Exhibit 10.5
TERM NOTE
Amount: $13,069,000 Date: January 1, 2002
FOR VALUE RECEIVED, MERISTAR H&R OPERATING COMPANY, L.P.
("Maker"), a Delaware limited partnership, hereby promises to pay to MERISTAR
HOSPITALITY OPERATING PARTNERSHIP, L.P. or order ("Payee"), at 1010 Wisconsin
Avenue, Washington, D.C. 20007, or at such other place as Payee shall from time
to time designate, the principal amount of $13,069,000 together with interest on
the unpaid principal balance hereof from time to time at the "Interest Rate" (as
hereinafter defined).
1. Definitions.
(a) "Revolving Credit Agreement" shall mean that certain Revolving
Credit Agreement, dated as of August 3, 1998, as amended by Amendment to
Revolving Credit Agreement, dated as of February 29, 2000, and Second Amendment
to Revolving Credit Agreement, dated as of January 28, 2002.
(b) "Senior Credit Agreement" shall mean that certain Senior Secured
Credit Agreement, dated as of February 29, 2000, among Payee, Southwest Agency,
as arranger and administrative agent, Citibank/Salomon Smith Barney, as
syndication agent, Lehman Brothers, Inc., as documentation agent, and the other
lenders party thereto as amended by First Amendment to Senior Secured Credit
Agreement, dated as of December 31, 2000, Second Amendment to Senior Secured
Credit Agreement, dated as of April 6, 2001 and Third Amendment to Senior
Secured Credit Agreement (the "Third Senior Amendment"), dated as of January 28,
2002.
(c) "Interest Rate" shall mean a per annum rate equal to the lesser
of (a) sum of (i) "LIBOR" (as defined in the Revolving Credit Agreement)
determined as of the first day of each month during the term of this Note for a
one-month period plus (ii) 6.50% and (b) the "Maximum Rate" (as defined in the
Revolving Credit Agreement).
(d) "Maturity Date" shall mean the Maturity Date as defined in the
Revolving Credit Agreement.
2. Payments. (a) Subject to the provisions of Section 2(c) of this
Note, Maker shall pay interest to Payee on the outstanding principal amount
hereof at the Interest Rate in arrears on the last day of each calendar quarter
commencing March 31, 2002 until the Maturity Date.
(b) Maker shall repay the outstanding principal amount of this Note
together with all accrued and unpaid interest thereon on the Maturity Date.
(c) Maker and Payee acknowledge the provisions of paragraph 18 of the
Third Senior Amendment amending clause (f) of Section 6.04 of the Senior Credit
Agreement and agree that if Maker is prevented from paying any interest to Payee
by virtue of such provisions that such unpaid interest shall accrue and be
payable on the Maturity Date or such earlier date on which Maker may be
permitted to pay the same pursuant to such provisions.
3. Prepayment. This Note and the indebtedness hereby evidenced may
be prepaid, in whole or in part, together with accrued and unpaid interest
thereon at the election of Maker without payment of premium or penalty, upon ten
(10) days prior written notice to Payee.
4. Default; Acceleration. (a) An "Event of Default" shall occur
under this Note if (I) Maker shall to make any payment of interest when due and
such failure continues for a period of ten (10) days; (ii)
Maker shall fail to pay the principal amount of this Note when due; or (iii) any
"Event of Default" shall occur under the Revolving Credit Agreement.
(b) Upon the occurrence and during the continuance of any Event of
Default, Payee shall have the right upon written notice to the Maker to
accelerate the repayment of this Note and the indebtedness hereby evidenced.
5. Default Rate. Upon the occurrence and during the continuance of
any Event of Default, the unpaid principal balance of this Note shall bear
interest at the lesser of (a) the Interest Rate plus 3% per annum and (b) the
Maximum Rate.
6. Nature of Indebtedness. The indebtedness evidenced by this Note
refinances and replaces the amount shown on the September 30, 2001 financial
statements of MeriStar Hotels & Resorts, Inc., Maker's parent, as "Due to
MeriStar Hospitality Corporation," Payee's parent. The indebtedness evidenced by
this Note does not constitute an advance under, or any indebtedness pursuant to,
the Revolving Credit Agreement.
7. Costs. In addition to, and not in lieu of, any other sums
otherwise payable to Payee hereunder, Payee shall be entitled to reimbursement
from Maker for all reasonable costs, expenses and fees (including reasonable
attorney's fees) incurred by Payee in connection with the collection of this
Note and/or the indebtedness hereby evidenced.
8. Waivers. Maker hereby waives presentment, demand, protest, notice
of protest and notice of any other kind except for such notice as is expressly
provided for hereunder.
9. Governing Law. This Note shall be governed by the laws of the
State of New York.
10. Amendment; Waivers. No waiver or amendment of this Note may be
made other than in writing executed by Payee and Maker.
11. No Usury. This Note is subject to the express condition that at
no time shall Maker be obligated to pay any interest on the principal balance of
this Note at a rate in excess of the Maximum Rate. If by the terms of this Note,
Maker is obligated to pay interest at a rate in excess of the Maximum Rate, then
the Interest Rate or Default Rate, as applicable, shall be deemed immediately
reduced to the Maximum Rate and all previous payments in excess of the Maximum
Rate shall be deemed to have been payments in reduction of principal and not on
account of interest. All sums to be paid to Payee under this Note shall, to the
extent permitted by law, be amortized, prorated, allocated and spread over the
full term of this Note so that the rate of interest does not exceed the Maximum
Rate from time to time in effect.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
written above.
MERISTAR H&R OPERATING COMPANY, L.P.
By: MeriStar Hotels & Resorts, Inc.,
its general partner
By: /s/ John Emery
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Name: John Emery
Title: President and COO