EXHIBIT 10.5
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SECURED PROMISSORY NOTE
made by
FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
(the "Maker")
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to
NOMURA ASSET CAPITAL CORPORATION
(the "Payee")
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Dated: As of January 13, 1997
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SECURED PROMISSORY NOTE
$165,400,000 New York, New York
January 13, 1997
FOR VALUE RECEIVED, FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Maker"), promises to pay to NOMURA ASSET
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CAPITAL CORPORATION, a Delaware corporation (together with its successors and
assigns, the "Payee"), or order, the principal amount of ONE HUNDRED SIXTY-FIVE
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MILLION FOUR HUNDRED THOUSAND DOLLARS ($165,400,000) (the "Loan"), in the manner
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set forth herein; together with interest on the unpaid principal amount of this
Note at the Base Rate (as adjusted pursuant to Paragraph 4(e) hereof) or Default
Rate, as applicable; together with payments with respect to amortization of
principal as described in Paragraph 4 hereof; together with the Yield
Maintenance Premium, if any, due and payable under the Loan Agreement; and
together with all other amounts due (including, without limitation, all items of
Debt) hereunder or under any of the other Transaction Documents.
1. Definitions. For the purposes of this Note, each of the
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following terms shall have the meaning specified with respect thereto
(a) "Accounting Period" has the meaning set forth in the Loan
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Agreement.
(b) "Adjusted Rate" means the Base Rate adjusted in accordance
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with Paragraph 4(e) of this Note.
(c) "Base Rate" means 8.40% per annum.
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(d) "Business Day" means a day on which banks and foreign
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exchange markets are open for business in New York, New York.
(e) "Debt" has the meaning set forth in the Loan Agreement.
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(f) "Debt Service Payment Date" means the 11th day of each
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month.
(g) "Debt Service Period" means the period from and including
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the eleventh (11th) day of the calendar month immediately preceding each Debt
Service Payment Date to and including the tenth (10th) day of the calendar month
in which such Debt Service Payment Date occurs.
(h) "Default Rate" means a rate per annum equal to the lesser of
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(aa) two percent (2%) above the Base Rate or Adjusted Rate, as applicable, and
(bb) the maximum rate allowed by law.
(i) "Event of Default" has the meaning set forth in the Loan
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Agreement.
(j) "Excess Cash Flow" has the meaning set forth in the Loan
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Agreement.
(k) "Loan Agreement" means that certain Loan Agreement, dated as
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of the date hereof, between the Maker and the Payee.
(l) "Maturity Date" shall mean the earliest to occur of:
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(1) January 11, 2017; or
(2) such date to which the maturity of the Debt may be
accelerated upon an Event of Default or as otherwise provided in any Transaction
Document.
(m) "Monthly Debt Service Payment" means the constant monthly
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payment set forth in Paragraph 4(b) hereof, as such payment may be adjusted as
set forth in Paragraph 4(c) hereof.
(n) "Non-Recourse" has the meaning set forth in the Loan
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Agreement.
(o) "Optional Prepayment Date" means January 11, 2007.
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(p) "Transaction Documents" has the meaning set forth in the
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Loan Agreement.
(q) "Yield Maintenance Premium" has the meaning set forth in the
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Loan Agreement.
Certain additional terms are defined in the less particular provisions
of this Note to which they pertain or in which they are initially used.
2. Payment of Debt.
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The Maker shall punctually pay the Debt at the time and in the
manner provided for its payment in this Note and the other Transaction
Documents. It is expressly agreed that the entire Debt may, at the Payee's
election (or automatically upon the occurrence of the events described in
clauses (f) and (g) of Section 4.1A of the Loan Agreement) become immediately
due and payable upon the occurrence of an Event of Default, as set forth in the
Loan Agreement.
3. Interest Rate.
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(a) Except as set forth below, including Paragraph 4(b) hereof,
the Debt shall bear interest, for each Debt Service Period, at the Base Rate.
(b) Following the Maturity Date and for each Debt Service Period
or portion thereof occurring from the date of the occurrence of an Event of
Default and while it is continuing or, if later, the date the Lender has given
notice to the Maker pursuant to Section 4.2(a) of the Loan Agreement, if such
notice is required, the Debt shall bear interest at the Default Rate.
(c) Calculations of interest shall be made on the basis of a
360-day year and actual days elapsed during each Debt Service Period.
4. Periodic Payments.
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(a) On February 11, 1997 the Maker shall pay to the Payee (i)
interest on the Note at the Base Rate for the period beginning on January 13,
1997 and ending on February 10, 1997, in an amount equal to $1,119,206.67, and
(ii) a principal payment in an amount equal to $228,535.11.
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(b) On each Debt Service Payment Date occurring after February 11,
1997, the Maker shall pay to the Payee an amount equal to $1,424,928.44, being
the constant monthly payment applicable to this Note up to the Maturity Date.
Such amount shall be applied (i) first, to the payment of interest (the "Base
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Rate Interest") on this Note at the Base Rate or the Default Rate, as
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applicable, then due and payable for the applicable Debt Service Period, and
(ii) next, to the payment of principal on this Note in reduction of such
principal in the amount of the difference between the Monthly Debt Service
Payment and the Base Rate Interest paid pursuant to subclause (i) above
(each, a "Principal Payment"). Following the Maturity Date and while an Event of
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Default has occurred and is continuing, the constant monthly payment set forth
in the first sentence of this Paragraph 4(b) shall be increased to reflect
payment of interest at the Default Rate.
(c) If any Principal Payment or a portion thereof is prepaid on any
Debt Service Payment Date by the application by the Payee of payments received
(i) from or with respect to U.S. Obligations held by the Payee on the Optional
Prepayment Date as a result of a release of any Property by the Maker pursuant
to Section 2.3(g) of the Loan Agreement, (ii) from the release of a Property by
the Maker from the Lien of the Security Documents (as such terms are defined in
the Loan Agreement) pursuant to Section 2.6(c) of the Loan Agreement, or (iii)
on and after the Optional Prepayment Date, pursuant to the last sentence of
Section 3.1 of the Loan Agreement, the Monthly Debt Service Payment payable on
each Debt Service Payment Date thereafter shall be reduced in an amount equal to
the percentage reduction in the principal amount payable under this Note
effected by such prepayment.
(d) On the Maturity Date, the Maker shall pay to the Payee an amount
equal to the then outstanding principal balance of the Loan, plus interest
accrued and unpaid thereon and any other Debt then due and payable.
(e) (i) On the Optional Prepayment Date and on each anniversary
thereof, the interest rate applicable to the Debt shall be set at the greater of
(xx) the Base Rate plus 2% per annum and (yy) the yield, calculated by linear
interpolation (rounded to three decimal places), of the yields of United States
Treasury Constant Maturities with the terms (one longer and one shorter) most
nearly approximating those of noncallable United States Treasury obligations
having maturities as close as possible to the tenth anniversary of the Optional
Prepayment Date, as determined by the Payee on the basis of Federal Reserve
Statistical Release H.15 - Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by the Payee in each case on the last
Business Day of the week immediately prior to the Optional Prepayment Date and
each anniversary thereof, as the case may be, plus 3.755% per annum (any such
increased rate being hereinafter referred to as the "Adjusted Rate"). The Maker
shall thereafter pay to the Payee the Monthly Debt Service Payment on each Debt
Service Payment Date in the manner and at the place established pursuant to this
Note. Such Monthly Debt Service Payment shall be applied (i) first, to the
payment of interest on this Note at the Base Rate then due and payable for the
applicable Debt Service Period and (ii) next, to the payment of the Principal
Payment then due and payable.
(ii) Additionally, on each Debt Service Payment Date subsequent
to the Optional Prepayment Date, the Maker shall pay to the Payee any Excess
Cash Flow for all of the Accounting Periods the Operating Profit Payment Dates
(as defined in the Loan Agreement) for which occurred during the Debt Service
Period immediately preceding such Debt Service Payment Date, which Excess Cash
Flow payments shall be applied (A) first, to prepayment of each Principal
Payment required to be made on each Debt Service Payment Date in inverse order
of maturity until the principal of this Note has been paid in full, and (B)
next, to payment of the difference, if any, between (y) the sum of (i) interest
accrued and unpaid on this Note calculated at the Adjusted Rate and (ii)
interest on such accrued and unpaid amount at the Adjusted Rate and (z) the Base
Rate interest paid on each Debt Service Payment Date.
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(f) A11 payments (including prepayments) to be made by the Maker on
account of principal, interest and all other amounts payable with respect to the
Debt, shall be made by wire transfer to the Payee without set-off or
counterclaim, in lawful money of the United States of America and in immediately
available funds, not later than 2 p.m. (New York time) on the dates such
payments are due, by payment to:
Mellon Bank, Pittsburgh
ABA #043000261
NACC (P&I Remittances)
Account #109-2525
Reference: Fairfield Inn by Marriott
Limited Partnership
(P&I Remittances)
or at such other place as the Payee may, from time to time, designate in
writing.
(g) If any payment hereunder becomes due and payable on a day other
than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to such payments, interest (at the
applicable rate hereunder) thereon shall be payable during such extension. Any
payments received after 2 p.m. (New York time) shall be deemed received on the
following Business Day.
5. Prepayments.
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(a) The Maker shall have the right to prepay the unpaid
principal amount of this Note on a Debt Service Payment Date to the extent set
forth in the last sentence of Section 3.1 of the Loan Agreement.
(b) If the Maturity Date occurs as a result of an Event of
Default and the Maker tenders payment of the Debt or any part thereof to the
Payee, such tender shall require the payment by the Maker of all sums required
pursuant to Section 4.2 of the Loan Agreement, including, without limitation,
the Yield Maintenance Premium.
6. Cost of Collection. The Maker shall pay all costs of collection
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when incurred, including, without limitation, the reasonable attorneys' fees and
disbursements of the Payee's counsel and court costs, which costs may be added
to the indebtedness evidenced hereby and must be paid within fifteen (15) days
after written demand. Such costs shall bear interest at the Base Rate from the
date of incurrence and interest at the Default Rate from and after delivery of
written demand.
7. Usury. It is the intent of the Payee and the Maker to comply at
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all times with applicable usury laws. If at any time such laws would render
usurious any amounts called for under this Note, then it is the Maker's and the
Payee's express intention that such excess amount be immediately credited on the
principal balance of this Note (or, if this Note has been fully paid, refunded
by the Payee to the Maker, and the Maker shall accept such refund), and the
provisions hereof be immediately deemed to be reformed and the amounts
thereafter collectible hereunder reduced to comply with the then applicable
laws, without the necessity of the execution of any further documents, but so as
to permit the recovery of the fullest amount otherwise called for hereunder. To
the extent permitted by law, any such crediting or refund shall not cure or
waive any default by the Maker under this Note. If at any time following any
such reduction in the interest rate payable by the Maker, there remains unpaid
any principal amounts under this Note and the maximum interest rate permitted by
applicable law is increased or eliminated, then the interest rate payable
hereunder shall be readjusted, to the extent permitted by applicable law, so
that the total dollar amount of interest payable hereunder shall be equal to the
dollar amount of interest which would have been paid by the Maker without giving
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effect to the reduction in interest resulting from compliance with the
applicable usury laws theretofore in effect. The Maker agrees, however, that in
determining whether or not any interest payable under this Note exceeds the
highest rate permitted by law, any non-principal payment (except payments
specifically stated in this Note to be "interest"), including, without
limitation, prepayment fees and late charges, shall be deemed to the extent
permitted by law, to be an expense, fee or premium rather than interest.
8. Applicable Law. This Note has been negotiated, executed, made
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and delivered in the Borough of Manhattan, City, County and State of New York.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
9. Waivers; Security.
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(a) The Maker and any endorsers, sureties and guarantors hereof
or hereon, and all parties now or hereafter liable with respect to this Note,
hereby jointly and severally waive presentment for payment, demand, protest,
notice of non-payment or dishonor and of protest, and agree to remain bound
until the Debt is paid in full notwithstanding any extensions of time for
payment which may be granted even though the period of extension be indefinite,
and notwithstanding any inaction by, or failure to assert any legal right
available to, the Payee.
(b) The Maker and any endorsers, sureties and guarantors hereof
or hereon, and all parties now or hereafter liable with respect to this Note,
further expressly agree that any waiver by the Payee, other than a waiver in
writing signed by the Payee, of any term or provision hereof or of any of the
other Transaction Documents or of any right, remedy or option under this Note or
any of the other Transaction Documents shall not be controlling, nor shall it
prevent or estop the Payee from thereafter enforcing such term, provision,
right, remedy or option, and the failure or refusal of the Payee to insist in
any one or more instances upon the strict performance of any of the terms or
provisions of this Note or any of the other Transaction Documents shall not be
construed as a waiver or relinquishment for the future of any such term or
provision, but the same shall continue in full force and effect, it being
understood and agreed that the Payee's rights, remedies and options under this
Note and the other Transaction Documents are and shall be cumulative and are in
addition to all other rights, remedies and options of the Payee in law or in
equity or under any other agreement.
(c) The Maker and the Payee hereby irrevocably waive all rights
to trial by jury in any action or other proceeding arising out of or relating to
this Note, and the Maker also waives the right in such action or other
proceeding to interpose any counterclaims (except to the extent such
counterclaims are compulsory and may not be brought in a separate action) or
set-offs of any kind or description.
(d) This Note is secured by, among other things, the Mortgages
(as defined in the Loan Agreement) made by the Maker in favor of the Payee
encumbering the Properties (as defined in the Loan Agreement).
10. Non-Recourse. The obligations of the Maker under this Note shall
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be Non-Recourse (as defined in the Loan Agreement).
11. Miscellaneous.
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(a) This Note may not be changed, waived, modified, discharged or
terminated orally, but only by an agreement in writing, signed by the party
against whom enforcement of any such change, waiver, modification, discharge or
termination is sought.
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(b) The term "Payee" shall mean the then holder of this Note, from
time to time, and its successors and assigns.
(c) If any provision of this Note or the application thereof to the
Maker or any circumstance in any jurisdiction governing this Note shall, to any
extent, be invalid or unenforceable under any applicable statute, regulation or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform to such
statute, regulation or rule of law, and the remainder of this Note and the
application of any such invalid or unenforceable provision to parties,
jurisdictions or circumstances other than to whom or to which it is held invalid
or unenforceable shall not be affected thereby, nor shall the same affect the
validity or enforceability of any other provision of this Note.
(d) Time is of the essence as to all dates set forth in this Note,
subject to any applicable notice or grace period provided herein or in any other
Transaction Document.
(e) The Maker hereby agrees to perform and comply with each of the
terms, covenants and provisions contained in this Note and in any instrument
evidencing or securing the indebtedness evidenced by this Note on the part of
the Maker to be observed and/or performed hereunder and thereunder. No release
of any security for the principal amount due under this Note, or of any portion
thereof, and no alteration, amendment or waiver of any provision of this Note or
of any such instrument (including the Transaction Documents) made by agreement
between the Payee and any other person shall release, discharge, modify, change
or affect the liability of the Maker under this Note or under such instrument.
(f) No act of commission or omission of any kind or at any time upon
the part of the Payee in respect of any matter whatsoever shall in any way
impair the rights of the Payee to enforce any right, power or benefit under this
Note, and no set-off, counterclaim, reduction or diminution of any obligation or
any defense of any kind or nature which the Maker has against the Payee shall be
available hereunder to the Maker.
(g) All notices and other communications given hereunder shall not be
deemed to have been duly given or made unless given or made in the manner
provided for in the Loan Agreement.
(h) The captions preceding the text of the various Paragraphs
contained in this Note are provided for convenience only and shall not be deemed
to in any way affect or limit the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the Maker has caused this Note to executed as
of the day and year first above written.
FAIRFIELD INN BY MARRIOTT LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Marriott FIBM One Corporation, General
Partner
By: /s/ Bruce D. Wardinski
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Bruce D. Wardinski
Vice President
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