall not be commingled with other
funds and shall be held in trust for the benefit of, and, if properly the
property of Bank hereunder, shall be paid over or delivered to Bank in precisely
the form received (except for the endorsement or assignment of Manager or CSDC
where necessary). Nothing herein, prior to an Event of Default under the Bank
Agreements, shall affect or limit the
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rights of Manager to the Operating or Capital Reserves required by this
Agreement and the Management Agreement.
4.6 Actions by Bank. Except as provided in the Bank/CSDC Estoppel, the
Manager Guaranty and the Additional Guaranty, Bank may, at any time and from
time to time, without the consent of or notice to either Manager or CSDC and
without impairing or releasing the obligations of either Manager or CSDC under
this Agreement: (i) exercise or refrain from exercising any rights against
Borrower, Guarantors and/or; (ii) apply any sums by whomsoever paid or however
realized to the Bank Indebtedness; (iii) upon notice to CSDC, sell, exchange,
release, surrender, realize upon or otherwise deal with in any manner and in any
order any property whatsoever and by whomsoever at any time pledged or mortgaged
to secure, or howsoever securing, any Bank Indebtedness; (iv) with notice to
CSDC, who may comment thereon but have no right to consent thereto, release any
guarantor and/or anyone liable in any manner for the payment or collection of
the Bank Indebtedness; and (v) settle or compromise all or any part of the Bank
Indebtedness, and subordinate the payment of any part of the Bank Indebtedness
to the payment of any other indebtedness (including any other part of the Bank
Indebtedness). No invalidity, irregularity or unenforceability of all or any
part of the Bank Indebtedness or of any of the Liens securing the same shall
affect, impair or be a defense to this Agreement, which provision shall still be
deemed effective for the purposes of this Agreement.
4.7 Foreclosure. The parties hereto acknowledge that this Agreement and
certain of the various Collateral Documents contain provisions for the proposed
distribution of cash flow from time to time and the distribution of proceeds
from a sale or refinancing (the "Distribution Provisions"). The parties further
acknowledge that these provisions are based upon an assumption that no default
exists under any of the Collateral Documents and that the proceeds are the
result of a voluntary sale or refinancing. To the extent that these Distribution
Provisions are inconsistent with the rights against the collateral (including
cash flow) under the Collateral Documents upon an event of default, as set forth
in Section 4.4 of this Intercreditor Agreement, the Distribution Provisions
shall be disregarded and distribution shall be made in a manner consistent with
the provisions of Section 4.4 above. By way of example, only, should a default
occur under the Bank Agreements, and Bank accelerate its Bank Indebtedness no
further
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payments shall be made to any junior creditor or Borrower and payments due under
the Hotel Lease shall be governed by the provisions of the Hotel Lease and the
Bank CSDC Estoppel. Further, Bank acknowledges that nothing in this Section 4.7
is intended to supersede any of the provisions of either the Bank/CSDC Estoppel
or the Manager Non-Disturbance Agreement or the Manager Consent. Should any
provision hereof be in direct conflict with either the Manager Non-Disturbance
Agreement or the Manager Consent, the provisions of those documents shall
control and supersede the contrary provisions herein.
ARTICLE V.
INDEMNIFICATION AND WAIVER OF SUBROGATION
5.1 Indemnification.
In addition to the indemnification and reimbursement obligations of
Borrower under the applicable Creditor Agreements, Borrower agrees upon demand
to reimburse and indemnify Bank for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Bank in performing, exercising or enforcing any duty,
right, power, privilege or remedy under this Agreement or under any of the Bank
Agreements or in any way relating to or arising out of this Agreement or under
any of the Bank Agreements, including, without limitation, all liabilities,
costs and expenses incurred by Bank in connection with any judicial or
non-judicial foreclosure sale or other disposition of any of the Collateral or
the remediation or containment of Hazardous Materials on or off the Project;
provided that (A) Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Bank's willful misconduct and
(B) in the event litigation arises between or among Bank and either of or both
of CSDC or Manager concerning the priorities of payment hereunder or the rights
and/or obligations of such parties vis-a-vis each other (but not vis-a-vis
Borrower), then the party prevailing in such litigation shall be reimbursed by
the opposing party for all attorneys' fees and expenses and all other charges,
expenses, liabilities and advances incurred by the prevailing party in
connection with such litigation, and Borrower shall have no obligation to
indemnify Bank for any such
-32-
amounts. Without limiting the generality of the foregoing, Borrower shall
reimburse and indemnify Bank for all fees, expenses and disbursements incurred
by the Bank (including, without limitation, the fees and expenses of counsel to
Bank, or of consultants, auditors (including in-house auditors, appraisers or
other professionals retained by Bank or its counsel) in connection with (i) the
preparation, negotiation, execution, delivery, implementation and administration
of the Agreement, the Bank Agreements and all other instruments or agreements
now or hereafter executed and delivered in connection herewith or therewith,
together with any amendments, waivers or consents with respect hereto or
thereto, and (ii) the exercise or enforcement of any right, power, privilege or
remedy under this Agreement, the Bank Agreements, any other instrument or
agreement now or hereafter executed and delivered in connection herewith or
therewith, applicable laws or otherwise in respect of the Liens on any
Collateral granted to Bank, including, without limitation, all such fees,
expenses and disbursements arising from the exercise or enforcement of any such
rights, powers, privileges or remedies in connection with any Proceeding or any
refinancing or restructuring of the credit arrangements provided under any of
the Creditor Agreements, the Collateral Documents and this Agreement in the
nature of a "workout". The indemnification obligations of Borrower and any
additional indemnity provided to Bank, shall survive the termination of this
Agreement. It is understood and agreed that the indemnification obligations of
the Borrower set forth herein constitute additional Bank Indebtedness secured by
the Bank Collateral Documents other than the Manager Guaranty and the Additional
Guaranty.
5.2 Waiver of Subrogation. Intervening into this Agreement comes the
Individual Guarantors and the Corporate Guarantors, as defined in the Loan
Agreement, to not only acknowledge and accept the terms contained herein but to
waive all rights of subrogation and substitution which any of them may possess
by virtue of any payment made to Bank under their Guaranties. Accordingly, any
payments made by these Intervenors shall not transfer to them any rights in any
of the Bank Agreements including, without limitation, the Bank Collateral
Documents.
-33-
ARTICLE VI.
Article VI is hereby deleted in its entirety and replaced with the
following provision: CSDC and Manager hereby acknowledge and consent to the
release by Bank of the Proceeds of Investor Note #2 to Borrower who shall use
said Proceeds to complete the Additional Work. In providing their consent CSDC
and Manager further release any security interest held is said Note or the
Proceeds thereof.
ARTICLE VII.
MISCELLANEOUS
7.1 Rights to Cure. Upon the occurrence of an Event of Default under
the Hotel Lease, Bank shall have the right but not the obligation to cure as set
forth therein. Upon the occurrence of an Event of Default under either the CSDC
Loan Agreements or the Manager Agreements, Manager or CSDC, respectively, shall
give written notice thereof to Bank who shall have fifteen (15) days from the
receipt of such notice to cure any monetary default and thirty (30) days for a
non-monetary default. Should the default remain uncured beyond the period
allowed for same, Bank may consider said default to be a default under the Bank
Agreements as set forth therein, but CSDC or Manager shall still have no rights
to enforce their rights under their Collateral Documents without the consent of
Bank except as otherwise provided herein. Any sums advanced by Bank to cure
defaults under the Hotel Lease or the other Creditor Agreements shall be secured
by the Bank's Collateral Documents.
7.2 Specific Performance. Each party hereto hereby agrees that Bank,
CSDC, Manager and Sonesta, shall be authorized to demand specific performance of
the provisions set forth in this Agreement in accordance with the terms of this
Agreement. Each party hereto hereby irrevocably waives any defense based on the
adequacy of a remedy at law which might be asserted by any party hereto against
any other party hereto as a bar to the remedy of specific performance of such
provisions brought in any action by such party.
7.3 Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. No Person (including Borrower) other than
Bank, CSDC, Manager, and Sonesta and their respective successors and assigns
shall have any rights under this Agreement. It is
-34-
acknowledged that Boh Brothers and Broadmoor, parties to the Intercreditor
Agreement, have been removed as parties hereto since they no longer have an
interest in the Project or any security interest therein due to the completion
of the Construction Contract and the Completion Guarantee, as defined therein.
7.4 Assignments and Participations. CSDC and Manager respectively agree
that it shall not transfer or assign its interest in the Indebtedness held by it
or any promissory note or other instrument evidencing such Indebtedness, or sell
any participation therein, without the consent of Bank which will not be
unreasonably withheld or delayed. Provided, however, Manager or Sonesta may
assign its Indebtedness without Bank's consent to any institutional lender as
part of a financing of its corporate assets, and CSDC may assign its
Indebtedness without Bank's consent to the City or HUD so long as any such
assignment by Manager, Sonesta or CSDC shall be subject to all of the provisions
hereof and all relevant Creditor Agreements.
7.5 Creditor Agreements.
(a) Each of CSDC and Manager agree that it shall not, after the
date hereof, without the prior written consent of Bank, which shall not be
unreasonably withheld or delayed, amend, renew, extend, restate or otherwise
modify in any manner their respective Creditor Agreements or the Hotel Lease to
which it is a party, except, subject to the limitations of Section 7.15, CSDC
may amend the CSDC Loan Agreements as requested by HUD.
(b) CSDC and Manager hereby acknowledge that no Default or Event of
Default under the Creditor Agreements to which it is a party exists as of the
date hereof nor has been or will be caused by the execution, delivery and
performance of this Agreement, the Creditor Agreements to which it is a party,
the Collateral or by the attachment and/or perfection of any Liens granted
pursuant to the Collateral Documents.
7.6 Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing and shall be personally delivered or
sent by first class mail, certified mail return receipt requested, or overnight
mail, or by telex or telegram (no later than 4:00 p.m. at the place of delivery)
with confirmation in writing mailed first class, in all cases with postage or
charges prepaid, to the applicable party at the address indicated below:
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In the case of Bank:
First National Bank of Commerce
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: 561-1535
In the case of CSDC:
Canal Street Development Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: 565-8135
In the case of Sonesta:
Sonesta International Hotels Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Office of the Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of Manager:
Sonesta Louisiana Hotels Corporation
c/o Sonesta International Hotels Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Office of the Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of Borrower:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Pres Kabacoff
Telecopy No.: 525-3932
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or, as to each party, at such other address as shall be designated by such party
complying as to delivery with the terms of this Section. Any notice sent
pursuant hereto via certified mail return receipt requested, certified fee and
normal postage prepaid, shall be deemed to have been received on the earlier of
actual receipt thereof, refusal or the third (3rd) day after the postmarked date
indicated on the Receipt for Certified Mail (PS Form 3800, June 1985, or any
successor form). Except as otherwise expressly provided herein, all notices,
requests, demands and other communications hereunder shall be effective when
received and shall be deemed received when delivered if sent by overnight mail
and deemed received when sent if sent by fax.
Manager agrees to provide CSDC with a copy of any notice which it
provides to Bank under this Agreement.
7.7 Waiver of Jury Trial. BORROWER, CSDC, MANAGER AND SONESTA MUTUALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN ANY COURT ARISING ON, OUT OF
OR IN ANY WAY RELATING TO THIS AGREEMENT, THE CREDITOR AGREEMENTS, OR ANY
AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
7.8 Execution by Borrower.
(a) Borrower is a signatory to this Agreement solely for purposes
of (i) consenting to and agreeing to be bound by the provisions of this
Agreement, including, without limitation, the application of payment provisions
in Article II hereof and application of proceeds provisions of Section 4.4 of
this Agreement, (ii) acknowledging and approving the provisions agreed to herein
by Manager, and (iii) agreeing to the indemnification provisions of Article V.
Borrower agrees and acknowledges that it has no right to enforce any provision
of this Agreement. Without limiting the generality of the foregoing, Borrower
acknowledges that one of the purposes of this Agreement is to clarify the
priorities of payments as among Bank for distribution to Bank, CSDC and Manager
with respect to their respective Indebtedness. Borrower irrevocably waives the
right to direct the application of any proceeds of Collateral or any other
payment in respect of any Indebtedness. Borrower consents and agrees to (i) the
sharing and distribution of proceeds realized under the Collateral Documents or
otherwise among
-37-
Bank, CSDC and Manager on the terms and conditions set forth in this Agreement
and (ii) the effect such sharing and distribution has on the calculation of the
Indebtedness held by Bank, CSDC and Manager and on Borrower's obligations under
the applicable Creditor Agreements and Collateral Documents. Borrower further
agrees that the Indebtedness which it owes to Bank, CSDC and Manager shall for
all purposes be deemed paid (or cash collateralized) only to the extent that
proceeds of Collateral or other payments are applied against such Indebtedness.
To the extent any application of proceeds of Collateral or other payments to any
Indebtedness (the "First Indebtedness") is reversed and reapplied to any other
Indebtedness (the "Second Indebtedness"), Borrower agrees that the First
Indebtedness shall be reinstated, and the Second Indebtedness shall be deemed
paid to the extent such proceeds of Collateral or other payments are applied
against such Second Indebtedness.
(b) Borrower, Manager, Sonesta, CSDC and Bank further acknowledge
that to the extent permitted by law, each will request during the pendency of
any bankruptcy proceeding by Borrower or foreclosure pursuant to which a keeper
may or must be designated that Manager be appointed to operate the Hotel under
the Management Agreement and in connection therewith be allowed to use any funds
produced by the Hotel to (i) pay Expenses under the Management Agreement, and
(ii) to establish and satisfy any cash collateral account requirements
established in the Proceeding.
7.9 Credit Decisions. Bank, CSDC and Manager severally represents and
warrants that each has made and will continue to make such independent
investigation of the financial condition and affairs of Borrower as Bank, CSDC
and Manager deems appropriate in connection with its entering into this
Agreement and the other Collateral Documents and the making and continuance of
the credit facilities contemplated by the Creditor Agreements and that Bank or
CSDC or Manager, in connection with such investigation, has not relied upon any
information provided to Bank or CSDC or Manager by Bank or CSDC or Manager.
7.10 No Partnership or Joint Venture. Neither the execution of this
Agreement, any Collateral Documents nor any agreement to share in profits or
losses arising out of the transactions contemplated herein, is intended to be,
nor shall it be construed to be, the formation
-38-
of a partnership or joint venture among Bank, CSDC, Manager or Sonesta, or among
any combination thereof.
7.11 Governing Law and Severability. This Agreement was negotiated in
the State of Louisiana and for all purposes shall be governed by and construed
in accordance with the laws of said State. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
7.12 Counterparts. This Agreement may be executed by one or more
parties to this Agreement in any number or counterparts, and all of said
counterparts when taken together shall be deemed to constitute one and the same
instrument.
7.13 Amendments, Waivers and Consents. All amendments, waivers and
consents with respect to any provision of this Agreement, including the
amendment of the priority of payments (other than Article VI hereof) shall be
effective only if the same shall be in writing and signed by Bank, CSDC and
Manager. No failure or delay on the part of Bank, CSDC or Manager in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy include
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. Remedies herein provided for are cumulative and
non-exclusive of any remedies provided by law.
7.14 Conflict with Other Agreements. Except as provided in Section 4.7
hereof, the parties hereto agree that in the event of any conflict between the
provisions of this Agreement, on the one hand, and the provisions of any of the
Creditor Agreements or the Collateral Documents, on the other hand, the
provisions of this Agreement shall control unless otherwise agreed to in writing
by all parties hereto.
7.15 Agreement to Cooperate. Each of the parties hereto agrees to
cooperate fully with each other, to the end that the terms and provisions of the
Agreement may be promptly and fully carried out. Each party hereto also agrees,
from time to time, to execute and deliver any and all other agreements,
documents or instruments and to take such other actions, all as may be
-39-
reasonably necessary or desirable to effectuate the terms, provisions and the
intent of this Agreement and the Creditor Agreements.
7.16 Term. This Agreement shall expire on the earlier to occur of (a)
the refinancing of the Bank Indebtedness, and (b) payment of the Bank
Indebtedness; provided, however, the provisions hereof shall continue during the
pendency of any action by Bank to enforce its rights under the Bank Collateral
Documents. Provided further, however, that the provisions of Sections 1.2(ww)
and (yy), 4.1, 4.3(c) and 4.3(d) shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts effective as of the date written above.
FIRST NATIONAL BANK OF COMMERCE
/s/ ▇▇▇▇ ▇. ???????
_________________________________ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: _______________________________
_________________________________ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
CANAL STREET DEVELOPMENT
CORPORATION
/s/ ??????????????? /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________ By: _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ???? President
_________________________________ Its: ___________________________
SONESTA INTERNATIONAL HOTELS
CORPORATION
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________ By: _______________________________
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________ Its: Vice President and Secretary
-40-
SONESTA LOUISIANA HOTELS
CORPORATION
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________ By: _______________________________
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________ Its: Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED
PARTNERSHIP
By: Historic Restoration, Incorporated
Its: General Partner
/s/ ▇▇▇▇ ▇. ???????????? /s/ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
___________________________________ By: _________________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
___________________________________ Its: President
HISTORIC RESTORATION,
INCORPORATED
/s/ ▇▇▇▇ ▇. ???????????? /s/ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
___________________________________ By: _________________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
___________________________________ Its: President
HRI MANAGEMENT CORPORATION
/s/ ▇▇▇▇ ▇. ???????????? /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________ By: _________________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________ Its: President
-41-
HISTORIC CONSTRUCTION
INCORPORATED
/s/ ▇▇▇▇ ▇. ???????????? /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________ By: _________________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________ Its: President
/s/ ▇▇▇▇ ▇. ???????????? /s/ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
___________________________________ ______________________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PRES ▇▇▇▇▇▇▇▇
___________________________________
/s/ ▇▇▇▇ ▇. ???????????? /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________ ______________________________________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________
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ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the Vice President of FIRST NATIONAL
BANK OF COMMERCE (the "Bank"), that as such duly authorized agent, by and with
the authority of the Board of Directors of Bank, he signed and executed the
foregoing Amended and Restated Intercreditor Payment Priority and Lien Priority
Agreement as the free and voluntary act and deed of Bank, for and on behalf of
Bank, and for the objects and purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 6th
day of May, 1997, after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-43-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the President of CANAL STREET
DEVELOPMENT CORPORATION (the "Corporation"), that as such duly authorized agent,
by and with the authority of the Board of Directors of the Corporation, he
signed and executed the foregoing Amended and Restated Intercreditor Payment
Priority and Lien Priority Agreement as the free and voluntary act and deed of
the Corporation, for and on behalf of the Corporation, and for the objects and
purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this ____
day May, 1997, after due reading of the whole.
WITNESSES:
/s/ ??????????????????? /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ????????
-----------------------------------
/s/ ????????
---------------------------------------
NOTARY PUBLIC
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the Vice President and Secretary of
SONESTA INTERNATIONAL HOTELS CORPORATION (the "Corporation"), that as such duly
authorized agent, by and with the authority of the Board of Directors of the
Corporation, he signed and executed the foregoing Amended and Restated
Intercreditor Payment Priority and Lien Priority Agreement as the free and
voluntary act and deed of the Corporation, for and on behalf of the Corporation,
and for the objects and purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 2nd
day of May, 1997 after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
NOTARY PUBLIC
My Commission Expires 4/17/2003
-45-
ACKNOWLEDGMENT
STATE OF MASSACHUSETTS
SUFFOLK COUNTY
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the Vice President of SONESTA
LOUISIANA HOTELS CORPORATION (the "Corporation"), that as such duly authorized
agent, by and with the authority of the Board of Directors of the Corporation,
he signed and executed the foregoing Amended and Restated Intercreditor Payment
Priority and Lien Priority Agreement as the free and voluntary act and deed of
the Corporation, for and on behalf of the Corporation, and for the objects and
purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 2nd
day of May, 1997 after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
NOTARY PUBLIC
My Commission Expires 4/17/2003
-46-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇▇▇ PRES ▇▇▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the President of Historic
Restoration, Incorporated, the General Partner of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED
PARTNERSHIP (the "Partnership"), that as such duly authorized agent, by and with
the authority of the Partnership pursuant to its Articles of Partnership, he
signed and executed the foregoing Amended and Restated Intercreditor Payment
Priority and Lien Priority Agreement as the free and voluntary act and deed of
Historic Restoration, Incorporated and thereby the Partnership, for and on
behalf of the Partnership, and for the objects and purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 6th
day of May, 1997 after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇▇▇ PRES KABACOFF
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-47-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇▇▇ PRES ▇▇▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the President of HISTORIC
RESTORATION, INCORPORATED (the "Corporation"), that as such duly authorized
agent, by and with the authority of the Board of Directors of the Corporation,
he signed and executed the foregoing Amended and Restated Intercreditor Payment
Priority and Lien Priority Agreement as the free and voluntary act and deed of
the Corporation, for and on behalf of the Corporation, and for the objects and
purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 6th
day of May, 1997 after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇▇▇ PRES KABACOFF
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-48-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇▇ ▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the President of HRI MANAGEMENT
CORPORATION (the "Corporation"), that as such duly authorized agent, by and with
the authority of the Board of Directors of the Corporation, he signed and
executed the foregoing Amended and Restated Intercreditor Payment Priority and
Lien Priority Agreement as the free and voluntary act and deed of the
Corporation, for and on behalf of the Corporation, and for the objects and
purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 6th
day of May, 1997 after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-49-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
to me known, who declared and acknowledged before me, Notary, and the
undersigned competent witnesses, that he is the President of HISTORIC
CONSTRUCTION INCORPORATED (the "Corporation"), that as such duly authorized
agent, by and with the authority of the Board of Directors of the Corporation,
he signed and executed the foregoing Amended and Restated Intercreditor Payment
Priority and Lien Priority Agreement as the free and voluntary act and deed of
the Corporation, for and on behalf of the Corporation, and for the objects and
purposes therein set forth.
THUS DONE AND PASSED, in the State and Parish aforesaid, on this 6th
day of May, 1997 after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------- -----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-50-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇▇▇ PRES ▇▇▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and to the
undersigned competent witnesses, that he is the identical person who executed
the foregoing Amended and Restated Intercreditor Payment Priority and Lien
Priority Agreement in writing, that his signature thereto is his own true and
genuine signature, and that he executed said instrument of his own free will and
accord, and for the uses, purposes and considerations therein expressed.
THUS DONE AND PASSED in the State and Parish aforesaid, on this 6th
day of May, 1997, after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇▇▇ Pres ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇▇▇ PRES KABACOFF
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-51-
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
to me known, who declared and acknowledged before me, Notary, and to the
undersigned competent witnesses, that he is the identical person who executed
the foregoing Amended and Restated Intercreditor Payment Priority and Lien
Priority Agreement in writing, that his signature thereto is his own true and
genuine signature, and that he executed said instrument of his own free will and
accord, and for the uses, purposes and considerations therein expressed.
THUS DONE AND PASSED in the State and Parish aforesaid, on this 6th
day of May, 1997, after due reading of the whole.
WITNESSES:
/s/ ▇▇▇▇ ▇. ??????????? /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ????????
---------------------------------------
NOTARY PUBLIC
-52-