EXHIBIT 10.32
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS, COVENANTS AND CONDITIONS OF A
CERTAIN CONFIRMATION OF SUBORDINATION AGREEMENT OF EVEN OR NEAR DATE HEREWITH IN
FAVOR OF NOMURA ASSET CAPITAL CORPORATION (the "Subordination Agreement")
PROMISSORY NOTE
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$3,884,052.23 New York, New York
Dated as of October 31, 1997
FOR VALUE RECEIVED, HUDSON HOTEL PROPERTIES CORP., a New York corporation
with offices at One Airport Way, Suite 200, Rochester, New York, 14624
("Borrower") promises to pay to the order of EQUITY INNS PARTNERSHIP, L.P., a
Tennessee limited partnership ("Lender"), at 4735 Spottswood, Suite 201,
Memphis, Tennessee or at such other place in the United States of America as may
be designated in writing by the holder of this note (this "Note"), the sum of
Three Million Eight Hundred Eighty Four Thousand Fifty Two and 23/100 Dollars
($3,884,052.23), together with Interest as hereinafter provided, until the said
principal sum shall be fully paid, and to be due and payable as hereinafter
provided.
1. DEFINITIONS. The following terms, as used in this Note, shall have
the following meanings, which shall be applicable equally to the singular and
the plural of the terms defined:
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day
on which federally insured depository institutions in the State of New York are
authorized or obligated by law, governmental decree or executive order to be
closed.
"EVENT OF DEFAULT" shall mean (i) any failure of Borrower to pay any
amounts due and payable pursuant to this Note within five (5) Business Days
after the due date thereof, (ii) any default by Borrower under the Senior
Indebtedness (as hereinafter defined) which shall entitle Nomura Asset Capital
Corporation (together with its successors or assigns, "Senior Lender") to
accelerate all principal indebtedness evidenced by the Senior Indebtedness,
(iii) financial difficulties of Borrower or of Guarantor as evidenced by (x) the
filing of a voluntary or involuntary petition in bankruptcy or under any
chapters of the Bankruptcy Code or under any federal or state statute providing
for relief of debtors, (y) the making of an assignment for the benefit of
creditors or (z) the appointment of a receiver or trustee for all or a major
part of its property or (iv) default under the Security Agreement (as defined
herein).
"MATURITY DATE" shall mean October 31, 1999.
2. INTEREST.
(a) Interest at the rate of ten percent (10%) per annum on the unpaid
principal ("Interest") shall be due and payable in arrears on the first day of
each month following the date of this Note. Interest after an Event of Default
shall accrue at eighteen percent (18%) per year. Borrower shall pay Lender a
late fee of five percent (5%) of any late payment. Interest accruing under this
Note shall be computed on the basis of a 365-day year for the actual number of
days elapsed.
(b) It is not intended hereby to charge interest at a rate in excess of
the maximum legal rate of interest permitted to be charged to Borrower under
applicable law, but if, notwithstanding the foregoing, interest in excess of
said maximum legal rate shall be paid hereunder, the excess shall be applied by
Lender to the payment of the unpaid principal due hereunder.
3. VOLUNTARY PREPAYMENT. Borrower shall have the right to prepay any
unpaid principal or other unpaid sums in connection herewith in whole or in part
without penalty or premium. Any such prepayment of unpaid principal shall be
accompanied by an amount equal to unpaid Interest to the date of such prepayment
on the amount of principal being so prepaid.
4. PRINCIPAL PAYMENTS.
(a) Borrower shall, unless sooner prepaid, pay the principal sum of
$2,500,000 on the date one year from the date hereof.
(b) The remaining balance of principal, plus accrued but unpaid interest,
shall be due on the Maturity Date.
5. GUARANTEE. The payment of principal, interest and any other sums
under this Note has been guaranteed by Hudson Hotels Corporation, a New York
corporation ("Guarantor") of which Borrower is a wholly-owned subsidiary.
6. SECURITY. Payment of the amounts due and to become due hereunder has
been secured by the pledge of 2,000,000 shares of common stock of Guarantor
pursuant to that certain Pledge Agreement of even date herewith (the "Security
Agreement") by Borrower and Guarantor in favor of Lender.
7. ACCELERATION. In the case of the occurrence of any Event of Default
under this Note, Lender may, upon giving written notice to Borrower, and in
addition to exercising any other available rights or remedies, accelerate all or
any part of the principal due hereunder, which shall therewith be immediately
due and payable by Borrower, together with Interest accrued to date at the rate
specified hereunder, together with all fees and other charges payable by
Borrower hereunder.
8. WAIVER.
(a) Borrower and any indorser, sureties and guarantor hereof or hereon
hereby waive presentment for payment, demand, protest, notice of non-payment or
dishonor and of protest, and agree to remain bound until the unpaid principal,
all accrued interest and all other sums payable hereunder are 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 Lender.
(b) It is further expressly agreed that any waiver by Lender, other than a
waiver in writing signed by Lender, of any term or provision hereof or of any
right, remedy or option under this Note shall not be controlling, nor shall it
prevent or estop Lender from thereafter enforcing such term, provision, right,
remedy or option, and the failure or refusal of Lender to insist in any one or
more
instances upon the strict performance of any of the terms or provisions of this
Note 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 Lender's rights, remedies and options under
this Note are and shall be cumulative and are in addition to all other rights,
remedies and options of Lender in law or in equity or under any other agreement.
9. COSTS OF COLLECTION. Borrower shall pay, when such costs are incurred
by Lender, all third party costs of collecting any amount which is not paid by
Borrower when due pursuant to the terms of this Note, including, without
limitation, the attorneys' fees and disbursements of Lender's counsel, which
costs may be added to the indebtedness evidenced by this Note and paid promptly
on demand.
10. SUBORDINATION. The term "Senior Indebtedness" shall mean: the
principal in an amount not to exceed $35,000,000, plus any premiums, unpaid
interest and any other sums, charges or amounts which are or may become due and
payable by Guarantor and/or Borrower to Senior Lender, whether outstanding on
the date of execution of this Note or thereafter created, incurred, assumed,
issued or guaranteed relating to such principal, which indebtedness is, among
other things, for all or part of the consideration for the acquisition of
certain hotels being transferred from Lender to HH Properties-II, Inc. on even
date herewith pursuant to that certain Hotel Asset Purchase Agreement dated July
12, 1997 and executed and delivered by E. Anthony Wilson on August 12, 1997,
among Borrower and Lender and any and all deferrals, renewals or extensions of
any such indebtedness or obligations.
This Note, including the principal hereof and Interest hereon, is
subordinate and junior in right of payment to the Senior Indebtedness, all as
more particularly set forth in the Subordination Agreement. Without limiting
anything set forth in the Subordination Agreement, in the case of any
bankruptcy, insolvency, receivership, conservatorship, reorganization, or
arrangement with, or assignment for the benefit of creditors, readjustment of
debt, marshaling of assets and liabilities or similar proceeding or any
liquidation or winding-up of, or relating to, Borrower, whether voluntary or
involuntary, all such Senior Indebtedness shall be entitled to be paid in full
before any payment shall be made on account of the principal, or Interest or
premium, if any, on this Note.
10. WAIVER OF TRIAL BY JURY. Borrower hereby irrevocably waives all right
to trial by jury in any action, proceeding or counterclaim arising out of or
relating to this Note.
11. MISCELLANEOUS.
(a) APPLICABLE LAW. Borrower agrees that this Note shall be governed by
and construed and enforced in accordance with the procedural and substantive
laws of the State of New York. Any legal action or proceeding with respect to
this Note may be brought in the courts of the State of New York within Monroe
County, or of the United States of America for the Western District of New York,
and, by execution and delivery of this Note, Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Borrower further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the delivery of copies thereof to Borrower to the address of
Borrower specified in the Preamble hereof. Nothing herein shall affect the
right of Lender to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against Borrower in any other
jurisdiction.
(b) AMENDMENT IN WRITING. No amendment or waiver of any provision of this
Note, nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Lender and Borrower
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
(c) PARTIAL INVALIDITY. In the event that any provision of this Note or
the application thereof to Borrower 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 a 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
whom 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) AUTHORITY. Borrower has executed this note with due and proper
authority to do so. This Note is valid and enforceable against Borrower and
evidences Borrower's lawful indebtedness to Lender.
IN WITNESS WHEREOF, Borrower has caused this Promissory Note to be executed
as of the date first above written.
ATTEST: HUDSON HOTELS PROPERTIES CORP.
/s/ Alan S. Lockwood By: /s/ Bruce A. Sahs
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Alan S. Lockwood, Secretary Bruce A. Sahs, President