Exhibit 10.4
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
$25,500,000 Chicago, Illinois
September 24, 1996
THIS AMENDED AND RESTATED SECURED PROMISSORY NOTE AMENDS AND RESTATES
COMPLETELY THAT CERTAIN PROMISSORY NOTE SECURED BY MORTGAGE DATED JUNE 12, 1989
MADE BY MUTUAL BENEFIT CHICAGO MARRIOTT SUITE HOTEL PARTNERS, L.P., A RHODE
ISLAND LIMITED PARTNERSHIP, IN FAVOR OF NATIONAL BANK OF CANADA IN THE FACE
PRINCIPAL AMOUNT OF $25,500,000. THIS AMENDED AND RESTATED SECURED PROMISSORY
NOTE IS SECURED BY, AMONG OTHER INSTRUMENTS, THE "MORTGAGE", THE "ASSIGNMENT OF
RENTS", AND THE "SECURITY AGREEMENT", AS SUCH TERMS ARE HEREINAFTER DEFINED.
FOR VALUE RECEIVED, MUTUAL BENEFIT CHICAGO MARRIOTT SUITE HOTEL PARTNERS,
L.P., a Rhode Island limited partnership ("Borrower"), hereby promises to pay to
the order of NATIONAL BANK OF CANADA, New York, a duly licensed branch of
National Bank of Canada, a Canadian bank ("Lender"), in the manner provided
hereinafter, the principal sum of TWENTY-FIVE MILLION FIVE HUNDRED THOUSAND AND
00/100 DOLLARS ($25,500,000) with interest thereon, as follows:
1. Certain Definitions. As used herein, the following terms shall have
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the indicated meanings, and all capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Loan Agreement:
1.1 Accounting Period. Each Accounting Period shall commence at 12:01
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a.m. local time on a Saturday and shall end at midnight on the Friday that
is the twenty-eighth (28th) day of said Accounting Period. Each Accounting
Period shall commence immediately following the last day of the previous
Accounting Period. The first Accounting Period of each Fiscal Year shall
commence on the first day of said Fiscal Year and the last Accounting
Period of each Fiscal Year shall end on the last day of said Fiscal Year.
As stated above, each Accounting Period shall contain twenty-eight (28)
days; provided, however, that in certain Fiscal Years one of the Accounting
Periods shall contain thirty-five (35) days if necessary in order to cause
the last day of the last Accounting Period to coincide with the last day of
the Fiscal Year in question.
1.2 Accrual Rate. The respective rates of interest per annum set
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forth below with respect to the calendar years set forth below:
Accrual Rate
per Annum Calendar Year
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0.0% 1996
0.25% 1997
0.25% 1998
0.50% 1999
1.00% 2000
1.50% 2001
; provided, however, that (i) the Accrual Rate for calendar year 2000 shall
be reduced to 0.50% (retroactive to January 1, 2000) (the "Reduced Year
2000 Accrual Rate") if Borrower repays the Indebtedness in full (other than
following an acceleration of the Indebtedness by Lender following an Event
of Default) on or before December 31, 2000 and (ii) the Accrual Rate for
calendar year 2001 shall be reduced to 0.75% (retroactive to January 1,
2001) (the "Reduced Year 2001 Accrual Rate") if Borrower repays the
Indebtedness in full (other than following an acceleration of the
Indebtedness by Lender following an Event of Default) on or before June 11,
2001. If an Interest Period falls partially within one calendar year and
partially within the next calendar year, the Accrual Rate for said Interest
Period shall be adjusted (as of the first day of the new calendar year) in
accordance with the schedule of Accrual Rates set forth above.
1.3 Accrual Rate Interest. As defined in Section 2.1 hereinbelow.
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1.4 Additional Accrued Interest. As defined in Section 2.1(c)
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hereinbelow.
1.5 Affiliated Party. (i) Any member, shareholder, partner, officer,
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director, agent or fiduciary of or for Borrower, (ii) any Person that
controls, is controlled by or is under common control with Borrower, (iii)
any Person that owns, directly or indirectly, 10% or more of the legal or
beneficial interests in Borrower, and (iv) any Person in which Borrower or
any member, shareholder, partner, officer, director, agent or fiduciary of
or for Borrower owns 10% or more of the legal or beneficial interests. For
purposes of this definition, "control", when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise. The term "controlled" has a meaning correlative to
the foregoing.
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1.6 Annual Operating Projection. As defined in the Loan Agreement.
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1.7 Assignment of Rents. As such term is defined in the Loan
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Agreement.
1.8 Business Day. A day on which banks are open for business in New
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York, New York and on which major American money banks are also dealing in
Dollar deposits in the London Interbank Market.
1.9 Base Rate. The rate of interest per annum determined as follows:
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(a) If the Fixed Rate Election is not duly exercised by Borrower
in accordance with the terms hereof, the Base Rate for each Interest
Period during the term hereof shall be equal to the LIBOR Based Rate;
and
(b) If the Fixed Rate Election is duly exercised by Borrower in
accordance with the terms hereof, then:
(i) The Base Rate for each Interest Period commencing prior
to the Conversion Date shall be equal to the LIBOR Based Rate;
and
(ii) The Base Rate applicable during the term hereof from
and after the Conversion Date shall be equal to the Fixed Rate.
1.10 Base Management Fee. The "Base Management Fee," in an amount
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equal to three percent (3%) of Gross Revenues, payable to the Manager by
Borrower pursuant to the Management Agreement.
1.11 Base Rate Interest. As defined in Section 2.1(a) hereinbelow.
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1.12 Consultant's Fee. As defined in the Loan Agreement.
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1.13 Contingent Management Fees. Shall have the meaning ascribed
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thereto in Management Agreement.
1.14 Contract Rate. With respect to each Interest Period, the rate
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of interest per annum equal to the Base Rate plus the Accrual Rate, as the
same shall be in effect with respect to said Interest Period.
1.15 Contract Rate Interest. As defined in Section 2.1(a)
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hereinbelow.
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1.16 Conversion Date. If Borrower shall have duly given the Fixed
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Rate Election Notice in accordance with Section 2.4(b) hereinbelow, the
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"Conversion Date" shall be the date from and after which the Base Rate is
equal to the Fixed Rate.
1.17 Cost of Funds Quote. As defined in Section 2.4(a) hereinbelow.
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1.18 Cost of Funds Quote Request. As defined in Section 2.4(b)
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hereinbelow.
1.19 Cumulative NOI Threshold Amount. "Cumulative NOI Threshold
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Amount" means, as of any given date, the sum of the respective NOI
Threshold Amounts applicable to each Fiscal Year or portion thereof falling
within the period from and after the date hereof, through and including the
date in question.
1.20 Deductions. Shall have the meaning ascribed thereto in the
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Management Agreement.
1.21 Default Rate. If the Conversion Date has not yet occurred, (i)
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three percent (3%) per annum plus the Base Rate through and including the
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last day of the then current Interest Period, and (ii) at all times
thereafter, three percent per annum plus the Reference Rate determined by
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Lender from time to time. If the Conversion Date has occurred, three
percent (3%) per annum plus the Base Rate that became effective as of the
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Conversion Date.
1.22 Deferred Prepayment Interest. Collectively, all Deferred Year
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2000 Prepayment Interest and Deferred Year 2001 Prepayment Interest.
1.23 Deferred Year 2000 Prepayment Interest. As defined in Section
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2.8(d) hereinbelow.
1.24 Deferred Year 2001 Prepayment Interest. As defined in Section
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2.8(e) hereinbelow.
1.25 Dollars. "Dollar(s)," whether or not capitalized, and the sign
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"$" shall mean lawful money of the United States of America.
1.26 Excess Cash Flow. With respect to any given period of time,
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Excess Cash Flow shall mean the Net House Profit with respect to said
period of time, to the extent remaining after application to the following
to the extent that said items are then due and payable (Borrower hereby
acknowledging that pursuant to the Loan Agreement, Borrower is obligated to
cause Net House Profit to be applied in said order of priority and to apply
the remainder (i.e., the Excess Cash Flow) as provided in Section 2.3
hereof):
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(a) rent and other charges then due and payable to the ground
lessor under the Ground Lease;
(b) Base Rate Interest;
(c) Scheduled Principal Payments;
(d) any Incentive Management Fee or Contingent Management Fees
due and payable to Manager in accordance with Article V of the
Management Agreement.
(e) actual out-of-pocket expenses incurred by Borrower to parties
that are not Affiliated Parties and are not employees of Borrower or
any Affiliated Party (with the exception of Host Marriott Corporation,
but only to the extent that the compensation paid to Host Marriott
Corporation does not exceed the amounts that would be payable at
arm's-length) in connection with the administration of Borrower's
limited partnership structure, provided that said amount shall not
include overhead not specifically attributable to the Borrower entity
and shall not exceed $75,000 in any given Fiscal Year (which amount
shall be ratably adjusted for partial Fiscal Years during the term
hereof based upon the number of days in said Fiscal Year that fall
within the term hereof);
(f) any Lender's Expenses not previously repaid;
(g) any portion of the Restructuring Fee not previously repaid;
(h) any Consultant's Fees incurred by Lender in an NOI Shortfall
Year; and
(i) any "Permitted Payments" (as such term is defined in the
Subordination Agreement of even date herewith between Lender and
Manager) payable to Manger from time to time by Borrower.
1.27 Excess Cash Flow Payments. As defined in Section 2.3
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hereinbelow.
1.28 FF&E Account. As defined in the Loan Agreement.
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1.29 Fiscal Year. A period of thirteen (13) Accounting Periods,
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ending at midnight on the Friday closest to December 31st in each calendar
year; the new Fiscal Year begins on the Saturday immediately following said
Friday. A partial Fiscal Year
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during the term of this Note shall, for purposes of this Note, constitute a
separate Fiscal Year.
1.30 Fixed Rate. The rate of interest per annum equal to Lender's
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Cost of Funds, determined on the Conversion Date in the manner provided in
this Note, plus 2.5% per annum, computed on the basis of a 360-day year and
the actual number of days elapsed.
1.31 Fixed Rate Election. As defined in Section 2.4(b) hereinbelow.
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1.32 Fixed Rate Election Notice. As defined in Section 2.4(b)
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hereinbelow.
1.33 Full Prepayment. As defined in Section 2.8 hereinbelow.
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1.34 Gross Revenues. Shall have the meaning ascribed thereto in the
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Management Agreement.
1.35 Ground Lease. The Ground Lease, the lessee's interest in which
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has heretofore been assigned to Borrower, originally made and dated as of
June 16, 1986 by and between Marriott Corporation, a Delaware corporation,
as lessee, and Simon-Rosemont Developers, as lessor, a memorandum of which
was recorded on April 3, 1987 as Document 3604964, as amended by First
Amendment to Lease recorded on April 3, 1987 as Document 36049654, as
further amended by Second Amendment to Lease recorded on February 9, 1989
as Document 89063670, and as further supplemented and amended by those
documents identified on Exhibit E to the Mortgage.
1.36 Incentive Management Fee. Shall have the meaning ascribed
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thereto in the Management Agreement.
1.37 Indebtedness. "Indebtedness" means, in the aggregate, all
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obligations of Borrower, of any kind or nature, evidenced or secured by one
or more of the Loan Documents.
1.38 Interbank Market. Any interbank market, whether located in
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London, England or in any other location satisfactory to Lender, where
Lender, or any branch, subsidiary, parent or affiliate of Lender, may
purchase or sell deposits of U.S. dollars to other banks for fixed periods.
1.39 Interest Period. Each Interest Period shall commence on the
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24th day of a calendar month and shall continue through and including the
23rd day of the calendar month that is three (3) months thereafter. The
first Interest Period shall commence on
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September 24, 1996 and end on December 23, 1996. Each successive Interest
Period shall commence on the date following the expiration of the previous
Interest Period. Notwithstanding the foregoing, the final Interest Period
shall end on the Maturity Date and may, accordingly, be a shorter period of
time than the other Interest Periods.
1.40 Lender's Cost of Funds.
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(a) For the purposes of this definition, the term "Cost of Funds,"
with respect to Lender or any of its Participants, considered separately,
shall mean the rate of interest per annum equivalent to the yield to
maturity at which said party can effectively borrow funds in a wholesale
market selected by said party in an amount equal to the then outstanding
balance of principal under this Note therein (or, in the case of a
Participant, each Participant's respective percentage thereof) for a period
of time equivalent to the scheduled term remaining under this Note from and
after the proposed Conversion Date. In determining said yield, effect shall
be given to (i) all commissions that would be incurred or payable in
connection with the sale of said party's obligations, and (ii) the
effective cost to said party of any then existing reserve requirement
(including, but not limited to, all basic supplemental, marginal and other
reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during such period) which is
imposed under Regulation D for determining reserve requirements applicable
to obligations of said party of the type in question or any other then
applicable regulation of the Board of Governors of the Federal Reserve
System, which prescribes reserve requirements applicable to obligations of
said party of the type in question. The utilization of the foregoing
definition in determining said party's Cost of Funds shall not obligate
said party to actually borrow funds in order to determine any rate of
interest based on said party's Cost of Funds. As employed above, the term
"then outstanding balance of principal" shall mean the principal balance
under this Note that is reasonably projected by Lender to be outstanding as
of the first day of the next Interest Period.
(b) As employed herein, the term "Lender's Cost of Funds," determined
as of any given time, shall mean either (i) the Cost of funds of Lender
determined as of said time, if Lender has no Participants in the Loan, or
(ii) the weighted average (based upon their relative percentage interests
in the Loan) of Lender's Cost of Funds and each of its Participant's
respective Cost of Funds.
(c) The "Cost of Funds Quote," the "Final Cost Quote" and the "Rate
Set Notice" (as such terms are employed in Section 2.4 hereinbelow) shall
be conclusive (in the absence of manifest error) in establishing Lender's
Cost of Funds at the time or times in question.
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1.41 Lender's Expenses. The fees, costs and expenses incurred by
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Lender in connection with the restructuring of the Original Loan, including
without limitation (i) Borrower's failure to repay the Original Loan prior
to maturity (including all such amounts incurred by Lender in anticipation
of Borrower's failure to repay the Original Loan prior to maturity) or (ii)
the negotiation, preparation and execution of the Loan Documents and all
term sheets or agreements preliminary thereto, are referred to herein as
"Lender's Expenses." Pursuant to the Loan Agreement, Lender shall notify
Borrower, within sixty (60) days following the date hereof, as to the
amount of Lender's Expenses. Concurrently herewith, Lender has advised
Borrower as to the amount of Lender's Expenses as estimated by Lender.
1.42 LIBOR. For each Interest Period, the interest rate quoted by
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Lender (or money center reference banks selected by Lender) as the rate of
interest per annum (computed on the basis of a three hundred sixty (360)-
day year) at which a deposit in Dollars in a sum equal to the then
outstanding balance of principal under this Note is offered to Lender (or
said money center reference banks selected by Lender) in the Interbank
Market at approximately 11:00 a.m. (London time) on the date that is two
(2) Business Days prior to the first date of said Interest Period for the
term of said Interest Period. The use of such offered interest rate to
define the LIBOR Based Rate shall not obligate Lender (or any money center
reference bank) to accept a deposit in order to charge interest at the
LIBOR Based Rate. As employed above, the term "then outstanding balance of
principal" shall mean the principal balance under this Note that is
reasonably projected by Lender to be outstanding as of the first day of the
Interest Period in question.
1.43 LIBOR Based Rate. For any given Interest Period, the sum of (1)
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the quotient of (a) LIBOR for said Interest Period (determined as provided
hereinabove) divided by (b) one minus the Reserve Requirement, if required
by present or future regulations (expressed as a decimal and rounded
upward, if necessary, to the next higher .001%, plus (2) 2.0% per annum,
computed on the basis of a three hundred sixty (360)-day year and the
actual number of days elapsed. Although Lender shall have no obligation to
furnish such a certificate, a certificate of Lender as to the LIBOR Based
Rate in effect with respect to any given Interest Period shall be
conclusive (in the absence of manifest error) for the purposes of this Note
and the other Loan Documents as to the LIBOR Based Rate in effect for any
given Interest Period.
1.44 Loan. The loan evidenced by this Note and secured by the Loan
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Documents hereinafter described.
1.45 Loan Agreement. The Amended and Restated Loan Agreement of even
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date herewith between Borrower and Lender.
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1.46 Loan Documents. As defined in the Loan Agreement.
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1.47 Management Agreement. The Management Agreement by and between
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the Borrower and the Manager dated as of June 12, 1989.
1.48 Manager. Marriott International, Inc., a Delaware corporation.
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1.49 Maturity. The date that is the earlier to occur of (i) the
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Maturity Date, (ii) the date upon which the Indebtedness shall be
accelerated by Lender, or (iii) the date of any Permitted Prepayment. All
references herein to payment "at Maturity" shall mean payment on the date
on which Maturity occurs, and all references herein to an amount becoming
due and payable "at Maturity" shall mean that said amount is due and
payable on the date on which Maturity occurs.
1.50 Maturity Date. June 12, 2001.
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1.51 Maximum Amount. As such term is defined in Section 9
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hereinbelow.
1.52 Mortgage. As defined in the Loan Agreement.
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1.53 Net House Profit. Shall have the meaning ascribed thereto in
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the Management Agreement, provided however that in determining Net House
Profit, there shall be no double counting, either in terms of including a
single item more than once in the deductions made in determining Net House
Profit, or in terms of excluding an item from Gross Revenues and, at the
same time, deducting said item in determining Net House Profit.
Furthermore, notwithstanding the fact that the definitions of Gross
Revenues, Deductions and Net House Profit under this Note have the same
meanings as are set forth in the Management Agreement, if the amount
characterized by Manager as constituting Net House Profit for the purposes
of Section 5.01(B)(1) of the Management Agreement for any given period of
time is, for any reason, greater than the amount that might otherwise be
derived by the application of said definitions, and if said greater amount
has been agreed to or acquiesced in by Borrower for purposes of the
Management Agreement, then said greater amount shall constitute Net House
Profit for the period in question for the purposes of this Note and the
other Loan Documents; provided that the adjustments made pursuant to this
sentence shall not be made, as to any given Fiscal Year, until the final
accounting statements for said Fiscal Year have been furnished in
accordance with clause (iii) of Article 7 of the Loan Agreement.
1.54 NOI Threshold Amount. "NOI Threshold Amount" shall mean, with
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respect to each Fiscal Year or portion thereof during the term of this
Note, the respective amount set forth on Exhibit A attached hereto opposite
the listing of said Fiscal Year. Said
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amount shall be prorated for periods of less than the full period
contemplated in Exhibit A based upon the number of days in the period in
question, divided by the number of days in the full period contemplated in
Exhibit A.
1.55 NOI Shortfall Year. NOI Shortfall Year means any Fiscal Year or
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portion thereof falling during the term of this Note with respect to which
Net House Profits are less than the NOI Threshold Amount.
1.56 Original Loan. As defined in the Loan Agreement.
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1.57 Partial Prepayment. As defined in Section 2.8 hereinbelow.
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1.58 Participant. Any holder from time to time of a participation
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interest in the Loan, as contemplated pursuant to Section 12.17 of the Loan
Agreement.
1.59 Payment Date. The day immediately following the last day of
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each Interest Period. Notwithstanding the foregoing, whenever any payment
on this Note is due on a day that is not a Business Day, such payment shall
be made on the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of interest on this
Note; provided, however, that if the day on which payment is due is not a
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Business Day but is a day of the month after which no further Business Day
occurs in such month, then the due date thereof shall be the next preceding
Business Day.
1.60 Permitted Prepayment. As defined in Section 2.8 hereinbelow.
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1.61 Person. "Person" means an individual, corporation, partnership,
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trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
1.62 Prepayment. As defined in Section 2.8 hereinbelow.
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1.63 Prime Rate. "Prime Rate" at any time shall mean the rate of
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interest per annum then most recently announced by Lender at its New York
branch as its prime rate. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any
customer of Lender. Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate. A certificate of
Lender as to its Prime Rate in effect on any day shall be conclusive (in
the absence of manifest error) for purposes hereof as to the Prime Rate in
effect on such day. If Lender shall not announce such a rate at its New
York branch, or shall not have a New York branch, then the term "Prime
Rate" shall mean the prime rate or base rate from time to time announced by
an American money center bank designated by Lender.
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1.64 Property. The Borrower's leasehold interest in certain real
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property pursuant to the Ground Lease, and the Borrower's ownership
interest in the improvements thereto and the personal property associated
therewith, all referred to collectively in the Loan Agreement as the
"Property."
1.65 Rate Set Notice. As defined in Section 2.4(c) hereinbelow.
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1.66 Reduced Year 2000 Accrual Rate. As defined in the definition of
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Accrual Rate.
1.67 Reduced Year 2001 Accrual Rate. As defined in the definition of
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Accrual Rate.
1.68 Reference Rate. "Reference Rate" at any time shall mean the
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Prime Rate plus one (1) percent per annum.
1.69 Regulation D. Regulation D of the Board of Governors of the
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Federal Reserve System from time to time in effect, and any successor or
other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
1.70 Regulatory Change. "Regulatory Change" means any change after
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the date hereof in the United States federal, state, or municipal laws or
regulations or foreign laws or regulations (including Regulation D)
applying to a class of banks including Lender, or the adoption or making
after the date of this Note of any interpretations, directives or requests
under any such United States, federal, state, or municipal laws or
regulations or any foreign laws or regulations (whether or not having the
force of law) applying to a class of banks including Lender by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
1.71 Reserve Requirement. With respect to any Interest Period, the
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daily average during such Interest Period of the maximum aggregate reserve
requirement (including, but not limited to, all basic supplemental,
marginal and other reserves and taking into account any transitional
adjustments or other scheduled changes in reserve requirements during such
period) which is imposed under Regulation D for determining reserve
requirements applicable to "Eurocurrency Liabilities" of Lender pursuant to
Regulation D or any other then applicable regulation of the Board of
Governors of the Federal Reserve System, which prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as presently defined
in Regulation D.
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1.72 Restructuring Fee. An amount equal to $191,250, as described
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more fully in the Loan Agreement.
1.73 Security Agreement. As defined in the Loan Agreement.
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1.74 Scheduled Principal Payments. As defined in Section 2.2
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hereinbelow.
2. Principal and Interest.
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Section 2.1 Interest.
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(a) From and after the date hereof, the unpaid principal balance of
this Note shall bear interest prior to Maturity at the Contract Rate. Said
interest is referred to herein as "Contract Rate Interest." That portion
of the Contract Rate Interest consisting of interest accruing from time to
time at the Base Rate on the unpaid principal balance of this Note, is
referred to herein as "Base Rate Interest." Borrower shall pay to Lender
all accrued and unpaid Base Rate Interest in arrears on each Payment Date,
in addition to the Scheduled Principal Payments required to be paid by
Borrower pursuant to Section 2.2 hereinbelow.
(b) All accrued and unpaid Contract Rate Interest in excess of the
Base Rate Interest shall not be required to be paid pursuant to Section
2.1(a), shall be referred to herein as "Accrual Rate Interest," and shall
be due and payable by Borrower in accordance with Section 2.6 hereof.
(c) In addition to Base Rate Interest and Accrual Rate Interest,
additional interest (collectively, "Additional Accrued Interest") shall
accrue with respect to the Loan, in an amount equal to fifty percent (50%)
of the Excess Cash Flow for each NOI Shortfall Year. Additional Accrued
Interest shall not be payable pursuant to Sections 2.1, 2.2, or 2.3, but
all accrued and unpaid Additional Accrued Interest shall be due and payable
in accordance with Section 2.6 hereof.
(d) All accrued and unpaid Contract Rate Interest and Additional
Accrued Interest shall be due and payable at Maturity.
(e) Notwithstanding anything to the contrary herein contained,
pursuant to the Loan Agreement, Lender has agreed to waive payment of
Additional Accrued Interest if (i) Borrower repays the Indebtedness in full
on or before the Maturity Date (with the exception of any payment made
following the acceleration of the Indebtedness by Lender consequent to any
Event of Default) or (ii) (x) Net House Profit for the period from June 13,
2000 through and including June 12, 2001 is greater than or equal to the
NOI
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Threshold Amount for said period and (y) the cumulative Net House Profit
for the period from the date hereof through and including June 12, 2001 is
greater than or equal to the Cumulative NOI Threshold Amount for said
period.
From and after the earlier to occur of (a) any Event of Default (as hereinafter
defined); or (b) Maturity, whether by acceleration or otherwise, interest shall
accrue on the amount of the principal balance outstanding hereunder at the
Default Rate and shall be payable upon demand. All interest under this Note
shall accrue on the actual number of days that funds are outstanding and shall
be calculated on the basis of a 360-day year.
Section 2.2 Scheduled Payments of Principal. In addition to the payments
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of Base Rate Interest required to be made by Borrower pursuant to Section 2.1
above, on each Payment Date, Borrower shall make a mandatory payment to Lender
(each such payment being referred to herein as a "Scheduled Principal Payment")
in the amount set forth on Exhibit B attached hereto opposite the listing of
said Payment Date. Each Scheduled Principal Payment shall be applied to the
unpaid principal balance of this Note. The amount of each Scheduled Principal
Payment has been calculated by determining the amount of principal that would be
required to be paid on each Payment Date in order to fully amortize the Loan
over a term of twenty (20) years, utilizing an interest rate equal to the Base
Rate in effect as of the date hereof, rather than the Contract Rate. The level
of said Scheduled Principal Payments shall not be subject to adjustment for any
reason whatsoever, including changes in the Base Rate, or any Partial
Prepayment. Borrower and Lender specifically acknowledge and agree that (i)
unless so elected by Lender during the continuation of an Event of Default, no
portion of any Scheduled Principal Payment shall be applied in reduction of
Accrual Rate Interest or Additional Accrued Interest, and (ii) Borrower's
payment of the Scheduled Principal Payments in accordance with the terms of this
Note will not cause the principal balance of the Note to have been fully
amortized as of the Maturity Date and a substantial payment of principal will be
due and payable by Borrower at Maturity, pursuant to Section 2.6 hereinbelow.
Section 2.3 Excess Cash Flow Payments. Borrower shall, at the times
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provided below, pay all Excess Cash Flow to Lender. Said payments, which are
referred to herein as "Excess Cash Flow Payments", shall be in addition to the
payments of Base Rate Interest required to be made pursuant to Section 2.1 of
this Note and the Scheduled Principal Payments required to be made pursuant to
Section 2.2 of this Note. Each Excess Cash Flow Payment shall be applied first
to the payment of any amounts required to be paid by Borrower pursuant to
Section 2.12 hereinbelow in connection with said Excess Cash Flow Payment and
then to the reduction of the outstanding principal balance of this Note; any
such reduction of principal shall be in addition to the reduction of principal
effectuated pursuant to the Scheduled Principal Payments. Unless so elected by
Lender during the continuation of an Event of Default, the Excess Cash Flow
Payments shall not be applied to the payment of Accrual Rate Interest or
Additional Accrued Interest. Borrower shall make Excess Cash Flow Payments to
Lender at the following times only:
13
(a) On the first Payment Date following October 31 of each Fiscal Year
or portion thereof during the term of this Note, Borrower shall pay to
Lender all Excess Cash Flow for the first ten (10) Accounting Periods (or
portions thereof during the term of this Note) during the then current
Fiscal Year, said Excess Cash Flow to be determined on the basis of the
accounting statements required to be furnished by Borrower for such Fiscal
Year on or before said Payment Date pursuant to clauses (i) and (ii) of
Article 7 of the Loan Agreement, subject to any adjustments that may be
required based on the accounting statements required to be furnished by
Borrower for such Fiscal Year pursuant to clause (iii) of Article 7 of the
Loan Agreement, which adjustments shall be incorporated in the payment
required to be made by Borrower pursuant to Section 2.3(b) hereinbelow.
(b) On the first Payment Date following May 31 of each year during the
term of this Note, Borrower shall pay to Lender all Excess Cash Flow for
the preceding Fiscal Year (or portion thereof during the term of this
Note), to the extent not previously paid.
Borrower shall advise Lender, not less than three (3) Business Days prior to the
date on which any Excess Cash Flow Payment is required to be made pursuant to
Section 2.3(a) or 2.3(b) hereinabove, of the amount of any such Excess Cash Flow
Payment that will be made by Borrower. If the information and materials
furnished to Lender by Borrower pursuant to Article 7 of the Loan Agreement
disclose that the amount of any payment made by Borrower pursuant to this
Section 2.3 was less than required, then without limitation of Lender's other
rights and remedies under the Loan Documents, Borrower shall pay the amount of
said deficiency to Lender concurrently with the furnishing of said information
and materials to Lender. Notwithstanding anything to the contrary herein
contained, the Excess Cash Flow Payments required to be made by Borrower from
and after the date hereof with respect to Fiscal Year 1996 shall be based on the
Excess Cash Flow for the entirety of Fiscal Year 1996, rather than merely that
portion of said Excess Cash Flow attributable to the period from and after the
date of this Note; provided, that (i) for the portion of Fiscal Year 1996
occurring prior to the date hereof, the deduction in subsection (b) of the
definition of Excess Cash Flow shall be based on interest accrued and paid with
respect to the Original Loan during said period, and the deduction in subsection
(c) shall be disregarded as being inapplicable, (ii) in determining Excess Cash
Flow for Fiscal Year 1996, the category of deduction set forth in subsection (e)
of the definition of Excess Cash Flow shall be expanded to include, in addition,
the Borrower's costs and expenses in closing the restructuring of the Loan in
accordance with the Loan Documents, to the extent paid to parties that are not
Affiliated Parties and are not employees of Borrower or any Affiliated Party,
provided that the aggregate limit of all the deductions pursuant to said clause
(e) in Fiscal Year 1996 shall not exceed $75,000.
Section 2.4 Fixed Rate Election.
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14
(a) Prior to the second anniversary of the date hereof, not more often
than once during any given Interest Period and provided that there then
exists no Event of Default and no event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default, Borrower
shall have the right, on or before the date that is ten (10) Business Days
prior to the expiration of the then current Interest Period, to furnish
written notice (a "Cost of Funds Quote Request") to Lender requesting that
Lender identify Lender's Cost of Funds. If Borrower shall have furnished a
Cost of Funds Quote Request to Lender in accordance with the foregoing,
Lender shall furnish Borrower a written notice (a "Cost of Funds Quote")
identifying Lender's Cost of Funds, determined as of the date that is five
(5) Business Days prior to the first day of the next Interest Period. If
either the Lender or any of its Participants, in determining their
respective Cost of Funds, is subject to a forward rate lock process under
which said party's Cost of Funds would be finally set a specified number of
days (not to exceed two (2) Business Days) prior to the Conversion Date,
Lender shall, concurrently with furnishing the Cost of Funds Quote, notify
Borrower of the earliest such date that is applicable to the final setting
of the respective Costs of Funds by Lender or any of its Participants,
which date is referred to herein as the "Final Cost Quote Date."
(b) At any time prior to the second anniversary of the date hereof,
Borrower may make an election (a "Fixed Rate Election") on a one-time only
basis, to convert the Base Rate to the Fixed Rate from the LIBOR Based Rate
for the remaining term of the Loan, by giving Lender a written notice (a
"Fixed Rate Election Notice") indicating that Borrower has elected to
exercise the Fixed Rate Election and specifying the proposed Conversion
Date, which shall be the first day of the next Interest Period.
Notwithstanding the foregoing, a Fixed Rate Election Notice shall not be
effective unless:
(i) it is received by Lender at least four (4) Business Days
before the proposed Conversion Date and said proposed Conversion Date
falls on or before the second anniversary of the date hereof;
(ii) at the time such Fixed Rate Election Notice is given, no
Event of Default exists and no event has occurred which, with the
giving of notice or the lapse of time or both, would constitute an
Event of Default;
(c) If Borrower furnishes the Fixed Rate Election Notice in accordance
with Section 2.4(b) hereinabove, then from and after the Conversion Date,
through and including the Maturity Date, the Base Rate shall be equal to
the Fixed Rate, which shall be based on a determination made by Lender, on
or before the Conversion Date, as to Lender's Cost of Funds.
Notwithstanding anything to the contrary herein contained, if Lender has
furnished a Cost of Funds Quote to Borrower during the Interest Period
immediately prior to the Conversion Date and if Lender's Cost of Funds,
determined by
15
Lender on the Final Cost Quote Date, shall be greater than Lender's Cost of
Funds as set forth in said Cost of Funds Quote, then Lender shall notify
Borrower thereof on or before 9:30 a.m. Eastern time on the Final Cost
Quote Date (said notice being referred to herein as a "Final Cost Quote")
and Borrower may revoke the Fixed Rate Election by furnishing a notice to
Lender by facsimile in the manner provided in Section 11 hereinbelow on or
before 10:00 a.m. Eastern time on the Final Cost Quote Date. If Borrower
has duly revoked the Fixed Rate Election in accordance herewith, then the
Base Rate shall continue to be determined in accordance with Section 2.5
hereinbelow as though the Fixed Rate Election had not been made; provided,
however that the Base Rate for the Interest Period commencing on what would
have been the Conversion Date shall be a floating rate equal to the
Reference Rate determined by Lender from time to time until such time as
Lender is capable of determining the LIBOR Based Rate for the remainder of
said Interest Period. Borrower hereby acknowledges that (i) although Lender
and/or one or more of its Participants will finally determine their
respective Costs of Funds as of the Final Cost Quote Date, one or more of
said parties may not finally determine their respective Costs of Funds
until a later date that is nevertheless on or before the Conversion Date
and (ii) changes in circumstances occurring after the date on which the
Cost of Funds Quote is furnished or after the Final Cost Quote Date, as the
case may be, may cause Lender's Cost of Funds as finally determined for
purposes of establishing the Fixed Rate, to differ from Lender's Cost of
Funds as set forth in the Cost of Funds Quote or the Final Cost Quote. On
or after the Conversion Date, Lender shall furnish Borrower with a written
notice (the "Rate Set Notice") identifying the amount of the Fixed Rate.
(d) If a Fixed Rate is, in the determination of Lender, unavailable,
Lender shall give Borrower prompt notice thereof and the applicable Base
Rate for each remaining Interest Period shall continue to be the LIBOR
Based Rate applicable from time to time.
(e) Delivery of a Fixed Rate Election Notice by Borrower shall
constitute a representation by Borrower that at the time such Fixed Rate
Election Notice is given, no Event of Default exists and no event has
occurred that, with the giving of notice or the lapse of time or both,
would constitute an Event of Default.
Section 2.5 Resetting the LIBOR Based Rate. Until such time as the Fixed
------------------------------
Rate Election has been duly made in accordance with this Note, the Base Rate
shall be the LIBOR Based Rate, which shall be determined by Lender for each
Interest Period as of the date that is two (2) Business Days prior to the first
date of said Interest Period.
Section 2.6 Maturity. Subject to Section 2.1(e) hereinabove, the entire
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outstanding principal balance of the Loan, together with all accrued but unpaid
interest thereon (including without limitation all Contract Rate Interest and
Additional Accrued Interest) and any other sums
16
due hereunder or under any of the Loan Documents, shall be due and payable at
Maturity or on such earlier date as may be required by the terms of this Note or
any other Loan Document.
Section 2.7 Payment. All payments of principal and interest on this Note
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are payable in Dollars at Lender's office at 125 West 55th Street, New York, New
York by wired federal funds or other immediately available funds on or before
11:00 a.m. Eastern Time on the date such payment is due to ABA No. 026005487, or
at such other place within the United States as Lender may specify by notice to
Borrower.
Section 2.8 Prepayment. Any payment, prior to the time when said amount
----------
shall be due and payable pursuant to the terms hereof, of all or any portion of
the then outstanding balance of principal under this Note is referred to herein
as a "Prepayment." Any Prepayment of less than the entire balance of principal
then outstanding under this Note is referred to herein as a "Partial
Prepayment." Any Prepayment of the entire balance of principal then outstanding
under this Note is referred to herein as a "Full Prepayment." Borrower shall
have the right to make Prepayments only as follows (any Prepayment that is made
in accordance with the terms hereof being referred to herein as a "Permitted
Prepayment"):
(a) Borrower shall notify Lender not less than three (3) Business
Days prior to making any Prepayment. Any Prepayment (regardless of whether
said Prepayment is a Partial Prepayment or a Full Prepayment) shall be
accompanied by Borrower's payment to Lender of the entire amount of
Lender's Expenses and the entire amount of the Restructuring Fee, to the
extent that said amounts have not previously been repaid pursuant to the
Loan Agreement.
(b) Any Partial Prepayment shall be accompanied by Borrower's
payment to Lender of all accrued and unpaid Base Rate Interest attributable
to the portion of principal that is being prepaid.
(c) Any Partial Prepayment made on or before December 31, 1999
shall be accompanied by Borrower's payment to Lender of all accrued and
unpaid Accrual Rate Interest attributable to the portion of principal that
is being prepaid .
(d) Any Partial Prepayment made after January 1, 2000 and on or
before December 31, 2000 shall be accompanied by Borrower's payment to
Lender of all accrued and unpaid Accrual Rate Interest attributable to the
portion of principal that is being prepaid; provided, however, that, solely
for the purposes of determining the payment required to be made by Borrower
pursuant to this subsection (d), the amount of said Accrual Rate Interest
accrued during calendar year 2000 with respect to the portion of principal
that is being prepaid shall be determined as though the Accrual Rate for
calendar year 2000 were the Reduced Year 2000 Accrual Rate. The difference
between the interest
17
accrued on said prepaid amount during calendar year 2000 computed at the
Accrual Rate and the interest accrued on said prepaid amount during
calendar year 2000 computed at the Reduced Year 2000 Accrual Rate is
referred to herein as the "Deferred Year 2000 Prepayment Interest."
(e) Any Partial Prepayment made on or after January 1, 2001 and on
or before June 11, 2001 shall be accompanied by Borrower's payment to
Lender of (i) all Deferred year 2000 Prepayment Interest, if any, and (ii)
all accrued and unpaid Accrual Rate Interest attributable to the portion of
principal that is being prepaid; provided, however, that, solely for the
purpose of determining the payment required to be made by Borrower pursuant
to clause (ii) of this subsection (e), the amount of said Accrual Rate
Interest accrued during calendar year 2001 with respect to the portion of
principal that is being prepaid shall be determined as though the Accrual
Rate for calendar year 2001 were the Reduced Year 2001 Accrual Rate. The
difference between the interest accrued on said prepaid amount during
calendar year 2001 computed at the Accrual Rate and the interest accrued on
said prepaid amount during calendar year 2001 computed at the Reduced Year
2001 Accrual Rate is referred to herein as the "Deferred Year 2001
Prepayment Interest."
(f) A Full Prepayment shall be accompanied by Borrower's payment
of all accrued and unpaid Contract Rate Interest, Additional Accrued
Interest (subject, however, to Section 2.1(e) hereof) and all other
components of the Indebtedness.
(g) If the Fixed Rate Election has not theretofore been made in
accordance with this Note, then any Prepayment may be made on any Payment
Date without the payment of any charge or amount other than as set forth
above in this Section 2.8; provided, however, that in connection with any
Prepayment made on a day other than a Payment Date, and in connection with
any Prepayment (regardless of whether said Prepayment is made on a Payment
Date) following the making of the Fixed Rate Election in accordance with
this Note, Borrower shall pay to Lender, on the day that such Prepayment is
made, in addition to the amounts otherwise payable pursuant to this Section
2.8, all amounts required to be paid by Borrower under Section 2.12 hereof
with respect to such Prepayment as though Lender had made demand for such
amount.
(h) Borrower shall not have the right to make any Prepayments
during the continuation of any Event of Default.
It is specifically acknowledged that the amount of Contract Rate Interest
or Accrual Rate Interest, as the case may be, that is outstanding at any time
shall specifically include any unpaid Deferred Prepayment Interest; provided
that Lender agrees (i) to waive collection of Deferred Year 2000 Prepayment
Interest at such time, if any, as the Accrual Rate for calendar year 2000 shall
have been converted to the Reduced Year 2000 Accrual Rate by operation of the
definition
18
of Accrual Rate under the Note, and (ii) to waive collection of Deferred Year
2001 Prepayment Interest at such time, if any, as the Accrual Rate for calendar
year 2001 shall have been converted to the Reduced Year 2001 Accrual Rate by
operation of the definition of Accrual Rate under this Note.
Section 2.9 Late Charge. If Borrower fails to make any payment due under
-----------
this Note on or before the date that is five (5) days after the same shall
become due, whether by acceleration or prepayment or otherwise, Lender, in
addition to its rights set forth elsewhere in this Note, may at its option:
(a) charge interest on such payment, from the date on which it
was due to the date on which it actually is paid, at the Default Rate; or
(b) charge a late payment fee in an amount equal to three percent
of the amount of such payment;
provided, however, that if any such charge is deemed to be interest in excess of
the Maximum Amount, then the amount actually collected by Lender in excess of
such lawful amount shall be applied in accordance with the provisions of Section
9 hereof.
Section 2.10 Yield Protection.
----------------
(a) Borrower shall pay to Lender from time to time on demand such
amounts as Lender may determine to be necessary to compensate it for any
additional costs that Lender determines are attributable to its making or
maintaining the Loan, or any reduction in any amount receivable by Lender
hereunder or under any other Loan Document (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that: (i) changes the basis of
taxation of any amounts payable to Lender under this Note or under any
other Loan Document (other than taxes imposed on Lender under any laws,
rules or regulations or any interpretation, directive or requirement
pertaining to the assessment or imposition of any income tax or tax on
assets in lieu of income tax); or (ii) imposes or modifies any reserve,
special deposit, deposit insurance or assessment, minimum capital, capital
ratio or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of Lender; or (iii)
imposes any other similar condition affecting this Note or any other Loan
Document (or any of such extensions of credit or liabilities); provided
that Lender notifies Borrower of any event occurring after the date of this
Note that will entitle Lender to compensation pursuant to this Section 2.10
within ten days following Lender's actual knowledge of such event pursuant
to Lender's receipt of any written publication regarding such event from
the official regulatory agency responsible for the relevant Regulatory
Change. If, by its terms, the relevant Regulatory Change has
19
retroactive effect, then such compensation shall include any Additional
Costs that arise by reason of such retroactive effect, as provided in the
preceding sentence, with respect to the relevant Regulatory Change.
(b) Without limiting the effect of the foregoing provisions of
this Section 2.10, if by reason of any Regulatory Change, Lender (i) incurs
Additional Costs based on or measured by the excess above a specified level
of the amount of a category of deposits or other liabilities, including
deposits by reference to which the Base Rate is determined as provided in
this Note, or a category of extensions of credit or other assets of Lender
that includes this Loan and Borrower does not pay such Additional Costs on
demand or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if Lender so
elects by notice to Borrower, the obligation of Lender to determine the
Base Rate in such manner of such type shall be suspended until the date
such Regulatory Change ceases to be in effect and during said period the
Base Rate shall be a floating rate of interest equal to the Reference Rate
determined by Lender from time to time.
(c) Without limiting the effect of the foregoing provisions of
this Section 2.10 (but without duplication), Borrower shall pay to Lender
from time to time on demand such amounts as Lender may determine to be
necessary to compensate Lender for any costs that it determines are
attributable to the maintenance by it or any of its affiliates, pursuant to
any law or regulation of any jurisdiction or any interpretation, directive
or request (whether or not having the force of law) of any court or
governmental or monetary authority, whether in effect on the date of this
Note or thereafter, of capital in respect of the Loan (such compensation to
include, without limitation, an amount equal to any reduction in return on
assets or equity of Lender to a level below that which it could have
achieved but for such law, regulation, interpretation, directive or
request). Lender will notify Borrower of any event occurring after the date
of this Agreement that will entitle Lender to compensation pursuant to this
Section 2.10 as promptly as practicable, and in no event later than 60
days, after it determines to request such compensation.
(d) Determinations and allocations by Lender for purposes of this
Section 2.10 of the effect of any Regulatory Change pursuant to subsections
(a) or (b), or of the effect of capital maintenance requirements pursuant
to subsection (c), on its costs of making or maintaining the Loan or on
amounts receivable by, or the rate of return to, it in respect of the Loan,
and of the additional amounts required to compensate Lender under this
Section 2.10, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis. Upon Borrower's request, Lender
shall deliver to Borrower a summary of the calculations by which any such
determinations or allocations are made by Lender.
20
(e) If and as practicable, Lender shall use its reasonable best
efforts to take such action as it determines to be appropriate to reduce
amounts payable by Borrower under this Section 2.10, provided that Borrower
pays any costs or expense of Lender in taking any such action.
Section 2.11 Illegality. Any other provision in this Note to the contrary
----------
notwithstanding, if the Base Rate is equal to the LIBOR Based Rate and it
becomes unlawful for Lender to honor its obligation to make available or
maintain the Base Rate at the LIBOR Base Rate, then Lender shall promptly notify
Borrower thereof and from and after the date specified by Lender in said notice,
the Base Rate shall be a floating rate of interest equal to the Reference Rate
determined by Lender from time to time, provided that prior to the second
anniversary of the date hereof, Borrower shall retain the right to make the
Fixed Rate Election, if Borrower would otherwise be permitted to make the Fixed
Rate Election, under Section 2.4 of this Note.
Section 2.12 Certain Compensation.
--------------------
(a) If the Fixed Rate Election has not theretofore been made in
accordance with this Note, Borrower shall pay to Lender, upon demand, such
amount or amounts as shall be sufficient (in the reasonable opinion of
Lender) to compensate Lender for any loss, cost or expense that Lender
determines is attributable to any payment of interest or principal under
this Note on a date other than a Payment Date (whether by reason of
acceleration, the making of a Permitted Prepayment or otherwise). Without
limiting the foregoing, such compensation shall include the amount, if any,
by which (i) the amount of interest that otherwise would have accrued on
the principal amount so paid for the period from and including the date of
such payment through and including the next Payment Date at the Contract
Rate exceeds (ii) the amount of interest (as reasonably determined by
Lender) Lender would have bid in a wholesale market selected by Lender for
Dollar deposits for amounts comparable to such principal amount and
maturities comparable to the period in question.
(b) If the Fixed Rate Election has theretofore been made in
accordance with this Note, Borrower shall pay to Lender, upon demand, such
amount or amounts as shall be sufficient (in the reasonable opinion of
Lender) to compensate Lender and any Participants for any loss, cost or
expense that Lender or said Participants determines is attributable to any
payment of interest or principal under this Note (whether by reason of
acceleration, the making of a Permitted Prepayment, the making of an Excess
Cash Flow Payment or otherwise) prior to the Maturity Date other than (x)
the payment of Base Rate Interest pursuant to Section 2.1(a) hereinabove
and (y) the making of any Scheduled Principal Payment pursuant to Section
2.2 hereinabove. Without limiting the foregoing, such compensation shall
include the following, determined separately with respect to Lender and
each of the Participants: (A) the amount, if any, by which (i) the amount
of interest that
21
otherwise would have accrued on the principal amount so paid for the period
from and including the date of such payment through and including the
Maturity Date at the Contract Rate exceeds (ii) the amount of interest (as
reasonably determined by Lender or said Participant, as the case may be)
Lender (or said Participant) would have bid in a wholesale market selected
by Lender (or said Participant) for Dollar deposits for amounts comparable
to such principal amount and maturities comparable to the period in
question; or (B) in the discretion of Lender or said Participant, if said
party shall have entered into a "swap", "hedge" or other agreement with a
counterparty (each, a "Counterparty Agreement") in connection with the
furnishing of the Fixed Rate, all damages, termination fees and other
costs, expenses and penalties incurred by Lender or by said Participant in
connection with the termination, principal reduction or prepayment of said
Counterparty Agreement as a consequence of the payment in question.
(c) Determinations by Lender as to the amounts payable pursuant to
this Section 2.12 shall be conclusive, absent manifest error, and provided
that such determinations are made on a reasonable basis. Upon Borrower's
request, Lender shall deliver to Borrower a summary of the calculations by
which any such determinations are made by Lender.
3. Events of Default. Any of the following shall constitute an "Event of
-----------------
Default" under this Note:
(i) the failure of Borrower to make any payment
required under this Note, whether such payment is required to be
made to Lender or to some other person or entity, within five (5)
days following the date the same shall become due; or
(ii) the failure of Borrower to perform in any material
respect any other covenant or agreement hereunder if such failure
remains uncured for a period of thirty (30) days after such failure
has occurred or, if the failure is such that it cannot reasonably
be cured within such 30-day period, if Borrower fails to commence
the cure of such failure within such 30-day period or thereafter
fails to diligently pursue such efforts to completion, provided,
however, that in no event shall the amount of time permitted for
any such cure exceed 90 days after such failure shall occur; or
(iii) the occurrence of any Events of Default under the
Mortgage, the Loan Agreement or any other Loan Document or if the
right to foreclose the Mortgage shall accrue to Lender;
22
then, at any time thereafter, at the election of the holder or holders hereof
and without further notice to Borrower, the principal sum remaining unpaid
hereon, together with accrued interest thereon (including without limitation
Contract Rate Interest and Additional Accrued Interest), shall become at once
due and payable at the place of payment as aforesaid, and Lender may proceed to
foreclose the Mortgage, to exercise any other rights and remedies available to
Lender under the Mortgage and the other Loan Documents and to exercise any other
rights and remedies against Borrower or with respect to this Note which Lender
may have at law, in equity or otherwise.
From and after the occurrence of an Event of Default, Lender is expressly
authorized to apply payments made under this Note as Lender may elect against
any or all amounts, or portions thereof, then due and payable hereunder or under
the Mortgage or any other Loan Document, the outstanding principal balance due
under this Note, the unpaid and accrued interest under this Note (including
without limitation Contract Rate Interest and Additional Accrued Interest), or
any combination of the foregoing.
4. Remedies Cumulative. The remedies of Lender, as provided herein or in
-------------------
the Mortgage or any other Loan Document, shall be cumulative and concurrent, and
may be pursued singularly, successively or together, at the sole discretion of
Lender, and may be exercised as often as occasion therefor shall arise. Failure
of Lender, for any period of time or on more than one occasion, to exercise its
option to accelerate the Maturity of this Note shall not constitute a waiver of
the right to exercise the same at any time thereafter or in the event of any
subsequent Event of Default. No act of omission or commission of Lender,
including specifically any failure to exercise any right, remedy or recourse,
shall be deemed to be a waiver or release of the same; any such waiver or
release is to be effected only through a written document executed by Lender and
then only to the extent specifically recited therein. A waiver or release with
reference to any one event shall not be construed as a waiver or release of any
subsequent event or as a bar to any subsequent exercise of Lender's rights or
remedies hereunder. Except as otherwise specifically required herein, notice of
the exercise of any right or remedy granted to Lender by this Note is not
required to be given.
5. Attorneys' Fees, Accountants' Fees, Consultants' Fees. If: (i) this
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Note or any Loan Document is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding; (ii) an
attorney is retained to represent Lender in any bankruptcy, reorganization,
receivership or other proceedings affecting creditors' rights and involving a
claim under this Note or any Loan Document; (iii) an attorney is retained to
protect or enforce the lien of the Mortgage or any other Loan Document; (iv) an
attorney is retained to represent Lender in connection with (or in anticipation
of) any other proceedings or matters whatsoever in connection with this Note,
the Mortgage, any of the other Loan Documents or any property subject thereto;
or (v) an Event of Default shall be continuing, then Borrower shall pay to
Lender all reasonable attorneys' fees, costs and expenses incurred in connection
therewith, in addition to all other amounts due hereunder. If Lender retains an
accountant or business
23
consultant to advise Lender in connection with the Loan during the continuation
of any Event of Default or in connection with any of the proceedings or matters
described above, then Borrower shall pay to Lender all reasonable fees, costs
and expenses incurred by Lender in connection therewith, in addition to all
other amounts due hereunder.
6. Waiver. Borrower, each guarantor hereof, if any, and any and all
------
others who are now or may become liable for all or part of the obligations of
Borrower, under this Note (all of the foregoing being referred to collectively
herein as "Obligors") agree to be jointly and severally bound hereby and jointly
and severally: (i) to the fullest extent allowed by law, waive and renounce any
and all redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness evidenced by this Note or by
any extension or renewal hereof; (ii) waive presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor, and notice of
protest; (iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of the payment hereof or hereunder (except as otherwise expressly
provided herein); (iv) waive any and all lack of diligence and delays in the
enforcement of the payment hereof; (v) agree that the liability of each of the
Obligors shall be unconditional and without regard to the liability of any other
person or entity for the payment hereof, and shall not be affected in any manner
by any indulgence or forbearance granted or consented to by Lender to any of
them with respect hereto; (vi) consent to any and all extensions of time,
renewals, waivers or modifications that may be granted by Lender with respect to
the payment or other provisions hereof, and to the release of any security at
any time given for the payment hereof, or any part thereof, with or without
substitution, and to the release of any person or entity liable for the payment
hereof; and (vii) consent to the addition of any and all other makers,
indorsers, guarantors and other Obligors for the payment hereof, and to the
acceptance of any and all other security for the payment hereof, and agree that
the addition of any such Obligors or security shall not affect the liability of
any of the Obligors for the payment hereof. Time is of the essence hereof.
7. Governing Law and Other Agreements. Borrower agrees that: (i) this
----------------------------------
instrument and the rights and obligations of all parties hereunder shall be
governed by and construed under the substantive laws of the State of Illinois,
without reference to the conflicts of laws principles of such state; (ii) the
obligation evidenced by this Note is an exempted transaction under the Truth In
Lending Act, 15 U.S.C. { 1601 et seq.; (iii) said obligation constitutes a
-- ----
business loan within the purview of Ill. Rev. Stat. ch. 17, para. 6404 (1987),
815 ILCS 205/4 (1992); and (iv) the proceeds of the indebtedness evidenced by
this Note will not be used for the purchase of registered equity securities
within the purview of Regulation "U" issued by the Board of Governors of the
Federal Reserve System.
8. Interpretation. The parties hereto intend and believe that each
--------------
provision in this Note comports with all applicable law. However, if any
provision in this Note is found by a court
24
of law to be in violation of any applicable law, and if such court should
declare such provision of this Note to be unlawful, void or unenforceable as
written, then it is the intent of all parties hereto that such provision shall
be given full force and effect to the fullest possible extent that it is legal,
valid and enforceable, that the remainder of this Note shall be construed as if
such unlawful, void or unenforceable provision were not contained therein, and
that the rights, obligations and interests of the Borrower and the holder hereof
under the remainder of this Note shall continue in full force and effect;
provided, however, that if any provision of this Note which is found to be in
violation of any applicable law concerns the imposition of interest hereunder,
the rights, obligations and interests of Borrower and Lender with respect to the
imposition of interest hereunder shall be governed and controlled by the
provisions of the following paragraph.
9. Excess Interest. All agreements between Borrower and Lender are
---------------
expressly limited so that in no contingency or event whatsoever, whether by
reason of: errors of fact or law, prepayment or advancement of the proceeds of
the Loan, acceleration of maturity of the unpaid balance of this Note, or
otherwise, shall the amount paid or agreed to be paid to Lender for the use,
forbearance or retention of the money to be advanced hereunder, including any
fees or charges collected or made in connection with the Loan that may be
treated as interest under applicable law, if any, exceed the maximum legal limit
(if any such limit is applicable) under United States federal law or state law
(to the extent not preempted by federal law, if any), now or hereafter governing
the interest payable in connection with such agreements (the "Maximum Amount").
If, from any circumstances whatsoever, fulfillment of any provision hereof or of
any of the other Loan Documents, at the time performance of such provision shall
be due, shall involve transcending the limit of validity (if any) prescribed by
law that a court of competent jurisdiction may deem applicable hereto, then ipso
facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any circumstances Lender shall ever receive as interest an
amount that would exceed the maximum legal limit (if any such limit is
applicable), such amount that would be excessive interest shall be applied to
the reduction of the unpaid principal balance due under this Note and not to the
payment of interest or, if necessary, rebated to Borrower. This provision shall
control every other provision of all agreements between Borrower and Lender.
10. Successors and Assigns. Upon any endorsement, assignment or other
----------------------
transfer of this Note by Lender or by operation of law, the term "Lender," as
used herein, shall mean such endorsee, assignee or other transferee or successor
to Lender then becoming the holder of this Note. This Agreement shall be
binding upon and inure to the benefit of the heirs, successors, assigns and
personal representatives of the parties hereto; provided, however, that Borrower
shall not assign its rights hereunder, under the Note or under any other Loan
Document in whole or in part. Any such assignments by Borrower shall be void.
11. Notices. All notices, requests and demands to or upon the respective
-------
parties hereto, to be effective, shall be in writing and shall be delivered by
hand or sent by (x) mail (certified or registered, postage prepaid, return
receipt requested), (y) by a nationally recognized overnight
25
courier service, or (z) by facsimile transmission (provided that the original of
any notice sent by facsimile transmission shall be sent by a nationally
recognized overnight courier service) and unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered if
delivered by hand, or three Business Days following deposit if sent by certified
or registered mail, or on the next Business Day following deposit with a
nationally recognized overnight courier service, or upon receipt if sent by
facsimile with an original by nationally recognized overnight courier service
(provided that if said facsimile was received after 5:00 p.m. in the local time
zone of the recipient on any Business Day, said notice shall not be deemed to
have been received until the following Business Day), addressed in each case as
follows, or to such address or other address as may be hereafter notified by
such parties:
if to Lender: National Bank of Canada
New York Branch
125 West 55th Street
New York, New York 10019
Attention: LoriAnn Curnyn
Facsimile No.: (212) 632-8775
if to Borrower: Mutual Benefit Chicago Marriott Suite Hotel
Partners, L.P.
Host Marriott Corporation
10400 Fernwood Drive
Bethesda, Maryland 20817-1109
Attention: Law Department
Facsimile No.: (301) 380-6332
12. Relationship of Parties. Borrower and Lender intend that the
-----------------------
relationship created under this Note and under the other Loan Documents be
solely that of debtor and creditor or mortgagor and mortgagee, as the case may
be. Nothing herein or in the other Loan Documents is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender, nor to grant Lender any interest in the Property other than
that of creditor or mortgagee. In particular, no participation by Lender in the
profit from operations of, appreciation in value of, or profit from the sale or
any further encumbrance of the Property shall constitute a partnership, joint
venture, tenancy-in-common, or joint tenancy between Borrower and Lender.
Borrower covenants and agrees that it will not take any action or assert or
maintain any position at any time inconsistent with the foregoing.
13. Non-recourse.
------------
26
(a) Extent of Non-recourse. Anything in this Note to the contrary
----------------------
notwithstanding, Lender shall have no personal recourse against either
Borrower, the General Partner, any limited partner of Borrower, or any
Affiliated Party nor any officer, director, employee or agent of any of the
foregoing for the repayment of any of the principal of or interest on the
Loan or for any deficiency judgment that Lender may obtain after
foreclosure of the liens securing such repayment, or, subject to the
provisions of Section 13(b) hereof, for any deficiency, loss or damage
suffered by Lender as a result of the failure by Borrower or the General
Partner to comply with any of the terms or conditions of this Note or any
of the other Loan Documents and, subject to the provisions of Section 13(b)
hereof, Lender agrees not to seek recourse against any of the foregoing for
any such deficiency, loss or damage. The foregoing limitations are
limitations on Lender's right of recourse against Borrower and shall not
impair the validity or enforceability of the indebtedness evidenced by this
Note or any of the other obligations of Borrower under the Loan Documents
secured by the Property or the lien of or security interest in or the right
of Lender as mortgagee or secured party to foreclose and/or enforce its
rights in the Property after default by Borrower or the General Partner.
(b) Borrower's Liability for Damages or Misapplication of Funds. The
-----------------------------------------------------------
provisions of Section 13(a) hereof to the contrary notwithstanding,
Borrower and the General Partner shall be fully liable (i) for any damages
attributable to fraud or material misrepresentation in any Loan Document or
in any written communication by Borrower in connection with the Loan or in
connection with the Original Loan; (ii) for the retention of any rental
income or other income arising with respect to all or any part of the
Property covered by the Mortgage after Lender has given to Borrower any
notice that Borrower is in default hereunder or under the other Loan
Documents and that Lender has exercised its option to accelerate maturity
of the Note, foreclose or require the foreclosure of the liens securing
payment thereof, receive or collect such rental income or other income or
exercise its rights under the Loan Documents (to the full extent of the
rental income or other income retained after the giving of any such
notice); (iii) for any Gross Revenues distributed to any partners in
Borrower subsequent to the date hereof; (iv) for any Gross Revenues, Net
House Profits or Excess Cash Flow not applied as required pursuant to
Article 8 of the Loan Agreement; (v) for the misapplication of (A) proceeds
paid prior to any such foreclosure under any insurance policies by reason
of damage, loss or destruction to any portion of the property covered by
the Mortgage (to the full extent of such proceeds), or (B) any proceeds or
awards resulting from the condemnation, prior to any such foreclosure, of
all or any part of the property covered by the Mortgage (to the full extent
of such proceeds or awards); and (v) for damages arising from the breach of
any representation, warranty, covenant or other obligation concerning
"Environmental Claims", "Environmental Conditions" or "Environmental
Noncompliance" (as such terms are defined in the Loan Agreement and except
for matters set forth on Exhibit H of the Loan Agreement), including
without limitation the indemnification provisions of
27
Section 12.20 of the Loan Agreement; provided, however, that the recourse
liability of the General Partner in connection with the matters set forth
in this clause (v) shall not extend to conditions present in the Land prior
to the date on which Borrower acquired the leasehold interest under the
Ground Lease, except to the extent that such recourse liability is
otherwise applicable to the General Partner pursuant to clause (i)
hereinabove.
(c) Liability of General Partners. To the extent of personal
-----------------------------
liability of Borrower under Section 13(b) hereof, the General Partner of
Borrower hereby agrees to be liable therefor and waives any requirement of
law that in the event of a default hereunder Lender must proceed against
Borrower or exhaust any assets of Borrower before proceeding against the
General Partner or the General Partner's assets; provided, however, that in
no event shall any limited partner of Borrower, any Affiliated Party (other
than the General Partner), or any officer, director, employee or agent of
any partner of Borrower or of any Affiliated Party have any liability under
Section 13(c) hereof, and Lender agrees that it shall not seek recovery
from any party that is excluded from liability pursuant to this sentence.
IN WITNESS WHEREOF, the undersigned, through their duly authorized
officers, have executed this Note as of the day and year first above written.
MUTUAL BENEFIT CHICAGO MARRIOTT
SUITE HOTEL PARTNERS, L.P., a Rhode Island
limited partnership
By: MOHS CORPORATION, a Delaware
corporation, its sole General Partner
By: /s/ Christopher G. Townsend
----------------------------------------
Name: Christopher G. Townsend
--------------------------------------
Title: Vice President
-------------------------------------
Schedule of Exhibits
- --------------------
Exhibit A - NOI Threshold Amounts
Exhibit B - Scheduled Principal Payments
28
EXHIBIT A
---------
NOI THRESHOLD AMOUNTS
---------------------
Fiscal Year NOI Threshold Amount
----------- --------------------
1996 $3,317,186
1997 $3,264,637
1998 $3,406,320
1999 $3,379,011
2000 $3,228,127
2001 $3,199,132
A-1
EXHIBIT B
---------
SCHEDULED PRINCIPAL PAYMENTS
----------------------------
DATE PAYMENT PRINCIPAL
12/24/96 1 $138,759.12
03/24/97 2 $141,382.53
06/24/97 3 $144,055.54
09/24/97 4 $146,779.09
12/24/97 5 $149,554.14
03/24/98 6 $152,381.64
06/24/98 7 $155,262.61
09/24/98 8 $158,198.04
12/24/98 9 $161.188.97
03/24/99 10 $164,236.45
06/24/99 11 $167,341.55
09/24/99 12 $170,505.35
12/24/99 13 $173,728.97
03/24/00 14 $177,013.53
06/24/00 15 $180,360.19
09/24/00 16 $183,770.13
12/24/00 17 $187,244.53
03/24/01 18 $190,784.62
06/12/01 19 $22,557,453.00
B-1