Exhibit 10.5
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SECURED PROMISSORY NOTE
made by
MARRIOTT HOTEL PROPERTIES II LIMITED PARTNERSHIP
SANTA CLARA MARRIOTT HOTEL LIMITED PARTNERSHIP
(together, the "Maker")
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- to -
NOMURA ASSET CAPITAL CORPORATION
(the "Payee")
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Dated: September 23, 1996
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EXHIBIT 10.5
SECURED PROMISSORY NOTE
$43,500,000 New York, New York
September 23, 1996
FOR VALUE RECEIVED, MARRIOTT HOTEL PROPERTIES II LIMITED PARTNERSHIP, a
Delaware limited partnership and SANTA CLARA MARRIOTT HOTEL LIMITED
PARTNERSHIP, a Delaware limited partnership ("SC"), jointly and severally
(together, the "Maker"), promises to pay to NOMURA ASSET CAPITAL CORPORATION, a
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Delaware corporation (together with its successors and assigns, the "Payee"), or
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order, the principal amount of FORTY THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
($43,500,000) (the "Loan"), in the manner set forth herein; together with
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interest on the un paid 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; to gether 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 following
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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 8.22% per annum.
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(d) "Business Day" means a day on which banks and foreign exchange
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markets are open for business in New York, New York.
(e) "Debt" has the meaning ascribed to the term "SC Debt" in the
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Loan Agreement.
(f) "Debt Service Payment Date" means the 11th day of each month.
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(g) "Debt Service Period" means the period from and including the
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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) "Loan Agreement" means that certain Loan Agreement, dated as
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of the date hereof, between SC and the Payee.
(k) "Maturity Date" shall mean the earliest to occur of:
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(1) October 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.
(l) "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.
(m) "Non-Recourse" has the meaning set forth in the Loan
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Agreement.
(n) "Optional Prepayment Date" means October 11, 2007.
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(o) "Transaction Documents" has the meaning set forth in the Loan
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Agreement.
(p) "Yield Maintenance Premium" has the meaning set forth in the
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Loan Agreement.
Certain additional terms are defined in the 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.
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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 Payee has given
notice to the Maker pursuant to Section 4.2 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 October 11, 1996, the Maker shall pay to the Payee interest
on the Note at the Base Rate for the period beginning on the date hereof and
ending on October 10, 1996. On each Debt Service Payment Date thereafter through
and including October 11, 1997, the Maker shall pay to the Payee interest on
this Note at the Base Rate then due and payable for each Debt Service Period.
(b) On each Debt Service Payment Date occurring after October 11,
1997, the Maker shall pay to the Payee an amount equal to $369,829.85, 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 Rate
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Interest") on this Note at the Base Rate or the Default Rate, as applicable,
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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 sub-clause (i) above (each, a "Principal
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Payment"). Following the Maturity Date and while an Event of Default has
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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 the SC Property by the
Maker pursuant to Section 2.3 of the Loan Agreement, (ii) from the release of
the SC Property by the Maker from the Lien of the Security Documents (as such
terms are defined in the Loan Agreement) pursuant to Section
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2.6 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) 10.22% 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 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 3.52% per annum (any such increased rate being
hereinafter referred to as the "Adjusted Rate"). The Maker shall thereafter pay
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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, subsequent to the Optional Prepayment Date,
the Maker shall pay to the Payee on each Debt Service Payment Date the MHP Share
(as defined in, and determined in accordance with, the provisions of the Cash
Management Procedures including, without limitation, Sections 4.4(J) and 7.10(F)
thereof) for all Accounting Periods ending during the Debt Service Period
immediately preceding such Debt Service Payment Date, which shall be applied in
accordance with the terms of the MHP Cash Management Procedures (as such term is
defined in the Loan Agreement) and Sections 4.4(J) and 7.10(F) thereof.
(f) All payments (including prepayments) to be made by the Maker
or the Servicer (as such term is defined in the Loan Agreement) on account of
principal, interest and all other amounts pay able 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
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later than 2 p.m. (New York time) on the dates such payments are due, by payment
to:
Mellon Bank, Pittsburgh, PA
ABA # 043000261
NACC (Clearance Account)
Account #109-2525
Reference: Lance Haberin
(Clearance Account)
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 ex tended to the next
succeeding Business Day and, with respect to payments of princi pal, 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 when
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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 all
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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, promptly
refunded by the Payee to the Maker, and the Maker shall accept such
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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, with out 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 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 executed, made and delivered in
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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.
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 re spect 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 stop 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
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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 SC Mortgage
(as defined in the Loan Agreement) made by the Maker in favor of the Payee
encumbering the SC Property (as defined in the Loan Agreement).
10. Non-Recourse. The obligations of the Maker under this Note shall be
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Non-Recourse.
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.
(b) The term the "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.
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(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 here under 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.
(Signature page follows)
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IN WITNESS WHEREOF, the Maker has caused this Note to be executed as of
the day and year first above written.
MARRIOTT HOTEL PROPERTIES II LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Marriott MHP Two Corporation,
General Partner
By: /s/ Douglas W. Henry
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Name: Douglas W. Henry
Title: Vice President
SANTA CLARA MARRIOTT HOTEL LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Marriott MHP Two Corporation,
General Partner
By: /s/ Douglas W. Henry
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Name: Douglas W. Henry
Title: Vice President