Exhibit 10.11.2
PROMISSORY NOTE
U.S. $11,000,000 Executed and Delivered
in the City of
New York, New York
As of June 29, 19%
1. FOR VALUE RECEIVED, EAST WASHINGTON HOSPITALITY LIMITED
PARTNERSHIP, a Florida limited partnership, having an address at Servico Centre
South, 1601 Belvedere Road, West Palm Beach, Florida 33406 (the "Maker"),
promises to pay to the order of COLUMN FINANCIAL, INC., a Delaware corporation,
having an office at 3414 Peachtree Road, N.E., Suite 1140, Atlanta, Georgia
30326-1113, or its successors or assigns (collectively, the "Payee"), the
principal sum of Eleven Million Dollars ($11,000,000), in lawful money of the
United States of America with interest thereon from the date of this Note at the
Interest Rate (hereinafter defined).
2. The interest rate (the "Interest Rate") shall be Nine and
45/100ths (9.45%) percent per annum. Interest on the principal sum of this Note
shall be calculated on the basis of a 360 day year consisting of twelve (12)
months of thirty (30) days each. However, interest due and payable for a period
of less than a full calendar month shall be calculated by multiplying the actual
number of days elapsed in such period by a daily rate based on a 360-day year.
3. Maker shall make (a) a payment of interest only in the amount of
Two Thousand Eight Hundred Eighty-Seven And 50/100 Dollars ($2,887.50) on July
1, 1995 and (b) thereafter monthly payments of principal and interest on the
unpaid principal balance, payable in arrears, in the amount of One Hundred Two
Thousand One Hundred Seventy-Five And 54/100 Dollars ($102,175.54) on the first
Business Day (as hereinafter defined) of each calendar month (the "Due Date").
The unpaid principal sum and all interest thereon and all other sums and fees
then payable under this Note shall be due and payable on the first Business Day
of July, 2010 (the "Maturity Date"). All payments under this Note shall be paid
directly into the Central Account (as defined in the Loan Agreement (as
hereinafter defined)) by wire transfer of immediately available funds to:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Credit Clearing A/C No. 75217682
Ref: DLJ/Servico/Phoenix Lease
or to such other designated bank or place, or in such other manner, as Payee may
reasonably specify in writing from time to
time. The term "Business Day" shall mean any day other than a Saturday, Sunday
or any other day on which national banks in New York, New York are not open for
business.
4. The whole of the principal sum of this Note, together with all
interest accrued and unpaid thereon, and all other sums and fees payable
hereunder and under the Loan Agreement, the Deed of Trust (as hereinafter
defined) and the other Loan Documents (as defined in the Loan Agreement) (such
amounts hereinafter collectively referred to as the "Indebtedness") shall become
immediately due and payable at the option of Payee on the happening of any Event
of Default (as defined in the Loan Agreement), subject to Section 8.1(b) of the
Loan Agreement.
5. (a) The outstanding principal balance of this Note may not be
prepaid, in whole or in part, on or prior to the fourth anniversary of the date
hereof (the "Lock-Out Date"), except in connection with the application by
Lender of (i) any Loss Proceeds (as defined in the Loan Agreement) to the
principal amount of the Indebtedness pursuant to Section 2.6.8 of the Loan
Agreement, (ii) any amounts on deposit in the Capital Expenditure Sub-Account to
the Indebtedness during any DSCR Restricted Period or Franchise Restricted
Period (as such terms are defined in the Loan Agreement) pursuant to Section
2.6.7(f) of the Loan Agreement, (iii) any amounts on deposit in the Curtailment
Reserve Fund Sub-Account to the Indebtedness during any Operative Period (as
such terms are defined in the Loan Agreement) pursuant to Section 2.6.7(g) of
the Loan Agreement and (iv) any prepayments of the outstanding principal amount
of the Indebtedness made pursuant to the Deed of Trust in connection with a
change in control of Servico, Inc. After the Lock-Out Date, and provided that no
Event of Default shall have occurred and be continuing under the Loan Documents,
Maker may, on any Due Date, upon not less than thirty (30) days prior written
notice to Payee, prepay the principal amount of the Indebtedness, in whole or in
part, by wire transfer to the Central Account as provided in Paragraph 3 above
of (A) the portion of the principal amount of the Indebtedness to be prepaid,
(B) interest accrued and unpaid on the outstanding principal balance of the
Indebtedness to and including the date of such prepayment, (C) the Yield
Maintenance Premium, if any, payable with respect to such prepayment, and (D)
any other amounts which have accrued and are owing under the Loan Documents
through the date of such prepayment. Each notice of a voluntary prepayment of
all or any portion of the principal amount of the Indebtedness shall specify (I)
the prepayment date, (II) the amount of such prepayment and the amount of
interest thereon and other amounts to be delivered in connection therewith, and
(III) the amount of the Yield Maintenance Premium believed by Maker to be
payable in connection with such prepayment. The amount of the Yield Maintenance
Premium, interest and other amounts payable in connection with any prepayment
shall be subject to confirmation by Payee.
-2-
(b) The term "Yield Maintenance Premium" shall mean an amount to be
paid to Payee upon the prepayment of the Indebtedness in whole or in part at any
time before the first Due Date (the "10th Anniversary Due Date") following the
tenth (10th) anniversary of the date hereof for any reason, whether said
prepayment is made voluntarily or involuntarily or before, upon or after the
acceleration of the Indebtedness by Payee following the occurrence of an Event
of Default (provided, however, that no Yield Maintenance Premium shall be
payable in connection with any prepayment made as a result of Lender's
application to the Indebtedness of Loss Proceeds pursuant to Section 2.6.8 of
the Loan Agreement or of amounts on deposit in the Capital Expenditure
Sub-Account pursuant to Section 2.6.7(f) (ii) of the Loan Agreement), which
amount shall be equal to the greater of: (i) (A) with respect to a prepayment
made prior to the first Due Date (the "5th Anniversary Due Date") following the
fifth (5th) anniversary of the date hereof, two percent (2%) or (B) with respect
to a prepayment made on or after the 5th Anniversary Due Date but before the
10th Anniversary Due Date, one percent (1%) of the portion of the principal
balance of the Loan being prepaid, or (ii) the product of (A) the excess, if
any, of (I) the present value (as determined by discounting at a rate equal to
(y) the Treasury Constant Maturity Yield Index published during the second full
week preceding the date on which such Yield Maintenance Premium is payable for
instruments having a maturity coterminous with the remaining term of this Note
plus (z) fifty (50) basis points) of the stream of payments of principal and
interest that would be made on the Indebtedness if such prepayment of principal
were not made, including any payment due on the Maturity Date, over (II) the
principal balance of the Indebtedness immediately prior to such prepayment,
multiplied by (B) a fraction of which the numerator is the amount of principal
so prepaid and the denominator is the principal balance immediately prior to
such prepayment. The determination of the Yield Maintenance Premium shall be
made by Payee and shall, absent manifest error, be final, conclusive and binding
upon all parties. The term "Treasury Constant Maturity Yield Index" shall mean
the average yield for "This Week" as reported by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519). If there is no Treasury Constant
Maturity Yield Index for instruments having a maturity coterminous with the
remaining term of this Note, then the index referred to in clause (ii) (A) (I)
above shall be equal to the weighted average yield to maturity of the Treasury
Constant Maturity Yield Indices with maturities next longer and shorter than the
remaining term of the Note, calculated by averaging (and rounding upward to the
nearest whole multiple of 1/100 of 1% per annum, if the average is not such a
multiple) the yields of the relevant Treasury Constant Maturity Yield Indices
(rounded, if necessary, to the nearest 1/100 of 1%, with any figure of 1/200 of
1% or above rounded upward).
6. Maker agrees that (a) if any amount payable under this Note, the
Loan Agreement or any other Loan Document is not
-3-
paid within the grace period provided with respect to such payment under Section
8.1 of the Loan Agreement or, if no grace period is provided thereunder with
respect to such payment, on the date on which such payment is due, whether by
acceleration or otherwise, Maker shall pay interest at the Default Rare (as
hereinafter defined) with respect to such amount, upon demand from time to time,
to the extent permitted by applicable law, from the date such amount was due
until such amount has been paid by Maker and (b) upon the occurrence of any
Event of Default, Payee shall have the option, upon three (3) Business Days'
notice given to Maker, of increasing the rate of interest on the entire unpaid
principal balance of this Note (provided, however, that such rate of interest
shall be increased automatically and without notice for all such amounts as
hereinafter provided, upon the occurrence of any of the events set forth in
Section 8.1(a)(vi), (vii) and (viii) of the Loan Agreement), effective from the
date of Maker's initial default with respect to such Event of Default without
allowance for any applicable notice and/or grace period, to the Default Rate.
The term "Default Rate" shall mean a rate of interest equal to the greater of
(a) fifteen percent (15%) per annum or (b) 500 basis points above the "Prime
Rate" published in The Wall Street Journal as of the date notice is sent to
Maker, which interest Maker agrees to pay and which interest shall be secured by
the Deed of Trust. For purposes of the foregoing, if more than one Prime Rate is
published in The Wall Street Journal for the applicable day, the average of the
Prime Rates shall be used. The Prime Rate (or the average of Prime Rates) will
be rounded up to the nearest one-fourth of one percent. In the event that The
Wall Street Journal should cease or temporarily interrupt publication, then the
Prime Rate shall mean the daily average prime rate published in another business
newspaper, or business section of a newspaper, of national standing chosen by
Payee. In the event that a prime rate is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then Payee shall select a comparable interest rate index which is readily
available and verifiable to Maker but is beyond Payee's control. This substitute
index will also be rounded up to the nearest one-fourth of one percent.
Notwithstanding the foregoing, if the unpaid principal sum or any other amount
required to be paid on the Maturity Date or upon acceleration of the
Indebtedness is not paid when due, then interest shall thereafter be computed
and paid at the Default Rate without notice to Maker. The preceding sentence
shall not be construed as an agreement or privilege to extend the date of the
payment of the Indebtedness, nor as a waiver of any other right or remedy
accruing to Payee by reason of the occurrence of an Event of Default.
7. This Note is given to evidence a loan (the "Loan") by Payee to
Maker pursuant to that certain Loan Agreement dated the date hereof (the "Loan
Agreement") between Payee and Maker and is secured by, among other things, that
certain Deed of Trust
-4-
(the "Deed of Trust") dated the date hereof given by Maker to Chicago Title
Insurance Company for the benefit of Payee covering certain premises more
particularly described in the Deed of Trust.
8. Notwithstanding any provision herein, the total liability for
payments in the nature of interest hereunder shall not exceed the applicable
limits imposed by any applicable State or Federal interest rate laws. If any
payments in the nature of interest, additional interest, and other charges made
hereunder are held to be in excess of the applicable limits imposed by any
applicable State or Federal laws, the amount held to be in excess of such limits
shall be considered payment of principal and the Indebtedness shall be reduced
by such amount of principal in the inverse order of maturity so that the total
liability for payments in the nature of interest, additional interest and other
charges shall not exceed the applicable limits imposed by any applicable State
or Federal interest rate laws. For the purposes of calculating the actual amount
of interest, additional interest and other amounts paid and/or payable
hereunder, in respect of laws pertaining to usury or such other laws, all sums
paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the Indebtedness outstanding from time to time shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Note until payment in full of
all of the Indebtedness, so that the actual rate of interest on account of the
Indebtedness is uniform through the term hereof. The terms and provisions of
this Paragraph 8 shall control and supersede every other provision of all
agreements between Maker or any endorser and Payee.
9. If any monthly principal and interest payment or any other
amounts payable under this Note, the Deed of Trust, the Loan Agreement or the
other Loan Documents is not paid in full within the grace period provided with
respect to such payment under Section 8.1 of the Loan Agreement or, if no grace
period is provided thereunder with respect to such payment, on the date on which
such payment is due, then a late charge equal to the lesser of five percent (5%)
of such unpaid amount, or the maximum amount permitted by applicable law (the
"Late Payment Charge") shall be deemed to be immediately assessed and shall be
immediately due and payable. Such Late Payment Charge shall automatically become
due to Payee without notice and shall be paid to defray the expenses incurred by
Payee in handling and processing such delinquent payment, and to compensate
Payee for the loss of the use of such delinquent payment, and such amount shall
be secured by the Deed of Trust. Such charges shall be in addition to interest
at the Default Rate and all other rights and remedies available to Payee upon
the occurrence of an Event of Default or a default under this Note, the Deed of
Trust, the Loan Agreement or the other Loan Documents.
-5-
10. Notwithstanding any provision herein or in any of the Loan
Documents (other than the Environmental Indemnity (as defined in the Loan
Agreement)) to the contrary, in any action brought to enforce the obligations of
Maker under this Note, the Loan Agreement, the Deed of Trust or the other Loan
Documents (other than the Environmental Indemnity), the judgment or decree shall
be enforceable against Maker only to the extent of its interest in the Mortgaged
Property (as defined in the Deed of Trust) and any other collateral given to
Payee to secure the Indebtedness, and any such judgment shall not be subject to
execution on, nor be a lien on, other assets of Maker other than its interest in
the Mortgaged Property and any other collateral given to Payee to secure the
Indebtedness, except as otherwise expressly provided hereinafter. The provisions
of this Paragraph 10 shall not, however, limit the liability of Maker for loss,
costs or damage arising out of the following matters: (i) any failure to apply
the Revenue (as defined in the Loan Agreement) of the Mortgaged Property to pay
the operating expenses of the Mortgaged Property or to fulfill the then current
obligations of Maker under this Note, the Loan Agreement, the Deed of Trust or
any other Loan Document; (ii) any misapplication of Loss Proceeds (as defined in
the Loan Agreement), security deposits or trust funds in violation of applicable
law or the provisions of the Loan Agreement or any other Loan Document; (iii)
any collection of rent for more than one month in advance of the time when the
same becomes due; (iv) failure to pay all real estate taxes and assessments
prior to the date on which such payments become delinquent (subject to Lender's
obligation to make disbursements from the Basic Carrying Costs Sub-Account (as
defined in the Loan Agreement)); (v) any willful misrepresentation by Maker (or
any constituent partner or shareholder of Maker) in connection with Maker's
application, negotiation or documentation of the Loan; (vi) a fraudulent
conveyance or a fraudulent transfer of the Mortgaged Property or any part
thereof or any other properties or assets of Maker; or (vii) any material
misrepresentation or breach of warranty or covenant made by Maker under the
Environmental Indemnity. Nothing herein shall be deemed (w) to be a waiver of
any right which Payee may have under any bankruptcy law of the United States or
of any State in which any part of the Mortgaged Property is located to file a
claim for the full amount of the Loan or to require that all of the Mortgaged
Property and any other collateral given to secure the Loan shall continue to
secure all of the Indebtedness; (x) to impair the validity of the Indebtedness;
(y) to impair the right of Payee as beneficiary or secured party to foreclose
any lien or security interest or (z) impair the right of Payee to obtain the
Recourse Distributions received by Maker, including, without limitation, the
right to proceed against any constituent partner or shareholder of Maker to the
extent any such Recourse Distribution has actually theretofore been distributed
to such constituent partner or shareholder. The provisions of this Paragraph 10
shall be inapplicable to Maker if any petition for bankruptcy, reorganization or
arrangement pursuant to federal or state law
-6-
shall be filed by, consented to or acquiesced in by or with respect to Maker or
if Maker shall institute any proceeding for the dissolution or liquidation of
Maker or if Maker shall make an assignment for the benefit of creditors, in
which event Payee shall have recourse against all of the assets of Maker and the
Recourse Distributions received by the constituent partners and shareholders of
Maker. For purposes of this Paragraph 10, the term "Recourse Distributions"
shall mean the Revenues arising from the Mortgaged Property to the extent
received by Maker (or actually received by any partner or shareholder of Maker
if not actually received by Maker) after the occurrence and written notice
(including any Consultant's Notice (as defined in the Loan Agreement)) of an
Event of Default.
11. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought. Any such written waiver or consent
shall be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to or demand on
Makers shall entitle Makers to any other or future notice or demand in the same,
similar or other circumstances.
12. Maker and all other persons or parties who may become liable for
the payment of all or any part of the Indebtedness does hereby expressly and
unconditionally waive (a) presentment and demand for payment, notice of
dishonor, protest, notice of protest and non-payment and notice of any kind,
including, without limitation, any notice of intention to accelerate and notice
of acceleration, except as expressly provided herein, and (b) in connection with
any suit, action or proceeding brought by Payee on this Note, any and every
right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Payee on this Note and cannot be maintained in a separate action) and
(ii) have the same consolidated with any other or separate suit, action or
proceeding. Except as provided in the Loan Agreement, no release of any security
for the Indebtedness or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note, the Deed of Trust, the Loan Agreement or any other Loan Document made
by agreement between Payee and any such other person or party shall release,
discharge, modify, change or affect the liability of Maker, and any other person
who may become liable for the payment of all or any part of the Indebtedness,
under any other provision of this Note or the Deed of Trust. MAKER WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING OUT OF OR
RELATING TO THIS NOTE OR THE INTERPRETATION, BREACH OR ENFORCEMENT HEREOF.
-7-
13. In the event that it should become necessary to employ counsel
to collect the Indebtedness or to protect or foreclose the security hereof, or
pursue its rights under the Loan Documents, Maker agrees to pay reasonable
attorneys' fees for the services and disbursements of such counsel whether or
not suit be brought.
14. All of the terms, covenants and conditions contained in the Loan
Agreement, the Deed of Trust and all other Loan Documents are hereby made part
of this Note to the same extent and with the same force as if they were fully
set forth herein.
15. (a) This Note was negotiated in New York, and executed and
delivered by Maker and accepted by Payee in the State of New York, and the
proceeds of the Note delivered pursuant hereto were disbursed from New York,
which State the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby, and in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity and performance, this Note and the obligations arising hereunder shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts made and performed in such State and any applicable
law of the United States of America, except that at all times the provisions for
the creation, perfection, and enforcement of the liens and security interests
created pursuant to the Loan Agreement, the Deed of Trust and the other Loan
Documents shall be governed by and construed according to the law of the State
in which the Property (as defined in the Loan Agreement) is located, it being
understood that, to the fullest extent permitted by law of such State, the law
of the State of New York shall govern the validity and the enforceability of all
Loan Documents, and the Indebtedness or obligations arising hereunder or
thereunder. To the fullest extent permitted by law, Maker hereby unconditionally
and irrevocably waives any claim to assert that the law of any other
jurisdiction governs this Note and the Loan Agreement and this Note and the Loan
Agreement shall be governed by and construed in accordance with the laws of the
State of New York pursuant to ss.5-1401 of the New York General Obligations Law.
(b) Any suit, action or proceeding against Maker or Payee
arising out of or relating to this Note shall be instituted in any federal or
state court in New York, New York, pursuant to ss.5-1402 of the New York General
Obligations Law, or, at Payee's discretion, in any state where the Mortgaged
Property is located and Maker waives any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and Maker
hereby irrevocably submits to the jurisdiction of any such court in any suit,
action or proceeding. Maker does hereby designate and appoint C.T. Corporation
System, 1633 Broadway, New York, New York 10019, as its authorized agent
-8-
to accept and acknowledge on its behalf service of any and all process which may
be served in any such suit, action or proceeding in any federal or state court
in New York, New York, and agrees that service of process upon said agent at
said address and written notice of said service of Maker mailed or delivered to
Maker in the manner provided in the Deed of Trust, shall be deemed in every
respect effective service of process upon Maker, in any such suit, action or
proceeding in the State of New York. Maker (i) shall give prompt notice to the
Payee of any changed address of its authorized agent hereunder, (ii) may at any
time and from time to time designate a substitute authorized agent with an
office in New York, New York (which office shall be designated as the address
for service of process), and (iii) shall promptly designate such a substitute if
its authorized agent ceases to have an office in New York, New York or is
dissolved without leaving a successor.
16. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
17. Supplementing the provisions of Paragraph 8 hereof, Maker agrees
that, for the purposes of Arizona law, the effective rate of interest shall be
the Interest Rate stated in this Note plus any additional rate of interest
resulting from any other charges in the nature of interest paid or to be paid in
connection with this Note, the Loan Agreement and the other Loan Documents. All
fees, charges, goods and things in action or any other sums or things of value,
other than the interest resulting from the Interest Rate and the Default Rate,
as applicable, paid or payable by Maker (collectively, "Additional Sums"),
whether pursuant to this Note, the Loan Agreement, the Loan Documents or any
other document or instrument in any way pertaining to this lending transaction,
or otherwise with respect to this lending transaction, shall, for the purpose of
any laws of the State of Arizona that may limit the maximum amount of interest
to be charged with respect to this lending transaction, be payable by Maker as,
and shall be deemed to be, additional interest, and for such purposes only, the
agreed upon and "contracted for rate of interest" of this lending transaction
shall be deemed to be increased by the rate of interest resulting from the
Additional Sums. Maker understands and believes that this lending transaction
complies with the usury laws of the State of Arizona; however, for purposes of
Arizona law, if any interest or other charges in connection with this lending
transaction are ever determined to exceed the maximum amount permitted by law,
then Maker agrees that (a) the amount of interest or charges payable pursuant to
this lending transaction shall be reduced to the maximum amount permitted by law
and (b) any excess amount
-9-
previously collected from Maker in connection with this lending transaction that
exceeded the maximum amount permitted by law, hereunder as provided herein. If
the outstanding principal balance hereunder has been paid in full, the excess
amount paid will be refunded to Maker.
-10-
IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
EAST WASHINGTON HOSPITALITY
LIMITED PARTNERSHIP,
a Florida limited partnership
By: Servico East Washington, Inc.,
a Florida corporation, as its
general partner
By: /s/ David Buddemeyer
---------------------------------
David Buddemeyer, President