EXHIBIT 10.13
EXECUTION COPY
DEED OF TRUST NOTE
$17,000,000 July 31, 1998
For value received, XXXX SUITES/BELL HOSPITALITY, L.L.C., a Delaware
limited liability company, having its principal place of business at 0000 Xxxxx
0, Xxxxxxxx, Xxx Xxxx 00000, as successor by consolidation to Xxxx Suites,
L.L.C., a Delaware limited liability company, and Bell Hospitality, L.L.C., a
Delaware limited liability company (hereinafter referred to as "Maker"),
promises to pay to the order of CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
a Delaware limited liability company ("Payee"), having its principal office at
00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such place as the holder
hereof may from time to time designate in writing, the principal sum of
SEVENTEEN MILLION and 00/100 DOLLARS ($17,000,000.00) in lawful money of the
United States of America, with interest thereon to be computed on the unpaid
principal balance from time to time outstanding at the Applicable Interest Rate
(as hereinafter defined), and to be paid in installments as follows:
A. Prior to the Resizing Date, a payment of interest only computed at the
Initial Term Interest Rate (as hereinafter defined) (i) on the date
hereof, in the amount of Thirty-Eight Thousand Nine Hundred
Fifty-Eight and 33/100 Dollars ($38,958.33) with respect to the
interest accrual period from the date hereof to and including August
10, 1998 and (ii) on the eleventh day" of September, 1998 and on the
eleventh day of each calendar month thereafter (each a "Payment Date")
up to and including the eleventh day of October, 1999, which date is
the Resizing Date, in the amount of One Hundred Six Thousand Two
Hundred Fifty and 00/100 Dollars ($106,250.00)
B. On each Payment Date after the Resizing Date, up to and including the
Payment Date occurring on November 11, 2024; a monthly payment equal
to the level monthly payment of principal and interest resulting from.
calculating a twenty-five (25) year amortization schedule using as the
principal amount the Resized Loan Amount and as the interest rate, the
Resized Interest Rate (the "MONTHLY PAYMENT AMOUNT"); each of such
monthly payments under this Paragraph B to be applied (i) to the
payment of interest computed at the Resized Interest Rate (as
hereinafter defined) and (ii) the balance applied toward the reduction
of the principal sum of the Loan;
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and the balance of said principal sum together with all accrued and unpaid
interest thereon shall be due and payable on the eleventh day of November 2024
(the "Maturity Date"). Interest on the principal sum of this Note shall be
calculated on the basis of the actual number of days elapsed and a three-hundred
sixty (360) day year. For purposes of making payments hereunder, but not for
purposes of calculating interest accrual periods, if the eleventh (11th) day of
a given month is not a Business Day (as hereinafter defined), then amounts due
on the Payment Date for such month (including payments due on the Maturity Date)
shall be due on the next succeeding Business Day. All amounts due under this
Note shall be payable without setoff, counterclaim or any other deduction
whatsoever. Maker shall, in addition, pay the fees and set-up costs of the
Servicer (as defined in the Deed of Trust referred to below), in accordance with
Paragraph 62 of the Deed of Trust (as defined below), and the costs and expenses
due under the Cash Management Agreement (as defined below).
1. As used in this Note:
(a) The term "ALLOCATED LOAN AMOUNT" shall have the meaning ascribed
to such term in the Deed of Trust.
(b) The term "ANNUAL BUDGET" shall mean an annual budget submitted by
Maker to Payee in accordance with the terms of Paragraph 9(b) herein.
(c) The term "ANTICIPATED REPAYMENT DATE" shall mean October 11, 2009.
(d) The term "APPLICABLE INTEREST RATE" shall mean from (i) the date
of this Note through but not including the Resizing Date, the Initial Term
Interest Rate, (ii) from the Resizing Date through but not including the
Anticipated Repayment Date, the Resized Interest Rate and (iii) from and
after the Anticipated Repayment Date through and including the date this
Note is paid in full, the Extended Term Rate.
(e) The term "APPROVED ANNUAL BUDGET" shall mean each Annual Budget
approved by Payee in accordance with terms herein.
(f) The term "ASSIGNMENT OF LEASES" shall mean that certain Assignment
of Leases and Rents of even date herewith executed by Maker in favor of
Xxxxx.
(g) The term "BUSINESS DAY" shall mean a day other than a (i) Saturday
or Sunday, or (ii) any day on which commercial banks in New York City are
not open for general banking business.
(h) The term "CAPITAL EXPENDITURES" shall mean for any period, the
amount expended for items capitalized under generally accepted accounting
principles including
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expenditures for building improvements or major repairs, leasing
commissions and tenant improvements, to the extent not funded from a
deferred maintenance escrow under a separate agreement.
(i) The term "CASH EXPENSES" shall mean for any period, the operating
expenses for the Trust Property as set forth in an Approved Annual Budget
to the extent that such expenses are actually incurred by Maker, minus
payments into the Tax and Insurance Impound Fund, the Debt Service Reserve
and the FF&E Escrow Fund (all such funds and reserves as defined in the
Deed of Trust).
(j) The term "CASH MANAGEMENT AGREEMENT" shall mean have the meaning
ascribed to such term in the Deed of Trust.
(k) The term "DEBT" shall mean, collectively, the whole of the
principal sum of this Note, together with all interest accrued and unpaid
thereon and all other sums due under the Loan Documents.
(l) The "DEBT SERVICE COVERAGE RATIO" shall have the meaning ascribed
to such term in the Deed of Trust.
(m) The term "DEED OF TRUST" shall mean that certain Deed of Trust,
Assignment of Leases and Rents and Security Agreement of even date herewith
in the amount of this Note given by Maker for the use and benefit of
Payee covering the fee estate of Maker in certain premises as more
particularly described therein.
(n) The term "DEFAULT RATE" shall mean, a rate per annum which equal
to the lesser of (a) the maximum rate permitted by applicable law, or (b)
five percent (5%) above the Applicable Interest Rate.
(o) The term "DEFEASANCE OPTION" shall mean the right and option of
Maker to release either Individual Trust Property that comprises the Trust
Property or the entire Trust Property from the lien of the Deed of Trust in
accordance with the provision set forth in Paragraph 57 of the Deed of
Trust.
(p) The term "EXTENDED TERM RATE" shall mean (1) a rate per annum
equal to the greater of (i) the Resized Interest Rate plus five (5)
percentage points" or (ii) the Treasury Rate plus five (5) percentage
points or (2) for so long as the Note is an asset of a trust, partnership,
corporation or other entity formed in connection with a Securitization (as
defined in the Deed of Trust) pursuant to which securities rated by any
Rating Agency (as defined in the Deed of Trust) have been issued, a rate
per annum equal to the Resized Interest Rate plus two (2) percentage
points.
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(q) The term "EXCESS CASH FLOW" shall mean, for any period, the sum
(determined in accordance with generally accepted accounting principles,
consistently applied) of (i) Net Operating Income, plus (ii) depreciation
and amortization (to the extent deducted in determining Net Operating
Income) for such period, plus (iii) disbursements from the Tax and
Insurance Impound Fund, the Debt Service Reserve and the FF&E Escrow Fund
or any other escrows or reserves approved by Payee or provided for under
the Loan Documents, but only to the extent disbursed by Maker and not
applied to the payment of, or reimbursement for, taxes, insurance and other
amounts for which such reserves were set aside, minus (i) actual payments
of the regularly scheduled principal and interest payments (calculated at
the Applicable Interest Rate, or at the Default Rate, if applicable) due
and payable in accordance with this Note during an applicable period, minus
(ii) actual Capital Expenditures in excess of payments from the FF&E Escrow
Fund and funding of reserves for working capital and Extraordinary Expenses
as approved by Payee in its sole discretion, and minus (iii) payments into
the Tax and Insurance Impound Fund, the Debt Service Reserve, the Cash
Sweep Reserve and the FF&E Escrow Fund and other reserves required under
the Loan Documents (to the extent not already deducted in determining Net
Operating Income).
(r) The term "EXTRAORDINARY EXPENSE" shall mean an extraordinary
operating expense or capital expense not set forth in the Approved Annual
Budget or allotted for in the FF&E Escrow Fund, or any other reserves
required under the Loan Documents.
(s) The term "INDIVIDUAL TRUST PROPERTY" shall have the meaning
ascribed to such term in the Deed of Trust.
(t) The term "INITIAL TERM INTEREST RATE" shall mean a rate of seven
and one-half percent (7.50%) per annum until the Resizing Date.
(u) The term KEY PRINCIPALS shall mean collectively, Xxxxxxx X.
Xxxxxxx and Xxxx Xxxxxx and their respective heirs, successors and assigns,
each individually, a Key Principal.
(v) The term "LOAN" shall mean that certain loan made by Xxxxx to
Maker contemporaneously herewith.
(w) The term "LOAN DOCUMENTS" shall mean collectively this Note, the
Deed of Trust, the Assignment of Leases, the Cash Management Agreement, and
any and all other documents securing, evidencing, or guaranteeing all or
any portion of the Loan or otherwise executed and/or delivered in
connection with this Note and the Loan, including, without limitation, that
certain Guaranty Agreement dated of even date herewith made jointly and
severally by Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxx and Maker.
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(x) The term "LOCK BOX EVENT" shall mean the earliest to occur of (i)
the date that is six (6) months prior to the Anticipated Repayment Date;
(ii) an Event of Default under the Deed of Trust or any of the Loan
Documents; (iii) any breach or default under either Management Agreement or
either Franchise Agreement (as both are defined in the Deed of Trust) that
remains uncured by Maker beyond the applicable grace period, if any and
(iv) any failure of the Test DSCR to equal or exceed 1.15 to 1.
(y) The term "MEZZANINE LOAN" shall have the meaning ascribed to such
term in Paragraph 7(b)(ii) hereof.
(z) The term "NET CAPITAL EXPENDITURES" shall mean for any period the
amount by which Capital Expenditures during such period exceeds
reimbursements for such items during such period from any escrow or reserve
fund established pursuant to the Loan Documents.
(aa) The term "RESIZED INTEREST RATE" shall mean a rate per annum,
applicable from and after the Resizing Date, equal to the weighted average,
calculated in the reasonable judgment of Payee of the (i) Initial Term
Interest Rate (weighted by the ratio of the principal balance of the Loan
prior to the Resizing Date to the principal balance of the Loan as of the
Resizing Date) and (ii) fixed rate per annum equal to the Treasury Rate
plus 200 basis points (weighted by the ratio of the amount, if any, by
which the principal balance of the Loan shall be increased as of the
Resizing Date to the principal balance of the Loan as of the Resizing
Date). The Resized Interest Rate shall be calculated on or before the
Resizing Date pursuant to Paragraph 7 hereof.
(bb) The term "RESIZED LOAN AMOUNT" shall have the meaning ascribed to
such term in Paragraph 7(a) hereof.
(cc) The term "RESIZING DATE" shall mean October 11, 1999.
(dd) The term "SERVICER" shall have the meaning ascribed to such term
in the Deed of Trust.
(ee) The term "TEST DSCR" shall mean the Debt Service Coverage Ratio,
calculated by Payee or Servicer on a cash basis no later than sixty (60)
days after the end of each calendar quarter, for the twelve (12) month
period ending on the date of calculation, calculated utilizing actual Net
Operating Income for the entire Trust Property, unless expressly stated to
the contrary herein (without taking into account any of the assumptions or
adjustments set forth in Paragraph 18(c)(i)(A), (B), (C) and (D) of the
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Deed of Trust) and using the actual aggregate debt service on the Loan and
the Mezzanine Loan, if any, for such twelve (12) month period.
(ff) The term "TREASURY RATE" shall mean (i) as of the Resizing Date,
for purposes of calculating the Resized Interest Rate and the Resized Loan
Amount, the yield, calculated by linear interpolation (rounded to the
nearest one-thousandth of one percent (i.e., 0.001%)) of the yields of
noncallable United States Treasury obligations with terms (one longer and
one shorter) most nearly as possible to ten (10) years, and (ii) as of the
Anticipated, Repayment Date, for purposes of calculating the Extended Term
Interest Rate, the yield, calculated by linear interpolation (rounded to
the nearest one-thousandth of one percent (i.e., 0.001%)) of the yields of
noncallable United States Treasury obligations with terms (one longer and
one shorter) most nearly' approximating the period from the Anticipated
Repayment Date to the Maturity Date, in all cases as determined by 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 Payee.
(gg) The term "TRUST PROPERTY" shall have the meaning ascribed to such
term in the Deed of Trust.
(hh) The term "YIELD MAINTENANCE PREMIUM" shall have the meaning
ascribed to such term in the Deed of Trust.
2. This Note is evidence of the Loan and of the obligation of the Maker to
repay the Loan in accordance with the terms hereof. This Note is secured inter
alia by (a) the Deed of Trust, (b) the Assignment of Leases, and (c) the other
Loan Documents.
3. If any sum payable under this Note is not paid on or before the date on
which it is due, Maker shall pay to Payee upon demand an amount equal to the
lesser of three percent (3%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray a portion of 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. If the day when any payment
required under this Note is due is not a Business Day, then payment shall be due
on the first Business Day thereafter.
4. The Debt or any portion thereof, shall without notice become immediately
due and payable at the option of Payee if any payment required in this Note is
not paid on or before the date on which it is due or upon the happening of any
other Event of Default (as defined in the Deed of Trust). In the event that it
should become necessary to employ counsel to collect or enforce the Debt or to
protect or foreclose the security therefor, Maker also shall pay on demand
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all costs of collection incurred by Xxxxx, including attorneys' fees and costs
reasonably incurred for the services of counsel whether or not suit be brought.
5. Maker does hereby agree that upon the occurrence of an Event of Default
(including upon the failure of Maker to pay the Debt in full on the Maturity
Date), Payee shall be entitled to receive and Maker shall pay interest on the
entire unpaid principal sum and any other amounts due at the Default Rate,
together with the Yield Maintenance Premium (as defined in the Deed of Trust) if
any, that would be required under the Defeasance Option, assuming a Defeasance
of each Individual Trust Property comprising the Trust Property.
6. Maker hereby agrees that upon the occurrence of an Event of Default
Maker shall pay to Payee on the eleventh day of each month while such Event of
Default continues, an aggregate amount equal to the Excess Cash Flow for the
prior month, such Excess Cash Flow to be applied by Payee to the payment of the
Debt in such order as Payee shall determine in its sole discretion, including,
without limitation, alternating applications thereof between interest and
principal. Interest at the Default Rate and Excess Cash Flow shall both be
computed from the occurrence of the Event of Default until the actual receipt
and collection of the Debt. Interest at the Default Rate shall be added to the
Debt and shall be secured by the Deed of Trust. This paragraph, however, shall
not be construed as an agreement or privilege to extend the date of the payment
of the Debt, nor as a waiver of any other right or remedy accruing to Payee by
reason of the occurrence of any Event of Default; the acceptance of any payment
of Excess Cash Flow shall not be deemed to cure or constitute a waiver of any
Event of Default; and Payee retains its rights under this Note to accelerate and
to continue to demand payment of the Debt upon the happening of any Event of
Default despite any payment of Excess Cash Flow.
7. (a) Sixty days prior to the Resizing Date, Payee may notify Maker that
Maker must provide at Maker's sole cost and expense a new or updated appraisal
in form and substance acceptable to Payee and from an appraiser acceptable to
Payee, which appraiser used to prepare the appraisals provided in connection
with the closing of the Loan, Hospitality Valuation Services International,
shall be deemed so approved, dated not more than 45 days before the Resizing
Date for each Individual Trust Property. Prior to the Resizing Date, whether or
not Payee requires such new appraisal, Payee shall re-underwrite the Loan
applying its standard underwriting criteria for loans and properties of the
size, type and nature of the Loan and the Trust Property and, no later than 30
days before the Resizing Date, Payee will send Maker a notice (the "RESIZING
NOTICE") setting forth the new principal amount of the Loan resulting from such
re-underwriting ("RESIZED LOAN AMOUNT"), together with the Resized Interest
Rate, the Monthly Payment Amount and the revised Allocated Loan Amount for each
Individual Trust Property. The Resized Loan Amount shall be a principal amount
that (A) will provide a loan to value percentage of not greater than 80% and (B)
will result in a Debt Service Coverage Ratio of at least 1.40 to 1, calculated
utilizing (i) Net Operating Income generated by both Individual Trust Properties
for the twelve (12) month period ending on the date of calculation and (ii) the
greater of the (x) assumed level-
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monthly debt service payments resulting from calculating a twenty-Five (25) year
amortization schedule using as the principal amount the Resized Loan Amount and
as the interest rate the Treasury Rate plus two hundred (200) basis points or
(y) assumed level-monthly debt service payments using as the principal amount
the Resized Loan Amount multiplied by a debt service constant of 10.90%.
(b) (i) If the Resized Loan Amount calculated in accordance with
Paragraph 7(a) above is greater than the original Loan amount, then on the
Resizing Date, Payee will fund such excess to Maker as an increase to the
principal amount of the Loan. In connection with the foregoing, Payee and
Maker will amend the Loan Documents (including this Note) to reflect the
Resized Loan Amount, the Resized Interest Rate, the Monthly Payment Amount
and the revised Allocated Loan Amount for each Individual Trust Property.
(ii) If the Resized Loan Amount is less than the original
principal amount of the Loan, Xxxxx will propose, in the Resizing
Notice, the terms of a mezzanine financing ("MEZZANINE LOAN") that
will cover such shortfall. In no event may the projected Debt Service
Coverage Ratio through the Anticipated Repayment Date, calculated
using the Resized Loan Amount assuming a minimum debt service constant
of 10.90%, combined with the actual debt service on the Mezzanine
Loan, be less than 1.0 to 1. The Mezzanine Loan shall be structured
and priced in a manner consistent with Payee's standard mezzanine
financing products, at a commercially reasonable interest rate based
on a five (5) year amortization schedule, will mature no later than
the Anticipated Repayment Date and may be collateralized by a pledge
of the equity interests in Maker or may be convertible into a
preferred equity interest in Maker, in each case as more fully set
forth in the Resizing Notice. If the Mezzanine Loan is entered into,
then on the Resizing Date, Payee and Maker will amend the Cash
Management Agreement (or enter into a second Cash Management Agreement
in connection with the Mezzanine Loan) to reflect the debt service on
the Mezzanine Loan.
(c) If the Resized Loan Amount is less than the original Loan amount,
then within 10 days of receiving Payee's Resizing Notice, Maker shall
respond in writing that it will either (i) accept the Mezzanine Loan or
accept mezzanine financing from a third-party lender (not affiliated with
Payee) which third-party lender shall be approved by Payee in Xxxxx's sole
discretion upon terms and conditions and governed by loan documents
approved by Payee in Payee's sole discretion which approval shall be
further conditioned on such third party lender's entering into an
intercreditor agreement with Payee in form and substance to be determined
by Payee in Payee's sole discretion (and in either case make any prepayment
of the Loan necessary to meet the Debt Service Coverage Ratio test set
forth in clause (b)(ii) above or (ii) prepay the Loan to the Resized Loan
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Amount. Any prepayment made hereunder shall be made no later than the
Resizing Date, and shall be permitted notwithstanding the limitations set
forth in Paragraph 8 below, but shall be made together with the Yield
Maintenance Premium, calculated in accordance with Paragraph 57 of the Deed
of Trust. Failure of Maker to make any prepayment of the Loan or accept the
Mezzanine Loan or enter into any mezzanine financing required hereunder on
or before the Resizing Date shall constitute an Event of Default without
further notice or demand by Payee and the Loan shall become fully recourse
to Maker for the amount of the shortfall described in clause (b)(ii) above,
provided that the amount of such Debt which shall be fully recourse to
Maker under this clause (c) shall not exceed TWO MILLION FIVE HUNDRED
THOUSAND DOLLARS AND 00/100 CENTS ($2,500,000.00). In the event Maker shall
accept the Mezzanine Loan, Maker and Payee shall enter into binding
documents evidencing and governing the Mezzanine Loan on Payee's standard
forms appropriately modified to reflect the specific terms of the Mezzanine
Loan, which documents will be effective as of the Resizing Date.
(d) Effective from and after the Resizing Date, the principal amount
of the Loan shall be the Resized Loan Amount and the interest rate shall be
the Resized Interest Rate. As of the Resizing Date, the Maker shall obtain,
at its sole cost and expense, an endorsement to Xxxxx's mortgagee's title
insurance policy confirming that the lien of the Deed of Trust continues to
be a first lien on the Trust Property securing the Resized Loan Amount
subject to no prior liens or encumbrances other than the Permitted
Encumbrances and such other matters as Payee shall reasonably require. If
Xxxxx's title insurer and/or Payee reasonably require that any of the Loan
Documents be amended upon the Resizing Date, Maker and Payee will, at the
expense of Maker, amend the Loan Documents, including, without limitation,
Exhibit B of the Deed of Trust to reflect, as is applicable, the Resized
Loan Amount, the Resized Interest Rate, the Monthly Payment Amount and the
revised Allocated Loan Amount for each Individual Trust Property. In the
event the Loan Documents are amended in accordance with this Paragraph
7(d), Maker shall cause to be delivered to Payee an opinion of counsel
reasonably acceptable to Payee as to the due authorization and delivery of
the documents and instruments amending the Loan and evidencing and
governing the Mezzanine Loan and/or the enforceability of such documents
and instruments. Maker shall pay all of Xxxxx's cost and expenses incurred
in effecting the resizing of the Loan (including, without limitation,
reasonable attorneys' fees). Satisfaction of the foregoing requirements
shall be a condition precedent to the resizing of the Loan by Xxxxx.
8. This Note may not be prepaid prior to the Anticipated Repayment Date;
provided, however, Maker shall have the right and option to release the Trust
Property from the lien of the Deed of Trust in accordance with the terms and
provisions of the Defeasance Option. Notwithstanding the foregoing sentence, on
the Payment Date that is no more than sixty (60) days prior to the Anticipated
Repayment Date (the "OPTIONAL PREPAYMENT DATE") or on any Payment
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Date thereafter, the Maker may, at its option and upon thirty (30) days prior
written notice from Maker to Payee, prepay in whole, without any premium or
penalty, or in part the outstanding principal balance of this Note and any other
amounts outstanding, provided, however, that any partial prepayment shall be in
an amount equal to one hundred twenty-five percent (125%) of the Allocated Loan
Amount under the Deed of Trust allocated to the Individual Trust Property which
is proposed to be released from the lien of the Deed of Trust with respect to
such partial prepayment, to be applied toward the reduction of the outstanding
principal balance of this Note. Any prepayment prior to the Anticipated
Repayment Date on a date other than a Payment Date, shall, in any event, include
interest through the following Payment Date. In the event of a full or partial
prepayment occurring after the Optional Prepayment Date in accordance with the
foregoing provision, Payee may cause the release of one or both of the
Individual Trust Properties, as the case may be, from the lien of this Deed of
Trust and the other Loan Documents upon the satisfaction of the following
conditions:
(a) all accrued and unpaid interest and all other sums due under the
Note and under the other Loan Documents allocated to each Individual Trust
Property being released, the fee of the Servicer and any other charges with
respect to such prepayment up to the date of such prepayment and release
(the "PREPAYMENT RELEASE DATE"), including, without limitation, all costs
and expenses incurred by Payee or its agents in connection with such
prepayment and release, shall be paid in full on or prior to the Prepayment
Release Date; and
(b) if such prepayment results in the release of only one Individual
Trust Property from the lien of the Deed of Trust, the Debt Service
Coverage Ratio for the remaining Individual Trust Property (computed as of
the immediately preceding Payment Date using the Net Operating Income
generated by the remaining Individual Trust Property) shall equal or exceed
the greater of (i) 1.45 to 1; (ii) the Debt Service Coverage Ratio for the
entire Trust Property on the closing of the Loan and (iii) the Debt Service
Coverage Ratio immediately prior to the release of the Individual Trust
Property from the lien of the Deed of Trust, and in addition, Maker shall
deliver to Payee on or prior to the Prepayment Release Date:
(i) a certificate of Maker certifying that all of the
requirements set forth in this Paragraph 8 have been satisfied;
(ii) an opinion of counsel for Maker in form and substance and
delivered by counsel satisfactory to Payee in its sole discretion
stating, among other things, that any REMIC Trust formed pursuant to a
Securitization (as defined in the Deed of Trust) will not fail to
maintain its status as a "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
within the meaning of Section 860D of the Code as a result of such
release;
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(iii) evidence in writing from the applicable Rating Agencies (as
defined in the Deed of Trust) to the effect that the release will not
result in a downgrading, withdrawal or qualification of the respective
ratings in effect immediately prior to such release for any securities
issued in connection with the securitization which are then
outstanding; and
(iv) such other certificates, documents or instruments as Payee
may reasonably require.
Upon compliance with the requirements of this paragraph, the applicable
Individual Trust Property shall be released from the lien of the Deed of Trust
and the other Loan Documents. Maker will, at Maker's expense, execute and
deliver any agreements reasonably requested by Xxxxx to release the lien of the
Deed of Trust from such applicable Individual Trust Property. If prior to the
Anticipated Repayment Date and following the occurrence of any Event of Default,
Maker shall tender payment of an amount sufficient to satisfy the Debt at any
time prior to a sale of the Trust Property or either Individual Trust Property,
either through foreclosure or the exercise of the other remedies available to
Payee under the Deed of Trust, such tender by Maker shall be deemed to be
voluntary and Maker shall pay, in addition to the Debt, the Yield Maintenance
Premium, if any, that would be required under the Defeasance Option.
9. (a) Prior to the Resizing Date and thereafter if the resized loan amount
calculated using a debt service constant of 11.33% instead of 10.90%, would be
less than SEVENTEEN MILLION AND 00/100 DOLLARS ($17,000,000) and, in any event,
upon the occurrence of a Lock Box Event and thereafter until the Anticipated
Repayment Date, Maker shall cause all Rents to be deposited directly into the
Clearing Account required by the Cash Management Agreement in the manner
provided therein and all amounts so received shall be allocated on each Payment
Date in the following order of priority, in each case to the extent sufficient
funds remain therefor:
(i) First, to the Tax and Insurance Impound Fund in accordance
with the terms and conditions of Paragraph 6 of the Deed of Trust;
(ii) Second, (A) prior to the Resizing Date, to the monthly
payment of interest computed at the Initial Term Interest Rate and (B)
on or after the Resizing Date, to pay the Monthly Payment Amount;
(iii) Third, to the Payee for any other amounts due under the
Loan Documents;
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(iv) Fourth, from and after the Resizing Date, to the FF&E Escrow
Fund, in accordance with the terms and conditions of Paragraph 6 of
the Deed of Trust;
(v) Fifth, to the Debt Service Reserve, the amount, if any,
required to be deposited therein in accordance with the terms and
conditions of Paragraph 6 of the Deed of Trust;
(vi) Sixth, for monthly Cash Expenses pursuant to the terms and
conditions of the related Approved Annual Budget;
(vii) Seventh, for monthly Net Capital Expenditures, pursuant to
the terms and conditions of the related Approved Annual Budget;
(viii) Eighth, for Extraordinary Expenses approved by Xxxxx, if
any; and
(ix) Lastly, any excess amounts to the Cash Sweep Reserve in
accordance with the terms and conditions of Paragraph 6 of the Deed of
Trust.
Nothing in Paragraph 9(a) above shall limit, reduce or otherwise affect
Maker's obligations to make payments of the Monthly Payment of monthly payments
to the Tax and Insurance Impound Fund, the FF&E Escrow Fund, the Cash Sweep
Reserve and the Debt Service Reserve due hereunder and under the other Loan
Documents, whether or not Rents are available to make such payments.
(b) For each fiscal year during the term of the Loan, the Maker shall
submit to the Payee for the Payee's written approval an Annual Budget not
later than sixty (60) days prior to the commencement of such fiscal year,
in form satisfactory to Payee setting forth in reasonable detail budgeted
monthly operating income and monthly operating capital and other expenses
for each Individual Trust Property. Each Annual Budget shall contain, among
other things, limitations on management fees, third party service fees, and
other expenses as the Maker may reasonably determine. Payee shall have the
right to approve such Annual Budget which approval shall not be
unreasonably withheld, and in the event that Payee objects to the proposed
Annual Budget submitted by Maker, Payee shall advise Maker of such
objections within fifteen (15) days after receipt thereof (and deliver to
Maker a reasonably detailed description of such objections which shall be
limited to reasonable adjustments that are necessary to assure the
operation and maintenance of the Trust Property in accordance with the Loan
Documents) and Maker shall within three (3) days after receipt of notice of
any such objections revise such Annual Budget and resubmit the same to
Payee. Payee shall advise Maker of any objections to such revised Annual
Budget within ten (10) days after receipt thereof (and deliver to
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Maker a reasonably detailed description of such objections) and Maker shall
revise the same in accordance with the process described in this
subparagraph until the Payee approves an Annual Budget, provided, however,
that if Payee shall not advise Maker of its objections to any proposed
Annual Budget within the applicable time period set forth in this
paragraph, then such proposed Annual Budget shall be deemed approved by
Payee. Until such time that Payee approves a proposed Annual Budget, the
most recently Approved Annual Budget shall apply; provided that, such
Approved Annual Budget shall be adjusted to reflect actual increases in
real estate taxes, insurance premiums and utilities expenses.
10. In the event that the Maker does not pay the Debt in full prior to the
Anticipated Repayment Date, the provisions of Paragraph 9(b) as set forth above
shall remain in full force and effect, and the following subparagraphs also
shall apply.
(a) From and after the Anticipated Repayment Date, interest shall
accrue on the unpaid principal balance from time to time outstanding on
this Note at the Extended Term Rate. Interest accrued at the Extended Term
Rate and not paid pursuant to this Paragraph 10 shall be deferred and added
to the Debt and shall earn interest at the Extended Term Rate to the extent
permitted by applicable law (such accrued interest is hereinafter defined
as "Accrued Interest"). All of the Debt, including any Accrued Interest,
shall be due and payable on the Maturity Date.
(b) Maker shall cause all Rents to be deposited directly into the
Clearing Account required by the Cash Management Agreement in the manner
provided therein and all amounts so received shall be allocated on each
Payment Date in the following order of priority, in each case to the extent
sufficient funds remain therefor:
(i) First, to the Tax and Insurance Impound Fund in accordance
with the terms and conditions of Paragraph 6 of the Deed of Trust;
(ii) Second, to pay the Monthly Payment Amount;"
(iii) Third, to the Payee for any other amounts due under the
Loan Documents;
(iv) Fourth, to the FF&E Escrow Fund, in accordance with the
terms and conditions of Paragraph 6 of the Deed of Trust;
(v) Fifth, to the Debt Service Reserve, the amount, if any,
required to be deposited therein in accordance with the terms and
conditions of Paragraph 6 of the Deed of Trust;
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(vi) Sixth, for monthly Cash Expenses pursuant to the terms and
conditions of the related Approved Annual Budget;
(vii) Seventh, for monthly Net Capital Expenditures, pursuant to
the terms and conditions of the related Approved Annual Budget;
(viii) Eighth, for Extraordinary Expenses approved by Xxxxx, if
any;
(ix) Ninth, to the Payee to be applied against the outstanding
principal due under this Note until such principal amount is paid in
full;
(x) Tenth, to the Payee for Accrued Interest, until all such
Accrued Interest has been repaid; and
(xi) Lastly, to pay to the Maker any excess amounts.
(c) In the event that the Maker must incur an Extraordinary Expense,
for purposes of Paragraphs 9 and 10 hereof, then the Maker shall promptly
deliver to Payee a reasonably detailed explanation of such proposed
Extraordinary Expense for the Payee's approval, which approval may be
granted or denied in the Payee's sole discretion.
(d) Nothing in this Paragraph 10 shall limit, reduce or otherwise
affect Maker's obligations to make payments of the Monthly Payment Amount,
payments to the Tax and Insurance Impound Fund, the FF&E Escrow Fund, and
the Debt Service Reserve due hereunder and under the other Loan Documents,
whether or not Rents are available to make such payments.
11. It is expressly stipulated and agreed to be the intent of Maker and
Payee at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Payee to contract for, charge,
take, reserve, or receive a greater amount of interest than under state law) and
that this paragraph (and the similar paragraph contained in the Deed of Trust)
shall control every other covenant and agreement in this Note and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Debt, or if Xxxxx's exercise of the
option to accelerate the Maturity Date, or if any prepayment or the exercise of
any Defeasance Option by Maker results in Maker having paid any interest in
excess of that permitted by applicable law, then it is Payee's express intent
that all excess amounts theretofore collected by Xxxxx shall be credited on the
principal balance of this Note and all other Debt and the provisions of this
Note and the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new
15
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Payee for the use, forbearance, or detention
of the Debt shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Payee to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest
at the time of such acceleration.
12. 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. Whenever used, the singular number shall
include the plural, the plural the singular, and the words "PAYEE" and "MAKER"
shall include their respective successors, assigns, heirs, executors and
administrators. The obligations and liabilities of each of the Key Principals
shall be joint and several and if Maker consists of more than one person or
party, the obligations and liabilities of each such person or party comprising
the Maker shall be joint and several.
13. Maker and all others who may become liable for the payment of all or
any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
notice of intent to accelerate the maturity hereof and of acceleration. No
release of any security for the Debt or any person liable for payment of the
Debt, no extension of time for payment of this Note or any installment hereof,
and no alteration, amendment or waiver of any provision of the Loan Documents
made by agreement between Payee and any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Maker, and any other person or party who may become liable under
the Loan Documents for the payment of all or any part of the Debt.
14. Subject to the qualifications below, Payee shall not enforce the
liability and obligation of Maker or any of the Key Principals to perform and
observe the obligations contained in this Note, the Deed of Trust or the other
Loan Documents by any legal, equitable or other action or proceeding wherein a
judgment shall be sought against Maker or any of the Key Principals, except that
Payee may bring a foreclosure action, an action for specific performance or any
other appropriate action or proceeding to enable Payee to enforce and realize
upon its interest under this Note, the Deed of Trust and the other Loan
Documents, or in the Trust Property or either Individual Trust Property, the
Rents, or any other collateral given to Payee pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Maker only to the
16
extent of Maker's interest in the Trust Property or either Individual Trust
Property, in the Rents and in any other collateral given to Payee, and Payee, by
accepting this Note, the Deed of Trust and the other Loan Documents, agrees that
it shall not sue for, seek or demand any deficiency judgment against Maker in
any such action or proceeding under or by reason of or under or in connection
with this Note, the Deed of Trust or the other Loan Documents. The provisions of
this paragraph shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Payee to name Maker as a party defendant in any action
or suit for foreclosure and sale under the Deed of Trust; (c) affect the
validity or enforceability of or any guaranty made in connection with the Loan
or any of the rights and remedies of the Payee thereunder; (d) impair the right
of Payee to obtain the appointment of a receiver; (e) impair the enforcement of
the Assignment of Leases executed in connection herewith; or (f) constitute a
waiver of the right of Payee to enforce the liability and obligation of Maker
against Maker or any of the Key Principals, by money judgment or otherwise, to
the extent of any loss, damage, cost, expense, liability, claim or other
obligation incurred by Xxxxx (including attorneys' fees and costs reasonably
incurred) arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Maker or any Key
Principal in connection with the Loan;
(ii) the gross negligence or willful misconduct by Maker or any
Key Principal;
(iii) physical waste of the Trust Property or either Individual
Trust Property which materially affects the value thereof;
(iv) the breach of any representation, warranty, covenant or
indemnification provision in that certain Hazardous Substances
Indemnity Agreement of even date herewith given by Maker and the Key
Principals to Payee or in the Deed of Trust concerning Environmental
Laws, Hazardous Substances and Asbestos (as such terms are defined in
the Deed of Trust);
(v) the misappropriation of any personal property from or the
removal or disposal of any portion of the Trust Property or either
Individual Trust Property or any part thereof;
(vi) the misapplication or conversion by Maker of (A) any
insurance proceeds paid by reason of any loss, damage or destruction
to the Trust Property, (B) any awards or other amounts received in
connection with the condemnation of all or a portion of the Trust
Property or either Individual Trust Property or a
17
portion thereof, (C) any security deposits or Rents following an Event
of Default, or (D) any Rents paid more than one month in advance;
(vii) failure to pay charges for labor or materials or taxes or
other charges that can create liens on any portion of the Trust
Property or either Individual Trust Property; and
(viii) any security deposits collected with respect to the Trust
Property or either Individual Trust Property which are not delivered
to Payee upon a foreclosure of the Trust Property or either Individual
Trust Property or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and
conditions of any of the Leases (as defined in the Deed of Trust)
prior to the occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof.
Notwithstanding anything to the contrary in this Note or any of the Loan
Documents, (A) Payee shall not be deemed to have waived any right which Payee
may have under Section 506(a), 506(b), 1111(b) or any other provisions of the
U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured by
the Deed of Trust or to require that all collateral shall continue to secure all
of the Debt owing to Payee in accordance with the Loan Documents, and (B) the
Debt shall become fully recourse JOINTLY AND SEVERALLY to Maker and each of the
Key Principals in the event that: (i) the first full monthly payment of interest
under this Note is not paid when due; (ii) Maker fails to maintain its status as
a single purpose entity, as required by, and in accordance with the terms and
provisions of the Deed of Trust; (iii) Maker fails to obtain Payee's prior
written consent to any subordinate financing or other voluntary lien encumbering
the Trust Property or either Individual Trust Property; (iv) Maker fails to
obtain Payee's prior written consent to any assignment, transfer, or conveyance
of the Trust Property' or either Individual Trust Property or any interest
therein as required by the Deed of Trust; (v) subject "to the limitation set
forth in Section 7(c) hereof with respect to the amount of Debt which shall
become recourse in connection with a default under Section 7 hereof, if the
Resized Loan Amount calculated in accordance with Section 7(a) hereof is less
than the original Loan Amount, Maker fails on or before the Resizing Date to
cause the Loan to be prepaid and/or fails to enter into any mezzanine financing,
as required by Section 7 hereof or (vi) subject to clauses (X), (Y) and (Z) of
this paragraph, following an Event of Default, Maker or any of the Key
Principals takes any action, asserts any claim, participates in or is a party to
any activity, action or proceeding intended to, or the likely result of which
would be to, delay, enjoin, impede, hinder or prevent Xxxxx's exercise of its
rights and remedies at law, in equity, under the Deed of Trust or under any of
the other Loan Documents, including without limitation (A) the filing, whether
by Maker or any of the Key Principals, or the filing by any third party against
Maker at the insistence of Maker or any of the Key Principals, of a
reorganization, liquidation or other similar bankruptcy proceeding under Title
11 of the United States Code or under any other federal or state
18
debtor relief law (a "BANKRUPTCY CASE") or (B) the institution or filing whether
by Maker or any of the Key Principals on behalf of Maker, or the institution or
Filing by any third party at the insistence of any of the Key Principals or
Maker, of any suit or other proceeding to hinder, enjoin, impede or delay the
exercise by Payee of such rights and remedies (a "COMMON LAW ACTION"). For
purposes of this paragraph:
(X) it shall be conclusively deemed that any Bankruptcy Case or Common
Law Action was not instituted at the insistence of Maker or any of the Key
Principals if such Maker or any of the Key Principals contests the filing
of any such proceeding to the extent reasonably requested by Xxxxx;
(Y) notwithstanding anything contained herein to the contrary,
following an Event of Default that relates to or arose from a breach or
failure by Maker under this Agreement or any of the other Loan Documents
that cannot be cured by the payment of a sum of money, Maker and each Key
Principal shall not be liable under this clause (v) by reason of such Maker
raising or interposing good faith, legitimate defenses or claims (excluding
the filing or commencement of a Bankruptcy Case) that are not expressly
prohibited or that have not otherwise been expressly waived pursuant to the
Deed of Trust or the other Loan Documents during the exercise by Payee of
its rights and remedies at law, in equity, under the Deed of Trust or
under any of the other Loan Documents. However, if the court in which such
rights and remedies are being adjudicated shall determine that such
defenses or claims were groundless, unwarranted, frivolous or were intended
primarily to hinder, delay or impede the exercise by Payee of such rights
and remedies, then the Maker and each of the Key Principals shall be and
remain jointly and severally liable to the full extent set forth in the
Deed of Trust and other Loan Documents; and
(Z) notwithstanding anything contained herein to the contrary, the
liability of Maker or each Key Principal under clause (v) above shall cease
and terminate if any general partner or managing member of the Maker or any
Key Principal shall (1) cause Maker to convey title to the Trust Property
or applicable Individual Trust Property to Payee or its designee by deed
in form and substance satisfactory to Payee within sixty (60) days after
written demand given after the occurrence of an Event of Default by Payee
to Maker directing such conveyance or (2) cause Maker to permit Payee to
acquire title to the Trust Property or applicable Individual Trust Property
through an uncontested judicial foreclosure, if Payee shall so elect in the
foregoing notice.
15. Maker (and the undersigned representative of Maker, if any) represents
that Maker has full power, authority and legal right to execute, deliver and
perform its obligations pursuant to this Note, the Deed of Trust and the other
Loan Documents and that this Note, the Deed of Trust and the other Loan
Documents constitute valid and binding obligations of Maker.
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16. All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner specified in the Deed of Trust
directed to the parties at their respective addresses as provided therein.
17. MAKER XXXXXX AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE
OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY MAKER,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. XXXXX IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY MAKER.
18. This Note shall be governed by and construed in accordance with the
laws of the State of Arizona and the applicable laws of the United States of
America.
Maker has duly executed this Note the day and year first above written.
MAKER:
Xxxx Suites/Bell Hospitality. L.L.C.
a Delaware limited liability company
By: DSDH, Inc.,
a Delaware corporation
Its managing member
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
President
Pay to the order of ________________,
without recourse.
Credit Suisse First Boston Mortgage
Capital LLC, a Delaware limited
liability company
By:
---------------------------------
Name:
-------------------------------
Its Authorized Signatory
