Exhibit 10.12.2
PROMISSORY NOTE
U.S. $3,900,000 Executed and Delivered
in the City of
New York, New York
As of January 31, 1995
1. FOR VALUE RECEIVED, MCKNIGHT MOTEL, INC., a Pennsylvania
Corporation, 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 THREE MILLION NINE
HUNDERED THOUSAND AND 00/100 Dollars ($3,900,000), 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 Ten and
74/100ths (10.74%) 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
Thirty Thousand Two Hundred Fifty One and no 00/100ths Dollars ($30,251.00) on
March 1, 1995 and (b) thereafter monthly payments of principal and interest on
the unpaid principal balance, payable in arrears, in the amount of Thirty Nine
Thousand Five Hundred Sixty Seven and 56/100ths Dollars ($39,567.56) 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 March, 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. BNF=7521-7623/DES
Ref: DLJ/Servico/McKnight
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 Mortgage (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 2.7.8 of the Loan
Agreement, including any payments made with respect to a release of any
Individual Property (as defined in the Loan Agreement) from the lien of the
Mortgage pursuant to Section 2.7.8(d) of the Loan Agreement in connection with
such application of Loss Proceeds, (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 2.7.7(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 2.7.7(g) of the Loan Agreement and (iv) any prepayments of the
outstanding principal amount of the Indebtedness made pursuant to the Mortgage
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, (III) the amount of the Yield Maintenance Premium
believed by Maker to be payable in connection
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with such prepayment, and (IV) whether Maker intends to obtain a release of the
Mortgage encumbering any Individual Property 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.
(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 (l0th) 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 2.7.8 of
the Loan Agreement or of amounts on deposit in the Capital Expenditure
Sub-Account pursuant to Section 2.7.7(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
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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 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 Rate (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 Mortgage. 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
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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 Mortgage (the "Mortgage") dated the date hereof given by Maker to Payee
covering certain premises more particularly described in the Mortgage.
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 Mortgage, 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
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by the Mortgage. 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 Mortgage, the Loan
Agreement or the other Loan Documents.
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 Mortgage 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 Mortgage) 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 Mortgage 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 mortgagee 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,
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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 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 Mortgage, 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
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may become liable for the payment of all or any part of the Indebtedness, under
any other provision of this Note or the Mortgage. 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.
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 Mortgage 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 Mortgage and the other Loan
Documents shall be governed by and construed according to the law of the State
in which the applicable Individual 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 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 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
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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 their authorized
agent to accept and acknowledge on their 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 Mortgage, 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 their 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.
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IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
MCKNIGHT MOTEL, INC., a
Pennsylvania corporation
By: /s/ David Buddemeyer
-----------------------------
David Buddemeyer, President
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