CONSENT AND RELEASE AGREEMENT
THIS CONSENT AND RELEASE AGREEMENT (this "Agreement")
is made and entered into as of November __, 1996
by and among XXXXXX LENDING CORP., a Delaware corporation
(formerly known as Shearson Lending Corp., a Delaware
corporation) ("Xxxxxx Lending"), XXXXXX BROTHERS HOLDINGS
INC., a Delaware corporation (formerly known as Shearson
Xxxxxx Brothers Holdings Inc.) ("Holdings") and UNION
SQUARE HOTEL PARTNERS, L.P., a Delaware limited partner-
ship (formerly known as Shearson Union Square Associates
Limited Partnership, a Delaware limited partnership)
("Borrower").
R E C I T A L S
WHEREAS, Borrower is the owner of that certain
property located in San Francisco, California and common
ly known as the Grand Hyatt San Francisco hotel (the "Ho-
tel");
WHEREAS, Xxxxxx Lending is the holder of that
certain Restructuring Expense Note, dated as of June 30,
1992 (the "Xxxxxx Lending Note") made by Borrower in
favor of Shearson Lending Corp., in the original princi-
pal amount of $1,000,000;
WHEREAS, Holdings is the holder of that certain
Amended and Restated Note, dated as of June 28, 1990 (the
"Holdings Note") made by Borrower in favor of Shearson
Xxxxxx Brothers Holdings Inc., in the original principal
amount of $10,000,000;
WHEREAS, Capital Growth Mortgage Investors,
L.P. ("CapGrowth") is the holder of the following promis-
sory notes made by Borrower (collectively, the "CapGrowth
Notes"): (i) the Zero Coupon Mortgage Note due January 2,
1997, dated as of August 20, 1986, as amended and restat-
ed as of June 30, 1992, in the original principal amount
of $13,325,000 and the face amount of $42,207,708.58 (the
"CapGrowth Secured Note"), (ii) the Promissory Note,
dated May 1, 1989, in the original principal amount of
$1,000,000 (the "May 1 Note"), and (iii) the Note, dated
as of July 12, 1991, in the original principal amount of
$1,611,952.35 (the "July 12 Note" and, collectively with
the May 1 Note, the "CapGrowth Unsecured Notes");
WHEREAS, the CapGrowth Secured Note is a non-
recourse note which is secured by: (i) that certain second
priority Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of August 29,
1986, encumbering the Hotel, as amended (as so amended,
the "Deed of Trust") by that certain First Agreement
Supplementing Capital Growth Deed of Trust and Capital
Growth Assignment of Lessor's Interest in Leases, Security
Agreement and Fixture Filing, dated as of June 30,
1992 (the "First Supplement") and (ii) that certain
second priority Assignment of Lessor's Interest in Leases,
dated as of August 29, 1986, as amended by the First
Supplement (as so amended, the "Assignment of Leases");
WHEREAS, the first priority mortgage debt
encumbering the Hotel (the "First Mortgage Debt"), the
Xxxxxx Lending Note and the CapGrowth Secured Note are
each scheduled to mature and become due and payable on
January 2, 1997;
WHEREAS, in order to generate funds to apply
toward, among other things, the repayment of the First
Mortgage Debt and the Secured Note, Borrower anticipates
entering into a purchase and sale agreement (the "Pur-
chase Agreement") with an affiliate ("Buyer") of Hyatt
Corporation for the sale (the "Sale") of the Hotel in
consideration for (a) a cash purchase price (the "Gross
Purchase Price") of $126,900,000, (b) Buyer's assumption
of mortgage debt subordinate to the Secured Note, and (c)
the covenants, representations, warranties and indemni-
ties made by Buyer and contained in the Purchase Agree-
ment and in the property transfer documents executed in
connection therewith, with no other consideration of any
kind being paid by Buyer to Borrower;
WHEREAS, the Holdings Note and the CapGrowth
Unsecured Notes will mature and become due and payable
(to the extent of sufficient sales proceeds) upon the
consummation of the Sale;
WHEREAS, the net proceeds that Borrower expects
to receive from the payment of the Gross Purchase Price
in connection with the Sale, after the payment of transac-
tion costs, the making of closing adjustments and the
repayment of the First Mortgage Debt (the "Net Sales Pro-
ceeds"), would not be sufficient to repay in full the
obligations of the Borrower under the CapGrowth Secured
Note and would therefore be insufficient to permit any
repayment of the CapGrowth Unsecured Notes, the Holdings
Note or the Xxxxxx Lending Note;
WHEREAS, in consideration of Borrower's under-
takings and efforts in connection with the sale of the
Hotel, CapGrowth will permit Borrower to retain a portion
of the Net Sales Proceeds for distribution to Borrower's
constituent partners, upon the terms and conditions set
forth in that certain Allocation and Release Agreement,
dated as of November 1, 1996 (the "CapGrowth Allocation
Agreement") by and between CapGrowth and Borrower, a copy
of which is attached hereto as Exhibit A, provided that
Borrower (i) obtain the consent of its unsecured lenders
to the provisions of the CapGrowth Allocation Agreement,
including, without limitation, to the retention by Bor-
rower of a portion of the Net Sales Proceeds, (ii) obtain
the release by Holdings and Xxxxxx Lending of Borrower
from any obligations under the Holdings Note and the
Xxxxxx Lending Note, respectively, and (iii) obtain
general releases of Borrower, CapGrowth and their respec-
tive general partners and affiliates from each of Xxxxxx
Lending and Holdings in their capacities as unsecured
creditors of Borrower;
WHEREAS, Holdings and Xxxxxx Lending have also
agreed to permit Borrower to retain a portion of the Net
Sales Proceeds (to the extent set forth in the CapGrowth
Allocation Agreement) in consideration of Borrower's
undertakings and efforts in connection with the Sale of
the Hotel; and
WHEREAS, Holdings, Xxxxxx Lending and Borrower
now desire to set forth their agreement with respect to
the release and forgiveness of the Holdings Note and the
Xxxxxx Lending Note.
NOW, THEREFORE, in consideration of the cove-
nants and conditions herein contained and other good and
valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Consent by Holdings.
Holdings hereby consents to the terms and
provisions of the CapGrowth Allocation Agreement.
2. Consent by Xxxxxx Lending.
Xxxxxx Lending hereby consents to the terms and
provisions of the CapGrowth Allocation Agreement.
3. Extension of Maturity of Xxxxxx Lending Note.
In order to permit Borrower sufficient time in
which to consummate the Sale, Xxxxxx Lending and Borrower
hereby agree that the maturity date of the Xxxxxx Lending
Note shall be extended until March 31, 1997, regardless
of the maturity of the First Mortgage Debt.
4. Release of Indebtedness and Borrower's Retention of
Certain Net Sales Proceeds.
Each of Holdings and Xxxxxx Lending acknowledges and
agrees that, upon consummation of the Sale and after pay-
ment to CapGrowth of the Pay-Off Amount as contemplated
by (and as such term is defined in) the CapGrowth Alloca-
tion Agreement, Holdings and Xxxxxx Lending shall cause
all of Borrower's obligations under, respectively, the
Holdings Note and the Xxxxxx Lending Note and each of the
respective loan documents executed in connection there-
with to be fully and unconditionally released and forgiv-
en, and Borrower shall have the absolute right to keep
and retain any and all remaining Net Sales Proceeds, free
from any claim of Holdings or Xxxxxx Lending.
5. Closing.
a. Closing Date. The closing (the "Closing") of
the satisfaction and release of Borrower's obligations
under the Holdings Note and the Xxxxxx Lending Note and
each of the loan documents executed in connection there-
with shall occur on the date (the "Closing Date") set
forth in a written notice to Holdings and Xxxxxx Lending
delivered by Borrower at least one (1) business day prior
to the Closing, which Closing Date shall be no later than
March 31, 1997. The Closing shall be conducted concur-
rently with the closing of the Sale and shall be made
part of the escrow established by Borrower with First
American Title Insurance Company (the "Title Company")
with respect to the Sale.
b. Closing Deliveries of Holdings and Xxxxxx
Lending. No later than thirty days after the "Effective
Date" (as defined in the Purchase Agreement), the follow-
ing items shall be delivered by Holdings and/or Xxxxxx
Lending (as applicable) to the Title Company, to be held
in escrow by the Title Company pending the consummation
of the Sale:
(1) the original executed Holdings Note;
(2) the original executed Xxxxxx Lending Note;
(3) an unconditional general release of Borrower,
its general partner and affiliates of Borrower's general
partner, duly executed by Holdings and Xxxxxx Lending, to
be prepared by Borrower, and to be in form and substance
reasonably satisfactory to the parties (the "General
Release of Borrower");
(4) an unconditional general release of CapGrowth,
its general partner and affiliates of CapGrowth's general
partner, duly executed by Holdings and Xxxxxx Lending, to
be prepared by Borrower, and to be in form and substance
reasonably satisfactory to CapGrowth (the "General
Release of CapGrowth"); and
(5) instructions to the Title Company to xxxx
each of the Holdings Note and the Xxxxxx Lending Note
"Cancelled" upon delivery to CapGrowth of the Pay-Off
Amount.
c. Borrower's Closing Deliveries. No later than
thirty days after the Effective Date, the following items
shall be delivered by Borrower to the Title Company to be
held in escrow by the Title Company pending the consumma-
tion of the Sale:
(1) instruction to the Title Company to pay the
Pay-Off Amount to CapGrowth out of Net Sales Proceeds;
(2) an unconditional general release of Holdings
and Xxxxxx Lending and the affiliates of each, duly executed
by Borrower and CapGrowth, in form and substance
reasonably satisfactory to the parties (the "General
Release of Holdings and Xxxxxx Lending").
d. Title Company Obligations. At Closing,
Borrower shall cause the Title Company to (i) deliver the
General Release of Holdings and Xxxxxx Lending to Hold-
ings and Xxxxxx Lending, and (ii) deliver the Holdings
Note, the Xxxxxx Lending Note and the General Release of
Borrower to Borrower.
6. Agreement and Release by CapGrowth.
It shall be a condition precedent to the obligations
of Holdings, Xxxxxx Lending and Borrower hereunder that
Borrower shall have obtained (or, in the case of clause
(iii) of this Section 6, caused to be delivered to the
Title Company at the Closing): (i) a fully executed
CapGrowth Allocation Agreement, (ii) a general release of
Borrower, its general partner and its affiliates by
CapGrowth, and (iii) the General Release of Holdings and
Xxxxxx Lending, executed by CapGrowth.
7. Miscellaneous Provisions.
a. Authority. Each party hereto represents and
warrants to the other that it has full power and authority
to enter into this Agreement and to consummate the
transactions contemplated hereby. The person executing
this Agreement on behalf of the general partner of each
party hereto has been duly authorized to sign this Agree-
ment on behalf of such general partner, but signs this
Agreement only in such person's capacity as an officer of
such general partner and shall have no personal liability
with respect to this Agreement or the transactions con-
templated hereby.
b. Severability. If any term or provision of this
Agreement or the application thereof to any persons or
circumstances shall, to any extent, be invalid or unen-
forceable, the remainder of this Agreement or the appli-
cation of such term or provision to persons or circum-
stances other than those as to which it is held invalid
or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
c. Integration of Agreement. This Agreement,
together with the Exhibits hereto, constitutes the entire
agreement of the parties regarding the subject matter of
this Agreement and all prior or contemporaneous agree-
ments, understandings, representations and statements,
oral or written, are hereby merged herein.
d. Further Assurances. The parties agree to
mutually execute and deliver to each other, at, and from
time to time after, the Closing, such other and further
documents as may be reasonably required by counsel for
the parties to carry into effect the purposes and intents
of this Agreement, provided such documents are customari-
ly delivered in similar transactions, and do not impose
any material obligations upon any party hereunder except
as set forth in this Agreement.
e. Attorneys' Fees. In the event that any party
hereto fails to perform any of its obligations under this
Agreement or in the event a dispute arises concerning the
meaning or interpretation of any provision of this Agree-
ment, the defaulting party or the party not prevailing in
such dispute, as the case may be, shall pay any and all
costs and expenses reasonably incurred by the other
parties in enforcing or establishing its rights hereun-
der, including, without being limited to, court costs and
reasonable attorneys' fees, charges and disbursements.
f. Modifications; Counterparts. This Agreement
may not be modified, amended, altered or supplemented
except by written agreement executed and delivered by the
parties hereto. This Agreement may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed
shall be deemed to be an original, and all of which when
so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart
of this Agreement. Any delivery of a counterpart signa-
ture by telecopier shall, however, be promptly followed
by delivery of a manually executed counterpart.
g. Governing Law. This Agreement shall be gov-
erned by and construed in accordance with the laws of the
State of New York, as if this Agreement was made and to
be performed wholly within such State.
h. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
i. No Waiver. Except as otherwise expressly
provided herein, the failure of any party hereto to
enforce at any time any of the provisions of this Agree-
ment shall in no way be construed as a waiver of any of
such provisions, or the right of any party thereafter to
enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of
any other or subsequent breach.
j. Headings. The Article and Section headings
used herein are for reference purposes only and do not
control or affect the meaning or interpretation of any
term or provision hereof.
k. Recordation. No party hereto may record this
Agreement. To the extent that any such filing is made in
violation of the Agreement, the party effecting such
filing shall indemnify, defend and hold the other harm-
less from and against any damages incurred by the other
in connection therewith. The provisions of this para-
graph shall survive the termination of this Agreement.
l. No Modifications to Existing Loan Documents.
Except to the extent expressly set forth herein, each of
the loan documents executed and delivered in connection
with the Xxxxxx Lending Note and the Holdings Note shall
remain unmodified and in full force and effect.
m. Agreement Contingent. This Agreement is contin-
gent upon the consummation of the Sale. In the event the
Sale has not been consummated on or before March 31,
1997, this Agreement shall terminate and be of no further
force or effect. Borrower, Holdings and Xxxxxx Lending
each hereby agrees that this Agreement does not consti-
tute a modification of the Xxxxxx Lending Note or the
Holdings Note within the meaning of Treasury Regulation
section 1.1001-3.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Release Agreement as of the date and
year first above written.
UNION SQUARE HOTEL PARTNERS,
L.P., a Delaware limited part-
nership
By: Union Square/GP Corp., its
general partner
By: s/Xxxxxxx X. Xxxxxx
__________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXXX BROTHERS HOLDINGS INC., a
Delaware corporation
By: s/Xxxxx Xxxxxx
___________________
Name: Xxxxx Xxxxxx
Title: Vice President
XXXXXX LENDING CORP., a Delaware
corporation
By: s/Xxxxx Xxxxxx
___________________
Name: Xxxxx Xxxxxx
Title: Vice President
EXHIBIT A
CAPGROWTH ALLOCATION AGREEMENT
