NON-DISTRIBUTION AND SECURITY AGREEMENT
THIS NON-DISTRIBUTION AND SECURITY AGREEMENT (this
"Agreement") is made as of this 21st day of February, 1997, by and
between UNION SQUARE HOTEL PARTNERS, L.P., a Delaware limited
partnership ("USHP"), and CAPITAL GROWTH MORTGAGE INVESTORS, L.P.,
a Delaware limited partnership (the "Secured Party").
W I T N E S S E T H
WHEREAS, USHP and the Secured Party have entered into that
certain Allocation and Release Agreement dated as of December 1,
1996 (the "Allocation and Release"), pursuant to which the Secured
Party agreed to accept certain funds in full satisfaction of
various secured and unsecured notes made by USHP and held by the
Secured Party (all capitalized terms used but not otherwise
defined herein shall have the meaning ascribed to them in the
Allocation and Release);
WHEREAS, on January 24, 1997, Cal Kan, Inc., a limited
partner of the Secured Party, filed a complaint in the Court of
Chancery in the State of Delaware against USHP and various other
entities seeking injunctive relief to prevent USHP from
distributing to its unitholders or partners any cash proceeds from
the Sale, and further seeking to have a receiver appointed
following the Sale to effect an application of such cash proceeds
to the Secured Note in a greater amount than was agreed to in the
Allocation and Release;
WHEREAS, in lieu of the Secured Party immediately attempting
to obtain such injunctive relief and/or the appointment of a
receiver, the Secured Party has requested that USHP agree to
refrain from distributing the Net Sales Proceeds to the
unitholders or partners of USHP on or before April 21, 1997;
WHEREAS, USHP is willing to agree to refrain from any such
distribution of the Net Sales Proceeds on or before April 21,
1997; and
WHEREAS, USHP is further willing to grant a security
interest in the Net Sales Proceeds in favor of the Secured Party
as herein provided, to secure any settlement agreement that may be
reached by USHP and the Secured Party with respect to the Net
Sales Proceeds on or before April 21, 1997, and to secure any
final order of a court of competent jurisdiction that may be
issued with
respect to the Net Sales Proceeds on or before April 21, 1997, and
to secure performance of this Agreement.
NOW, THEREFORE, in consideration of the premises, the
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Agreement of Non-Distribution. USHP hereby agrees to refrain from
distributing the Net Sales Proceeds, and to refrain from taking any further
action to declare any distribution of the Net Sales Proceeds, to its
unitholders or partners on or before April 21, 1997; provided, however, that on
and after April 22, 1997, USHP shall be permitted to freely distribute, and to
take any further action to declare any distribution of, any or all of the Net
Sales Proceeds to its unitholders or partners, or to otherwise deal with, pay,
or apply such Net Sales Proceeds in any manner which USHP deems appropriate,
unless this agreement to refrain from distributing the Net Sales Proceeds is
extended by both USHP and the Secured Party in writing, or unless USHP's use of
such Net Sales Proceeds is restricted by court order.
2. Pledge of Collateral. USHP hereby grants to the Secured Party a
security interest in the collateral described in Schedule I attached hereto
(the "Collateral"); provided, however, that this grant of a security interest
shall be effective only through April 21, 1997, and shall automatically
terminate and become null and void on April 22, 1997.
3. Security for Obligations. This Agreement and the security interest
granted hereunder are made to secure USHP's performance under any settlement
agreement that may be reached by USHP and the Secured Party with respect to the
Net Sales Proceeds on or before April 21, 1997, and to secure USHP's
performance under any final order of a court of competent jurisdiction that may
be issued with respect to the Net Sales Proceeds on or before April 21, 1997,
and to secure USHP's performance under this Agreement.
4. Remedies. If a breach or default hereunder or under any obliga tion
secured hereby shall have occurred and be continuing, the Secured Party shall
thereafter have all the rights and remedies of a secured party under the
California Commercial Code and under any other applicable law.
5. Further Encumbrance of Collateral. Without the prior written consent
of the Secured Party, USHP will not voluntarily grant a security interest in or
otherwise encumber any of the Collateral or any interest therein on or before
April 21, 1997, except for the security interest therein provided for in this
Agreement.
6. No Amendment. Neither this Agreement nor any term hereof may be
amended except by a written instrument expressly referring to this Agreement
and to the provisions so amended, and executed by the party to be charged.
7. Governing Law. This Agreement shall be governed by, and con strued in
accordance with, the laws of the state of California, without regard to
principles of conflicts of laws.
8. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. The
parties waive trial by jury in any dispute arising hereunder. This Agreement
may be executed in counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same agreement. This Agreement and
all rights and obligations hereunder shall be binding upon USHP and USHP's
successors and assigns, and shall inure to the benefit of the Secured Party and
the Secured Party's successors and assigns. If any term of this Agreement shall
be held to be invalid, illegal, or unenforceable, the validity of all other
terms hereof shall be in no way affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal, or unenforceable term
had not been included herein. Time is of the essence of each and every
provision of this Agreement. USHP acknowledges receipt of a copy of this
Agreement.
IN WITNESS WHEREOF, intending to be legally bound, USHP and the
Secured Party have caused this Agreement to be executed as of the
date first above written.
USHP:
UNION SQUARE HOTEL PARTNERS, L.P., a
Delaware limited partnership
By: Union Square/GP Corp., its general partner
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/ Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title:
President
SECURED PARTY:
CAPITAL GROWTH MORTGAGE INVESTORS,
L.P., a Delaware limited
partnership
By: CG Realty Funding Inc., its
general partner
BY: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
and
Chief Financial
Officer
SCHEDULE I
COLLATERAL
All of USHP's right, title, and interest in and to the
following:
(a) That certain deposit account #12333-62175 maintained
with Bank of America National Trust and Savings Association,
together with all funds deposited therein, all interest thereon,
and all other accessions thereto; and
(b) Any and all products, proceeds, and replacements of the
foregoing including, without limitation, deposit insurance proceeds
and claims.
NOTICE AND BANK AGREEMENT FOR DEPOSIT ACCOUNTS
February 21, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ National Trust and Savings Association ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Account
Administrator
Bank of America National Trust and Savings Association ▇▇▇▇▇
▇▇▇▇▇▇▇, Vice President GPS Contract Management #10514 ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Account No: 12333-62175 (the "Account")
Ladies & Gentlemen:
Union Square Hotel Partners, L.P., a Delaware limited
partnership ("USHP"), has entered into a Non-Distribution and
Security Agreement with Capital Growth Mortgage Investors, L.P., a
Delaware limited partnership (the "Secured Party") dated as of
February 21, 1997, a copy of which is attached hereto as Exhibit A.
You are hereby notified pursuant to Section 9-302(1)(g) of the
California Commercial Code and pursuant to any other applicable law
that USHP has granted to the Secured Party a security interest in
all of the right, title, and interest of USHP in, to, and under the
Account, and all funds deposited from time to time therein, and all
interest earned from time to time thereon, and all other accessions
thereto, and all products, proceeds, and replacements thereof,
including, without limitation, deposit insurance proceeds and
claims, through April 21, 1997, and that such security interest
shall automatically terminate and become null and void on April 22,
1997.
With respect to the Account, you are hereby instructed
and by your signature below hereby agree as follows:
1. That you are holding the Account subject to a security
interest for the benefit of the Secured Party and on or before
April 21, 1997, you will not permit a distribution or transfer of
funds from the Account or the grant of any other security interest
or pledge affecting the Account except upon receiving written
approval from both USHP and the Secured Party; provided, however,
that on April 22, 1997, you shall wire transfer all of the funds
then held in the Account, without any further authorization of the
Secured Party (and despite any contrary instruction from the
Secured Party), to:
Boston Safe Deposit & Trust Company ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA #: ▇▇▇▇▇▇▇▇▇
Account # 11-783-8
Account Name: Wire Purchase Account
Instructions: Union Square Hotel
Partners, ▇.▇.▇▇▇ Sales Proceeds
Contact: ▇▇▇▇▇▇ ▇▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇,
unless otherwise instructed by both USHP and the Secured Party in
writing, or by court order.
2. That copies of all correspondence, notices, account
statements, or other information which you are otherwise obligated
to send to USHP (by law, agreement, or otherwise) also will be sent
to the Secured Party at the following address:
Capital Growth Mortgage Investors, L.P. Three World
Financial Center, 29th Floor New York, New York 10285
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
3. That funds deposited in the Account will not be subject
to deduction, setoff, banker's lien. or any other lien, claim,
encumbrance, or right you may have against USHP or the Account.
4. That you have marked your books and records to reflect the
existence of the Secured Party's rights hereunder.
This letter agreement and the rights and obligations of
the parties hereunder will be governed by and construed and
interpreted in accordance with the laws of the State of California,
without regard to principles of conflicts of laws.
This letter agreement contains the entire agreement
among the parties, and may not be amended in any respect, nor may
any right, power, or privilege of any party hereunder be waived or
released or discharged, except upon execution by all parties hereto
of a written instrument so providing. In the event that any
provision in this letter agreement is in conflict with, or
inconsistent with, any provision of the Security Agreement, this
letter agreement will exclusively govern and control.
Please indicate your agreement to the terms of this
letter agreement by signing in the space provided below. This
letter agreement may be executed in any number of counterparts and
all of such counterparts taken together will be deemed to
constitute one and the same instrument. Time is of the essence of
each and every provision hereof. .This letter agreement will become
effective immediately upon execution of a counterpart of this
letter agreement by all parties hereto, but the notice provided
herein shall be effective immediately upon your receipt hereof.
USHP:
UNION SQUARE HOTEL PARTNERS,
L.P., a Delaware limited partnership
By: Union Square/GP Corp., its general partner
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
SECURED PARTY:
CAPITAL GROWTH MORTGAGE INVESTORS, L.P.,
a Delaware limited partnership
By: CG Realty Funding Inc. its general partner
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
and Chief
Financial
Officer
Acknowledged, consented, and
agreed to this 21st day of February, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ National Trust and Savings
Association
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Assistant Vice President
Exhibit A
Non-Distribution and Security Agreement BLOCKED
ACCOUNT AGREEMENT
This Blocked Account Agreement ("Agreement") is entered into
as of February 21, 1997, by and among Union Square Hotel Partners,
L.P. ("Company"), Capital Growth Mortgage Investors, L.P.
("Lender"), and Bank of America NT&SA ("Bank").
Recitals
A. Company and Lender are parties to the Non-Distribution and
Security Agreement (the "Security Agreement) dated as of February
21, 1997.
B. Pursuant to the terms of the Security Agreement, Company
has granted to Lender a security interest in the Account (as defined
below) and all funds deposited in the Account to secure the payment
and performance of certain obligations of Company to Lender under
the Security Agreement (the "Obligations").
C. Company has agreed to maintain deposit account number
1233362175 in its name (the "Account) until April 22, 1997, in which
Company shall deposit certain Net Sales Proceeds (as such term is
defined in the Security Agreement)
D. Company, Lender and Bank are entering into this Agreement
to provide for the retention and disposition of Net Sales Proceeds
deposited by Company into the Account.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, Company,
Lender and Bank agree as follows:
1. Bank is hereby authorized:
(a) to charge the Account for all returned checks,
service charges, and other fees and charges associated with this
Agreement; and
(b) to follow its usual procedures in the event the
Account or any check, draft or other order for payment of money
should be or become the subject of any writ, levy, order or other
similar judicial
or regulatory order or process ("Order").
2. (a) If the balances in the Account are not sufficient to
pay Bank for any returned check, draft or other order for the
payment of money Company agrees to pay Bank on demand the amount
due Bank.
(b) If the balances in the Account are not sufficient to
compensate Bank for any fees or charges due Bank under this
Agreement, Company agrees to pay Bank on demand the amount due
Bank. If Company has not paid Bank within 30 days after the demand,
Lender agrees to pay Bank the amount due Bank.
(c) Company hereby authorizes Bank, without prior
notice, from time to time to debit any other account Company may
have with Bank for the amount or amounts due Bank under subsection
2(a) or 2(b).
(d) Bank agrees it shall not offset against the Account,
except as permitted under this Agreement, until it has been advised
in writing by Company and Lender that all of Company's obligations
which are secured by the Account and all funds deposited in the
Account, are paid in full. Lender shall notify Bank promptly in
writing upon payment and satisfaction in full of Company's
obligations under the Security Agreement and this Agreement shall
automatically terminate upon receipt of such notice.
3. This Agreement will terminate on April 22, 1997 and Bank
will wire transfer any funds in the Account to Company in
accordance with paragraph 1 of that certain Notice and Bank
Agreement for Deposit Accounts dated as of the date hereof, by and
among Company, Lender and Bank (the "Notice and Bank Agreement).
4. (a) Bank will not be liable to Company or Lender for any
expense, claim, loss, damage or cost ("Damages") arising out of or
relating to its performance under this Agreement or the Notice and
Bank Agreement other than those Damages which result directly from
its acts or omissions constituting negligence or intentional
misconduct, subject to the limits in the next succeeding sentence.
Bank's liability is limited to direct money Damages actually
incurred.
(b) In no event will Bank be liable for any special,
indirect, exemplary or consequential damages, including but not
limited to lost profits.
(c) Bank will be excused from failing to act or delay in
acting, and no such failure or delay shall constitute a breach of
this Agreement or otherwise give rise to any liability of Bank, if
(i) such failure or delay is caused by circumstances beyond Bank's
reasonable control, including but not limited to legal constraint,
emergency conditions, action or inaction of governmental, civil or
military authority, fire, strike, lockout or other labor dispute,
war, riot, theft, flood, earthquake or other natural disaster,
breakdown of public or private or common carrier communications or
transmission facilities, equipment failure, or act, negligence or
default of Company or Lender or (ii) such failure or delay resulted
from Bank's reasonable belief that the action would have violated
any guideline, rule or regulation of any governmental authority.
5. Company and Lender shall jointly and severally indemnify
Bank against, and hold it harmless from, any and all liabilities,
claims, costs, expenses and damages of any nature (including but
not limited to allocated costs of staff counsel, other reasonable
attorneys' fees and any fees and expenses incurred in enforcing
this Agreement) in any way arising out of or relating to disputes
or legal actions concerning this Agreement. This section does not
apply to any cost or damage attributable to the negligence or
intentional misconduct of Bank. Company's and Lender's obligations
under this section shall survive
termination of this Agreement.
6. (a) Company and Lender each represent and warrant to Bank
that (i) this Agreement constitutes its duly authorized, legal,
valid, binding and enforceable obligation; (ii) the performance of
its obligations under this Agreement and the consummation of the
transactions contemplated hereunder will not (A) constitute or
result in a breach of its certificate or articles of incorporation,
by-laws or partnership agreement, as applicable, or the provisions
of any material contract to which it is a party or by which it is
bound or (B) result in the violation of any law, regulation,
judgment, decree or governmental order applicable to it; and (iii)
all approvals and authorizations required to permit the execution,
delivery, performance and consummation of this Agreement and the
transactions contemplated hereunder have been obtained.
(b) Company and Lender each agrees that it shall be
deemed to make and renew each representation and warranty in
subsection 6(a) on and as of each day on which it uses the service.
7. Company represents and warrants that it has not assigned
or granted a security interest in the Account or any funds now or
hereafter deposited in the Account, except to Lender.
8. Company agrees that:
(a) Except for a single wire transfer into the Account
on February 21, 1997, it cannot, and will not, make any deposits
into or withdraw any monies from the Account until the earlier of
(i) April 22, 1997 or (ii) such time as Lender advises Bank in
writing that Lender no longer claims any interest in the Account
and the monies deposited and to be deposited in the Account; and
(b) It will not permit the Account to become subject to
any other pledge, assignment, lien, charge or encumbrance of any
kind, nature or description, on or before April 22, 1997 other than
Lender's security interest referred to herein.
9. Lender acknowledges and agrees that Bank has the right to
charge the Account from time to time for fees owed the Bank in
connection with this Agreement or the opening or maintenance of the
Account, as set forth in this Agreement, and the Account agreement,
as said agreements are amended from time to time, and that Lender
has no right to the sums so withdrawn by Bank.
10. In addition to the original statement which will be
provided to Company, Bank will provide Lender with a duplicate
statement and such other account information reasonably requested
by Lender. Company authorizes Bank to provide any account
information requested by Lender.
11. Company and Lender agree to pay to Bank, upon receipt of
Bank's invoice, all reasonable costs, expenses and attorneys' fees
(including reasonable allocated costs for in-house legal services)
incurred by Bank in connection with the enforcement of this
Agreement and any instrument or agreement required hereunder,
including but not limited to any such reasonable costs, expenses
and fees arising out of the resolution of any conflict, dispute,
motion regarding entitlement to rights or rights of action, or
other action to enforce Bank's rights hereunder in a case arising
under ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code.
12. Notwithstanding any of the other provisions in this
Agreement or the Notice and Bank Agreement, in the event of the
commencement of a case pursuant to ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code,
filed by or against Company, or in the event of the commencement of
any similar case under then applicable federal or state law
providing for the relief of debtors or the protection of creditors
by or against Company, Bank may act as Bank deems reasonably
necessary to comply with
all applicable provisions of governing statutes and neither Company
nor Lender shall assert any claim against Bank for so doing.
13. This Agreement may be amended only by a writing signed
by Company, Lender and Bank; except that Bank's charges are subject
to reasonable change by Bank upon 30 days' prior written notice to
Company and Lender.
14. This Agreement may be executed in counterparts; all such
counterparts shall constitute but one and the same agreement.
15. Any written notice or other written communication to be
given to each party under this Agreement shall be addressed to the
person at the address set forth on the signature page of this
Agreement or to such other person or address as a party may specify
in writing. Except as otherwise expressly provided herein, any such
notice shall be effective upon receipt.
16. Except with respect to the Notice and Bank Agreement,
this Agreement supersedes all prior understandings, writings,
proposals, representations and communications, oral or written, of
any party relating to the subject matter hereof, and in the case of
any conflict between the terms and conditions of this Agreement and
the terms and conditions of the Notice and Bank Agreement, the
terms and conditions of the Notice and Bank Agreement shall apply.
17. Neither Company nor Lender may assign any of its rights
under this Agreement without the prior written consent of Bank.
18. This Agreement shall be interpreted in accordance with
California law without reference to California principles of
conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the day and year
first above written.
UNION SQUARE HOTEL PARTNERS L.P., a
Delaware limited partnership
By: Union Square/GP Corp., its general Address for notices:
partner ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ With a copy to:
Title: President Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CAPITAL GROWTH MORTGAGE Attn: Rand S. April, Esq.
INVESTORS, L.P., a Delaware limited
partnership
By: CG Realty Funding Inc., its general Address for notices:
partner 3 World Financial Center,
By: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ With a copy to:
Title: VP & CFO ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Bank of America National Trust and Savings Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Association
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/ Address for notices-
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Bank of America
Title: Vice President ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇/ Attn: Account
Administrator
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Title: Assistant Vice President
