EXHIBIT 4.1
NOTE
Date of Note: September 20, 1999
Principal Amount: $26,625,000
Maturity Date: October 1, 2000
Interest Rate: 8.5% per annum to be computed on an actual/365-day basis
(i.e., interest for each day during which any of the
Principal Amount is outstanding shall be computed at the
Interest Rate divided by 365).
FOR VALUE RECEIVED, the undersigned ("Maker") does hereby covenant
and promise to pay to the order of PROMUS HOTELS, INC., a Delaware corporation
or its successors or assigns (collectively, "Payee"), at 755 Crossover Lane,
Memphis, Tennessee 38117-4900, or at such other place as Payee may designate to
Maker in writing from time to time, the Principal Amount, on the Maturity Date,
together with interest at the Interest Rate on the unpaid portion of the
Principal Amount on the first day of the first month following the Date of Note
and on the first day of each month thereafter until this Note is paid in full,
and with a late payment premium of 4% of any principal or interest payment made
more than ten (10) days after the due date thereof which shall be due with any
such late payment. All payments of principal, interest and other sums hereunder
shall be made in lawful money of the United States and in immediately available
funds.
Pursuant to Section 2(b) of the Purchase Agreement (as hereinafter
defined), in addition to the payment of interest as provided herein, commencing
on the first day of the first month after the Date of Note and on the first day
of each month thereafter, Maker hereby covenants and promises to pay a monthly
principal amortization payment equal to the Amortization Amount, as hereinafter
defined. Each such principal amortization payment shall be applied in reduction
of the Principal Amount. In connection with calculating the Amortization Amount,
on or before the twenty-second (22nd) day of each month (or if such 22nd day is
not a business day, the first business day thereafter) between the date hereof
and the repayment in full of amounts evidenced by this Note and secured by the
Mortgage (as hereinafter defined), Maker shall notify Payee (the "Equity
Proceeds Notice") of (1) the total proceeds received in connection with the
"best efforts" public offering of shares in Maker (the "Equity Proceeds") and
(2) the net sum available to Maker from the Equity Proceeds after deduction of
offering expenses, including, without limitation, accountants' fees, legal fees,
printing expenses, registration fees, NASD filing fees, stock exchange/quotation
service listing fees and transfer agent and escrow charges, selling commissions,
marketing expense allowance, Property (as herein defined) acquisition fees and
expenses and closing costs and a working capital reserve and a reserve for
renovations, repairs and replacements of capital
improvements for each Property (the "Net Equity Proceeds"), all as contemplated
in Maker's Form S-11 Registration Statement, filed on August 3, 1999. For the
purposes of this Note (i) the "Amortization Amount" shall mean an amount equal
to the excess of the Net Equity Proceeds set forth in the most recent Equity
Proceeds Notice over the sum of (x) $8,875,000 plus (y) the aggregate of all
previous principal amortization payments applied in reduction of the Principal
Amount and (ii) "Property" shall mean each property sold to Maker pursuant to
that certain Agreement of Sale dated August 6, 1999 among Hampton Inns, Inc.,
Promus Hotels Florida, Inc. and Payee, as sellers, and Maker, as buyer (the
"Purchase Agreement"). Notwithstanding the foregoing, nothing provided herein
shall prevent Payee from paying the Amortization Amount more often than monthly.
This Note is secured by, among other things, mortgages and/or
deeds of trust and/or deeds to secure debt (individually and collectively, the
"Mortgage"), which Mortgage specifies various defaults upon the happening of
which all sums owing on this Note may, at Payee's option, be declared
immediately due an payable.
Maker agrees that it shall be bound by any agreement extending the
time or modifying the above terms of payment, made by Payee and the owner or
owners of the property affected by the Mortgage, whether with or without notice
to Maker, and Maker shall continue liable to pay the amount due hereunder, but
with interest at a rate no greater than the Interest Rate, according to the
terms of any such agreement of extension or modification. This Note may be
prepaid, in whole or in part, without premium or penalty.
This Note may not be changed orally, but only an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
Should the indebtedness represented by this Note or any part
thereof be collected at law or in equity, or in bankruptcy, receivership or any
other court proceedings (whether at the trial or appellate level), or should
this Note be placed in the hands of attorneys for collection upon default, Maker
agrees to pay, in addition to the principal, premium and interest due and
payable hereon, all costs of collection or attempting to collect this Note,
including reasonable attorneys' fees and expenses.
All parties to this Note, whether Maker, principal, surety,
guarantor or endorser, hereby waive presentment for payment, demand, protest,
notice of protest and notice of dishonor.
Anything herein to the contrary notwithstanding, the obligations
of Maker under this Note and the Mortgage shall be subject to the limitation
that payments of interest shall not be required to the extent that receipt of
any such payment by Payee would be contrary to provisions of law applicable to
Payee limiting the maximum rate of interest that may be charged or collected by
Payee.
In case of any loss, theft, destruction or mutilation of this
Note, Maker shall, upon its receipt of an affidavit of an officer of Payee as to
such loss, theft, destruction or mutilation and an appropriate indemnification,
execute and deliver a replacement Note to Payee in the same principal amount and
otherwise of like tenor as this Note.
MAKER BY EXECUTION HEREOF, AND PAYEE BY ACCEPTANCE HEREOF, HEREBY
EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY PAYEE ON THIS NOTE, ANY AND EVERY RIGHT IT MAY HAVE TO A
TRAIL BY JURY.
This Note and the rights and obligations of the parties hereunder
shall in all respects to be governed by, and construed and enforced in
accordance with, the laws of the State of Tennessee (without giving effect to
Tennessee's principles of conflicts of law). Maker hereby irrevocably submits to
the non-exclusive jurisdiction of any Tennessee State or Federal court sitting
in The City of Memphis over any suit, action or proceeding arising out of or
relating to this Note, and Maker hereby agrees and consents that, in addition to
any methods of service of process provided for under applicable law, all service
of process in any such suit, action or proceeding in any Tennessee State or
Federal court sitting in The City of Memphis may be made by certified or
registered mail, return receipt requested, directed to Maker at the address
indicated below, with a copy to counsel at Jenkens & Gilchrist, Fountain Place,
1445 Ross Avenue, Suite 3200, Dallas, Texas 75202, and service so made shall be
complete five (5) days after the same shall have been so mailed.
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IN WITNESS WHEREOF, Maker has executed and delivered this Note on
the day and year first above written.
APPLE SUITES, INC.,
a Virginia corporation
By /s/ Glade M. Knight
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Name: Glade M. Knight
Title: Chief Executive Officer
Address of Maker:
306 East Main Street
Richmond, Virginia 23219
ATTN Glade M Knight
This is to certify that this Note was executed in my presence on
the date hereof by the party whose signature appears above in the capacity
indicated.
/s/ Jacquelyn B. Owens
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Notary Public
My commission expires
6/30/03
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