EXHIBIT 10.19
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LOAN TERMS TABLE
Note Date: September 24, 1999
Borrower: Innkeepers RI Northwest, L.P., a Virginia limited partnership and
Innkeepers Summerfield General, L.P., a Virginia limited partnership
Servicing No: 3091477
Original Principal Amount: $58,000,000.00
Borrower's TIN: 00-0000000 and 00-0000000
Loan No.: 51579
Note Rate: 7.16%
Monthly Payment Amount: (a) a payment of interest only in the amounts set forth
on Schedule 1 attached hereto in months one (1) through thirty-six (36); and (b)
a payment of principal and interest in the amount of $436,918.21 in months
thirty-seven (37) through one hundred twenty (120).
Amortization Commencement Date: November 1, 2002 Maturity Date: October 1, 2009
Lockout Period: Beginning on the date of this Note and ending on August 1, 2009.
Specified U.S. Treasury Security: 5.50 % U.S. Treasury Security due May, 2009
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PROMISSORY NOTE
FOR VALUE RECEIVED, the borrower described in the Loan Terms
Table set forth above (the "Borrower") promises to pay to the order of BANK OF
AMERICA, N.A., its successors and assigns (the "Lender"), the Original Principal
Amount (as outstanding from time to time, the "Principal Amount") under the
terms and conditions of this promissory note (the "Note") and in accordance with
the loan agreement of even date herewith by and between the Borrower and the
Lender (the "Loan Agreement"). This Note is secured by certain deeds of trust or
mortgages of even date on certain property of the Borrower (collectively the
"Security Instrument") and other agreements by and between the Borrower and the
Lender. The Loan Terms Table is a part of this Note and all terms used in this
Note which are defined in the Loan Terms Table shall have the meaning set forth
therein. Except as expressly provided otherwise in this Note, the defined terms
in the Loan Documents (as defined in the Loan Agreement) are used herein with
the same meaning. All of the terms, definitions, conditions and covenants of the
Loan Documents are expressly made a part of this Note by reference in the same
manner and with the same effect as if set forth herein at length. Any holder of
this Note is entitled to the benefits of and remedies provided in the Loan
Documents. Any Event of Default under any of the Loan Documents is an Event of
Default under the terms of this Note.
1. Interest. The outstanding Principal Amount of the
loan evidenced by this Note (the "Loan") shall bear interest at a fixed rate per
annum equal to the Note Rate. Interest shall be computed based on the daily rate
produced assuming a 360 day year, multiplied by the actual number of days
elapsed. Except as otherwise set forth in this Note, interest shall be paid in
arrears.
2. Principal and Interest Payments. The Principal Amount
and interest thereon shall be payable at the Lender's offices at X.X. Xxx 00000,
Xxx Xxxxx, Xxxxxx 00000-0000, Attn: Commercial Mortgage
Servicing #1777, or at such other place as the Lender may designate in writing.
An initial payment is due on the date hereof for prepaid interest through and
including the last day of the month in which this Note is executed. Thereafter,
for the period through and including the thirty-sixth month of the term of the
Loan a payment of interest only shall be made on the first day of each month
(each a "Scheduled Payment Date"). Thereafter, except as may be adjusted in
accordance with the immediately following sentence, payment shall be made in
consecutive monthly installments of principal and interest in an amount equal to
the Monthly Payment Amount on the first day of each month beginning on the
Amortization Commencement Date, until the entire indebtedness evidenced hereby
is fully paid, except that any remaining indebtedness, if not sooner paid, shall
be due and payable on the Maturity Date. The Monthly Payment Amount for months
one (1) through thirty-six (36) is calculated based on the daily rate produced
assuming a 360 day year, multiplied by the actual number of days elapsed. The
Monthly Payment Amount for months thirty-seven (37) through one hundred twenty
(120) is $436,918.21, which was calculated according to an amortization schedule
for a loan having (a) an original principal amount equal to the Original
Principal Amount, (b) an amortization term of twenty-two (22) years, and (c) an
annual interest rate equal to the Note Rate, computed on the basis of a 360 day
year consisting of twelve (12) months of thirty (30) days each. The Borrower
expressly understands and agrees that such computation of interest based on a
360 day year consisting of 12 months of 30 days each is solely for the purpose
of determining the Monthly Payment Amount, and, notwithstanding such
computation, interest shall accrue on the outstanding Principal Amount of this
Note as provided in paragraph 1 above. The Borrower understands and acknowledges
that such computation results in more interest accruing on the Loan than if
either a 30 day month and a 360 day year or the actual number of days and a 365
day year were used to compute the accrual of interest on the Loan. The Borrower
recognizes that such computation will not fully amortize the Loan within the
amortization period set forth in clause (b) above. Following any partial
prepayment occurring solely as a result of the application of insurance proceeds
or condemnation awards pursuant to the terms of the Loan Agreement, the Lender
may, in its sole discretion, adjust the Monthly Payment Amount to give effect to
any such partial prepayment, provided, however, that in no event will any such
adjustment result in any such installment becoming due and payable on any date
after the Maturity Date.
3. Late Charges. In the event any payment of interest or
principal is not received prior to the 10th day after the same is due (or such
greater period, if any, required by applicable law), the Borrower will pay to
the Lender a late charge of four percent (4%) of the amount of the overdue
payment. This provision for late charges shall not be deemed to extend the time
for payment or be a "grace period" or "cure period" that gives the Borrower a
right to cure a Default Condition. Imposition of late charges is not contingent
upon the giving of any notice or lapse of any cure period provided for in the
Loan Documents.
4. Prepayment. Except as otherwise expressly permitted
by this Section 4, no voluntary prepayments, whether in whole or in part, of the
outstanding Principal Amount or any other amount at any time due and owing under
this Note can be made by the Borrower or any other Person. Notwithstanding the
foregoing, Borrower shall have the right to make a voluntary prepayment in whole
or in part of the outstanding Principal Amount and any other amounts due and
payable under this Note without paying a prepayment premium during the two (2)
months preceding the Maturity Date.
(a) Lockout Period. The Borrower has no right to make any
voluntary prepayment, whether in whole or in part, of the outstanding
Principal Amount or any other amount under this Note at any time during
the Lockout Period. Notwithstanding the foregoing, if either (i) the
Lender, in its sole discretion, accepts a full or partial voluntary
prepayment during the Lockout Period or (ii) there is an involuntary
prepayment during the Lockout Period, then, in either case, the
Borrower shall, in addition to any portion of the outstanding Principal
Amount prepaid (together with all interest accrued and unpaid thereon),
pay to the Lender a prepayment premium in an amount calculated in
accordance with Section 4(d) hereof.
(b) Defeasance.
(i) Notwithstanding any provisions of this Section 4 to
the contrary, at any time commencing with the sooner of (x) the date
which is twenty-five (25) months after the "startup day," within the
meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986, as
amended from time to time or any successor statute (the "Code"), of a
"real estate mortgage investment conduit," within the meaning of
Section 860D of the Code, that holds this Note; or (y) the forty-ninth
(49th) full calendar month following final disbursement of the Loan
proceeds, and provided no Event of Default has occurred hereunder or
under
2
any of the Loan Documents which is not cured within any applicable
grace period or cure period, the Borrower may cause the release of the
Premises from the lien of the Security Instrument and the other Loan
Documents upon the satisfaction of the following conditions:
(A) not less than sixty (60) (but not more than
one hundred twenty (120)) days prior written notice shall be
given to the Lender specifying a date on which the Defeasance
Collateral (as hereinafter defined) is to be delivered (the
"Release Date"), such date being on a Scheduled Payment Date;
(B) all accrued and unpaid interest and all
other sums due under this Note and under the other Loan
Documents up to the Release Date, including, without
limitation, all reasonable fees, costs and expenses incurred
by the Lender and its agents in connection with such release
(including, without limitation, the review of the materials
described in subsection 4(b)(i)(C) below and any related
documentation), shall be paid in full on or prior to the
Release Date; and
(C) the Borrower shall deliver to the Lender on
or prior to the Release Date:
(1) a pledge and security agreement, in
form and substance that would be satisfactory to a
prudent lender, creating a first priority security
interest in favor of the Lender in the Defeasance
Collateral, as defined herein (the "Defeasance
Security Agreement"), which shall provide, among
other things, that any excess amounts received by the
Lender from the Defeasance Collateral over the
amounts payable by the Borrower hereunder shall be
refunded to the Borrower promptly after each
Scheduled Payment Date;
(2) direct, non-callable obligations of
the United States of America that provide for
payments prior to and as close as possible to (but in
no event later than) all successive Scheduled Payment
Dates occurring after the Release Date, with each
such payment being equal to or greater than the
amount of the corresponding Monthly Payment Amount
required to be paid under this Note (including all
amounts due on the Maturity Date) for the balance of
the term hereof (the "Defeasance Collateral"), each
of which shall be duly endorsed by the holder thereof
as directed by the Lender or accompanied by a written
instrument of transfer in form and substance that
would be satisfactory to a prudent lender (including,
without limitation, such certificates, documents and
instruments as may be required by the depository
institution holding such securities or the issuer
thereof, as the case may be, to effectuate book-entry
transfers and pledges through the book-entry
facilities of such institution) in order to perfect
upon the delivery of the Defeasance Security
Agreement the first priority security interest
therein in favor of the Lender in conformity with all
applicable state and federal laws governing granting
of such security interests;
(3) a certificate of the Borrower
certifying that all of the requirements set forth in
this subsection 4(b)(i) have been satisfied;
(4) one or more opinions of counsel for
the Borrower in form and substance and delivered by
counsel that would be satisfactory to a prudent
lender stating, among other things, that (i) the
Lender has a legal and valid perfected first priority
security interest in the Defeasance Collateral and
that the Defeasance Security Agreement is enforceable
against the Borrower in accordance with its terms,
(ii) if a Securitization has occurred, the REMIC
Trust formed pursuant to such Securitization 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 the
defeasance pursuant to this Section 4(b), (iii) a
defeasance pursuant to this Section 4(b) will not
result in a deemed exchange for purposes of the Code
and will not adversely effect the status of the Note
as indebtedness for federal income tax purposes, (iv)
delivery of the Defeasance Collateral and the grant
of a security interest therein to Lender shall not
constitute an avoidable preference under
3
Section 547 of the Bankruptcy Code or applicable
state law and (v) if required by the applicable
Rating Agencies, a non-consolidation opinion with
respect to the Successor Borrower (as hereinafter
defined) and its equity owners;
(5) a confirmation in writing from the
Rating Agencies to the effect that the release of the
Premises from the lien of the Security Instrument and
the substitution of Defeasance Collateral will not
result in a downgrading, withdrawal or qualification
of the respective ratings in effect immediately prior
to such defeasance for the securities issued in
connection with the Securitization which are then
outstanding;
(6) a certificate of Borrower's
independent certified public accountant certifying
that the Defeasance Collateral will generate monthly
amounts equal to or greater than the Monthly Payment
Amount; and
(7) such other certificates, documents
and instruments as the Lender may reasonably require.
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(ii) Upon compliance with the requirements of subsection
4(b)(i), the Premises shall be released from the lien of the Security
Instrument and the other Loan Documents, and the Defeasance Collateral
shall constitute collateral which shall secure this Note and all other
obligations under the Loan Documents. In addition, upon such compliance
the Lender will promptly, at the Borrower's expense, execute and
deliver any agreements reasonably requested by the Borrower to release
the lien of the Security Instrument and the other Loan Documents from
the Premises.
(iii) Upon the release of the Premises in accordance with
this Section 4(b), the Borrower shall assign all its obligations and
rights under this Note, together with the pledged Defeasance
Collateral, to a successor entity designated by the Borrower which
shall be a single purpose bankruptcy remote entity which is not
directly or indirectly owned by Borrower and which shall be approved by
Lender, (the "Successor Borrower"). Such Successor Borrower shall
execute an assignment and assumption agreement in form and substance
that would be satisfactory to a prudent lender pursuant to which such
Successor Borrower shall assume the Borrower's obligations under this
Note and the Defeasance Security Agreement. As conditions to such
assignment and assumption, the Borrower shall (A) deliver to the Lender
one or more opinions of counsel in form and substance and delivered by
counsel that would be satisfactory to a prudent lender stating, among
other things, that (i) Lender has a legal and valid perfected first
priority security interest in the Defeasance Collateral, (ii) if a
Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization 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 the defeasance pursuant to this Section 4(b), (iii)
a defeasance pursuant to this Section 4(b) will not result in a deemed
exchange for purposes of the Code and will not adversely effect the
status of the Note as indebtedness for federal income tax purposes,
(iv) delivery of the Defeasance Collateral and the grant of a security
interest therein to Lender shall not constitute an avoidable preference
under Section 547 of the Bankruptcy Code or applicable state law, (v)
if required by the applicable Rating Agencies, a non-consolidation
opinion with respect to the Successor Borrower and its equity owners
and (vi) such assignment and assumption agreement is enforceable
against the Borrower and such Successor Borrower in accordance with its
terms and that this Note, the Defeasance Security Agreement and the
other Loan Documents, as so assigned and assumed, are enforceable
against such Successor Borrower in accordance with their respective
terms, and (B) pay all reasonable fees, costs and expenses incurred by
the Lender or its agents in connection with such assignment and
assumption (including, without limitation, the review of the proposed
transferee and the preparation of the assignment and assumption
agreement and related certificates, documents and instruments). Upon
such assignment and assumption, the Borrower shall be relieved of its
obligations hereunder, under the other Loan Documents and under the
Defeasance Security Agreement.
(c) Partial Defeasance.
(i) Notwithstanding any provisions of this Section 4 to
the contrary, at any time commencing with the sooner of (x) the date
which is twenty-five (25) months after the "startup day," as referenced
above, or (y) the forty-ninth (49th) full calendar month following
final distribution of the Loan proceeds, and provided no Event of
Default has occurred hereunder or under any of the Loan Documents which
is not cured within any applicable grace period or cure period, the
Borrower may cause the release of any Individual Property (as defined
in the Loan Agreement) (such Individual Property being referred to
herein as the "Release Parcel") from the Lien of the Security
Instrument and the other Loan Documents upon the satisfaction of the
following conditions:
(A) Borrower shall provide Lender not less than
sixty (60) (but no more than one hundred twenty (120)) days
prior written notice specifying (1) a Scheduled Payment Date
(the "Partial Defeasance Date") on which Borrower shall have
satisfied the conditions in this Section 4(c) and shall effect
the defeasance, and (2) the Release Parcel to be released from
the Lien of the Security Instrument;
(B) all accrued and unpaid interest and all
other sums due under this Note and under the other Loan
Documents up to the Partial Defeasance Date, including,
without limitation, all reasonable fees, costs and expenses
incurred by the Lender and its agents in connection with such
release (including, without limitation, the review of the
materials described in subsection
5
(4)(c)(i)(C) below and any related documentation), shall be
paid in full on or prior to the Partial Defeasance Date; and
(C) the Borrower shall deliver to the Lender on
or prior to the Partial Defeasance Date:
(1) a pledge and security agreement, in
form and substance that would be satisfactory to a
prudent lender, creating a first priority security
interest in favor of the Lender in the Partial
Defeasance Collateral, as defined herein (the
"Partial Defeasance Security Agreement");
(2) direct, non-callable obligations of
the United States of America equal to one hundred
twenty-five percent (125%) of the Allocated Loan
Amount for the Release Parcel (the "Partial
Defeasance Collateral"), each of which shall be duly
endorsed by the holder thereof as directed by the
Lender or accompanied by a written instrument of
transfer in form and substance that would be
satisfactory to a prudent lender (including, without
limitation, such certificates, documents and
instruments as may be required by the depository
institution holding such securities or the issuer
thereof, as the case may be, to effectuate book-entry
transfers and pledges through the book-entry
facilities of such institution) in order to perfect
upon the delivery of the Partial Defeasance Security
Agreement the first priority security interest
therein in favor of the Lender in conformity with all
applicable state and federal laws governing granting
of such security interests. The Partial Defeasance
Collateral shall be in an amount, as determined by
Lender, such that, immediately following the release
of the Release Parcel, the portion of the Premises
not being defeased will generate a Debt Service
Coverage Ratio with respect to the Undefeased Note
(as hereinafter defined) of at least equal to the
greater of (i) the Debt Service Coverage Ratio on the
date hereof; or (ii) the Debt Service Coverage Ratio
immediately prior to the Partial Defeasance Date, in
both instances taking into account the release of the
Release Parcel from the Lien of the Security
Instrument and the amount of the Partial Defeasance
Collateral;
(3) a certificate of the Borrower
certifying that all of the requirements set forth in
this subsection 4(c)(i) have been satisfied;
(4) one or more opinions of counsel for
the Borrower in form and substance and delivered by
counsel that would be satisfactory to a prudent
lender stating, among other things, that (i) the
Lender has a legal and valid perfected first priority
security interest in the Partial Defeasance
Collateral and that the Partial Defeasance Security
Agreement is enforceable against the Borrower in
accordance with its terms, (ii) if a Securitization
has occurred, the REMIC Trust formed pursuant to such
Securitization 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 the defeasance pursuant to this Section 4(c),
(iii) a defeasance pursuant to this Section 4(c) will
not result in a deemed exchange for purposes of the
Code and will not adversely effect the status of the
Defeased Note and the Undefeased Note (as those terms
are hereinafter defined) as indebtedness for federal
income tax purposes, (iv) delivery of the Partial
Defeasance Collateral and the grant of a security
interest therein to Lender shall not constitute an
avoidable preference under Section 547 of the
Bankruptcy Code or applicable state law and (v) if
required by the applicable Rating Agencies, a
non-consolidation opinion with respect to the
Successor Borrower and its equity owners;
(5) a confirmation in writing from the
Rating Agencies to the effect that the release of the
Release Parcel from the Lien of the Security
Instrument and the substitution of Partial Defeasance
Collateral will not result in a downgrading,
withdrawal
6
or qualification of the respective ratings in effect
immediately prior to such defeasance for the
securities issued in connection with the
Securitization which are then outstanding;
(6) a certificate of Borrower's
independent certified public accountant certifying
that the Partial Defeasance Collateral together with
payments under the Undefeased Note (hereinafter
defined) will generate monthly amounts equal to or
greater than the Monthly Payment Amount; and
(7) such other certificates, documents
and instruments as the Lender may reasonably require.
(D) Borrower shall prepare all necessary
documents to amend and restate the Note and issue two
substitute notes, one note having a principal balance equal to
an amount such that the undefeased portion of the Premises
complies with the conditions set forth in clause (C)(2) above
(the "Defeased Note"), and the other note having a principal
balance equal to the excess of (1) the original principal
amount of the Loan, over (2) the amount of Defeased Note (the
"Undefeased Note"). The Defeased Note and Undefeased Note
shall have identical terms as the Note except for the
principal balance and payment schedule. The Defeased Note and
the Undefeased Note shall be cross defaulted and cross
collateralized. A Defeased Note may not be the subject of any
further defeasance;
(E) Borrower, at its sole cost and expense,
shall have delivered to Lender, one or more endorsements to
the mortgagee policy of title insurance delivered to Lender on
or about the date hereof in connection with the Security
Instrument insuring that, after giving effect to such release,
(1) the Liens created by the Security Instrument and insured
thereunder as of the date of the Security Instrument are first
priority Liens on the remaining Premises subject only to the
Permitted Encumbrances applicable to the remaining Premises,
and (2) that such policies on the remaining Premises issued as
of the date of the Security Instrument remain in full force
and effect and unaffected by such release; and
(F) Lender and the Rating Agencies shall have
received from Borrower (1) statements of the Net Operating
Income Leases, Net Operating Income Premises and Debt Service
(each on a consolidated basis and separately for the Release
Parcel to be released) for the trailing twelve (12) month
period prior to the date of the proposed release, (2) based on
the foregoing statements of Net Operating Income Leases, Net
Operating Income Premises and Debt Service, calculations of
the Debt Service Coverage Ratio Leases and Debt Service
Coverage Ratio Premises both with and without giving effect to
the proposed release, and (3) detailed calculations of the
ratios referred to in the immediately preceding clause (2),
accompanied by an Officers' Certificate stating that such
statements, calculations and information are true, correct,
and complete in all respects.
(ii) Upon compliance with the requirements of subsection
4(c)(i), the Release Parcel shall be released from the lien of the
Security Instrument and the other Loan Documents, and the Partial
Defeasance Collateral shall constitute collateral which shall secure
the Defeased Note and all other obligations under the Loan Documents.
In addition, upon such compliance the Lender will promptly, at the
Borrower's expense, execute and deliver any agreements reasonably
requested by the Borrower to release the lien of the Security
Instrument and the other Loan Documents from the Release Parcel.
(iii) Upon the release of the Release Parcel in accordance
with this Section 4(c), the Borrower shall assign all its obligations
and rights under the Defeased Note, together with the pledged Partial
Defeasance Collateral, to a successor entity designated by the Borrower
which shall be a single purpose bankruptcy remote entity which is not
directly or indirectly owned by Borrower and which shall be approved by
the Lender (the "Partial Successor Borrower"). Such Partial Successor
Borrower shall execute an assignment and assumption agreement in form
and substance that would be satisfactory to a prudent lender pursuant
to which such successor entity shall assume the Borrower's obligations
under the Defeased
7
Note and the Partial Defeasance Security Agreement. As conditions to
such assignment and assumption, the Borrower shall (A) deliver to the
Lender one or more opinions of counsel in form and substance and
delivered by counsel that would be satisfactory to a prudent lender
stating, among other things, that (i) Lender has a legal and valid
perfected first priority security interest in the Partial Defeasance
Collateral, (ii) if a Securitization has occurred, the REMIC Trust
formed pursuant to such Securitization 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 the partial
defeasance pursuant to this Section 4(c), (iii) a partial defeasance
pursuant to this Section 4(c) will not result in a deemed exchange for
purposes of the Code and will not adversely effect the status of the
Defeased Note and the Undefeased Note as indebtedness for federal
income tax purposes, (iv) delivery of the Partial Defeasance Collateral
and the grant of a security interest therein to Lender shall not
constitute an avoidable preference under Section 547 of the Bankruptcy
Code or applicable state law, (v) if required by the applicable Rating
Agencies, a non-consolidation opinion with respect to the Partial
Successor Borrower and its equity owners and (vi) such assignment and
assumption agreement is enforceable against the Borrower and such
Partial Successor Borrower in accordance with its terms and the
Defeased Note, the Defeasance Security Agreement and the other Loan
Documents, as so assigned and assumed, are enforceable against such
Partial Successor Borrower in accordance with their respective terms,
and (B) pay all reasonable fees, costs and expenses incurred by the
Lender or its agents in connection with such assignment and assumption
(including, without limitation, the review of the proposed transferee
and the preparation of the assignment and assumption agreement and
related certificates, documents and instruments). Upon such assignment
and assumption, the Borrower shall be relieved of its obligations under
the Defeased Note and under the Partial Defeasance Security Agreement.
(d) Involuntary Prepayment During the Lockout Period.
During the Lockout Period, in the event of any involuntary prepayment
of the Principal Amount or any other amount under this Note, whether in
whole or in part, in connection with the Lender's acceleration of the
outstanding Principal Amount of this Note or otherwise, and whether the
Security Instrument is satisfied or released by foreclosure (whether by
power of sale or judicial proceeding), deed in lieu of foreclosure or
by any other means, the Borrower shall, in addition to any portion of
the outstanding Principal Amount prepaid (together with all interest
accrued and unpaid thereon), pay to the Lender a prepayment premium in
an amount calculated in accordance with this Section 4(d). Such
prepayment premium shall be in an amount equal to the greater of:
i) 1% of the Principal Amount being prepaid, or
ii) the product obtained by multiplying:
A) the Principal Amount being prepaid, times
B) the difference obtained by subtracting (I)
the Yield Rate from (II) the Note Rate,
times
C) the present value factor calculated using
the following formula:
l-(l+r)/-n/
-------
r
r = Yield Rate
n = the number of years and any
fraction thereof, remaining between
the date the prepayment is made and
the Maturity Date of this Note
As used herein, "Yield Rate" means the yield rate for the
Specified U.S. Treasury Security, as reported in The Wall Street Journal on the
fifth Business Day preceding the Prepayment Calculation Date. If the Yield Rate
is not published for the Specified U.S. Treasury Security, then the "Yield Rate"
shall mean the yield rate for the nearest equivalent U.S. Treasury Security (as
selected at the Lender's sole discretion) as reported in The Wall Street Journal
on the fifth Business Day preceding the Prepayment Calculation Date. If the
publication of such Yield
8
Rate in The Wall Street Journal is discontinued, the Lender shall determine such
Yield Rate from another source selected by the Lender in the Lender's sole
discretion. The "Prepayment Calculation Date" shall mean, as applicable, the
date on which (i) notice of prepayment is given to the Lender, in the case of a
voluntary prepayment of the entire outstanding Principal Amount of this Note,
(ii) the Lender applies any partial prepayment to the reduction of the
outstanding Principal Amount hereof, in the case of a voluntary partial
prepayment which is accepted by the Lender, (iii) the Lender accelerates the
Loan, in the case of a prepayment resulting from acceleration, or (iv) the
Lender applies funds held under any Reserve Account, in the case of a prepayment
resulting from such an application (other than in connection with acceleration
of the Loan).
(e) After the Lockout Period. After the expiration of the
Lockout Period and upon giving the Lender at least sixty (60) days
prior written notice, the Borrower may voluntarily prepay (without
penalty) the Note in whole or in part on a Scheduled Payment Date.
(f) Prepayment Premium Due Whether Voluntary or
Involuntary Prepayment. The Borrower shall pay the applicable
prepayment premium due under this Section 4 regardless of whether the
prepayment is voluntary or involuntary (in connection with the Lender's
acceleration of the outstanding Principal Amount of this Note or
otherwise) or whether the Security Instrument is satisfied or released
by foreclosure (whether by power of sale or judicial proceeding), deed
in lieu of foreclosure or by any other means.
(g) Insurance and Condemnation Proceeds; Excess Interest.
Notwithstanding any other provision herein to the contrary, the
Borrower shall not be required to pay any prepayment premium in
connection with any prepayment occurring solely as a result of (i) the
application of insurance proceeds or condemnation awards pursuant to
the terms of the Loan Documents, or (ii) the application of any
interest in excess of the maximum rate permitted by applicable law to
the reduction of the Principal Amount in accordance with Section 14 of
this Note.
(h) Limitation on Partial Prepayments. Except as
otherwise provided herein, in no event shall the Lender
have any obligation to accept a partial prepayment.
5. Certain Provisions Regarding Payments, Prepayments
and Remittances.
(a) Payments. Except to the extent that specific
provisions are set forth in this Note or any other Loan Document with
respect to application of payments, all payments received by the holder
hereof shall be applied, to the extent thereof, to the indebtedness
secured by the Security Instrument in such manner and order as the
Lender may elect in its sole discretion, any instructions from the
Borrower or anyone else to the contrary notwithstanding. All payments
made as scheduled on this Note shall be applied, to the extent thereof,
to accrued but unpaid interest, late charges, accrued fees, the unpaid
Principal Amount, and any other sums due and unpaid to the Lender in
connection with the Loan, in such manner and order as the Lender may
elect in its sole discretion.
(b) Prepayments. All involuntary prepayments on this Note
shall be applied, to the extent thereof, to accrued but unpaid interest
on the amount prepaid, to the remaining Principal Amount, and any other
sums due and unpaid to the Lender in connection with the Loan, in such
manner and order as the Lender may elect in its sole discretion,
including but not limited to application to principal installments in
inverse order of maturity.
(c) Remittances. Remittances in payment of any part of
the indebtedness other than in the required amount in immediately
available U.S. funds shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is
actually received by the holder hereof in immediately available U.S.
funds and shall be made and accepted subject to the condition that any
check or draft may be handled for collection in accordance with the
practices of the collecting bank or banks.
6. Acceleration. If the full outstanding Principal Amount of
this Note, together with all interest due thereon and any other amounts due in
respect of this Note are not paid on or before the Maturity Date or
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are accelerated under the terms of this Note or the other Loan Documents, the
then outstanding Principal Amount, all accrued but unpaid interest thereon and
any other amounts due in respect of this Note shall bear interest at the Note
Rate plus four percent (4%) per annum until such Principal Amount and interest
have been paid in full. Further, in the event of such acceleration, the Loan,
and all other indebtedness of the Borrower to the Lender arising out of or in
connection with the Loan shall become immediately due and payable, without
presentment, demand, protest, dishonor or notice of any kind, all of which are
hereby waived by the Borrower.
7. Non-Recourse Loan.
(a) Subject to the provisions of Section 8 and
notwithstanding any other provision in this Note or the other Loan
Documents, the personal liability of the Borrower to pay the Principal
Amount and interest thereon and any other sums under this Note or the
other Loan Documents shall be limited to (i) the Premises, (ii) the
Intangible Personalty, (iii) all Rents and Profits distributed (except
to the extent that the Borrower did not have the legal right, because
of a bankruptcy, receivership or similar judicial proceeding, to direct
the disbursement of such sums), and not applied (in accordance with the
Loan Documents), first, to the payment of reasonable Operating Expenses
Leases or Operating Expenses Premises as such Operating Expenses Leases
or Operating Expenses Premises become due and payable, and then, to the
payment of the Principal Amount and interest then due and payable under
this Note and any other sums due under the other Loan Documents
(including but not limited to deposits, escrows and/or reserves);
provided, however, that there shall be no personal liability incurred
for Rents and Profits distributed in any particular fiscal year to the
extent that all Operating Expenses and principal and interest due under
this Note and other sums due under the other Loan Documents (including
but not limited to deposits, escrows and/or reserves) are paid in full
in that fiscal year, and (iv) all other collateral or security for the
Loan.
(b) Except as provided above and in Section 8, the Lender
shall not seek (i) any judgment for a deficiency against the Borrower,
or any Borrower Principal, or the Borrower's heirs, legal
representatives, successors or assigns, in any action to enforce any
right or remedy under the Security Instrument, or (ii) any judgment on
this Note except as may be necessary in any action brought under the
Security Instrument to enforce the lien against the Premises, the
Intangible Personalty, the Rents and Profits or any other collateral or
security for the Loan, or to exercise any remedies under any of the
other Loan Documents.
8. Exceptions to Non-Recourse Liability.
(a) If, without obtaining the Lender's prior written
consent, there shall occur any violation of any of the Recourse
Covenants (as defined in the Loan Agreement), and if such violation
shall continue for thirty (30) days after written notice thereof from
the Lender to the Borrower, then Section 7 hereof shall not apply from
and after the date which is thirty (30) days after such written notice
and the Borrower (each individually on a joint and several basis if
more than one) shall be personally liable on a joint and several basis
for full recourse liability under this Note and the other Loan
Documents.
(b) Notwithstanding Section 7 hereof, the Borrower (each
individually on a joint and several basis if more than one) shall be
personally liable on a joint and several basis, in the amount of any
loss, damage or cost (including but not limited to reasonable
attorney's fees) resulting from (i) fraud or intentional
misrepresentation by the Borrower, or any agent, contractor or employee
of the Borrower, in connection with obtaining the Loan, or in complying
with any of the Borrower's obligations under the Loan Documents, (ii)
sale proceeds, insurance proceeds, condemnation awards, security
deposits from tenants or other sums or payments received by or on
behalf of the Borrower in its capacity as owner of the Premises and not
applied in accordance with the provisions of the Loan Documents, (iii)
after an Event of Default all Rents and Profits distributed and not
applied in accordance with the provisions of the Loan Documents, first,
to the payment of reasonable Operating Expenses
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Premises as such Operating Expenses Premises become due and payable,
and then, to the payment of the Principal Amount and interest then due
and payable under this Note and any other sums due under the other Loan
Documents (including but not limited to deposits, escrows and/or
reserves); provided, however, that there shall be no personal liability
incurred for Rents and Profits distributed in any particular fiscal
year to the extent that all Operating Expenses Premises and principal
and interest due under this Note and other sums due under the other
Loan Documents (including but not limited to deposits, escrows and/or
reserves) are paid in full in that fiscal year (iv) the Borrower's
failure following any Event of Default to deliver to the Lender on
demand all Rents and Profits, security deposits, books and records
relating to the Premises, (v) any damage to the Premises caused by the
willful, wanton or tortious act or omission of the Borrower, (vi) the
Borrower's failure to procure and maintain or cause to be maintained
the insurance policies required by the Loan Agreement, (vii) the
Lender's incurrence and obligation to pay attorney's fees, costs, and
expenses in any bankruptcy, receivership or similar case filed by or
against the Borrower, (viii) any transfer tax, recordation tax or other
similar tax or assessment, if any, in connection with the transactions
contemplated by the Loan Documents, or (ix) any violation of or failure
to comply with the Environmental Covenants (as defined in the Loan
Agreement), including without limitation, the indemnification
obligations set forth therein, except to the extent any such violation
or failure to comply is recovered or recoverable under any
environmental insurance policy furnished by the Borrower to the Lender
in connection with the Loan. Notwithstanding the foregoing, the
Borrower shall not be personally liable under clauses (ii), (iii) or
(iv) of this subsection 8(b) to the extent that the Borrower did not
have the legal right, because of a bankruptcy, receivership or similar
judicial proceeding, to direct the disbursement of the sums described
in such clauses.
9. No Waiver or Impairment. No provision of Section 7 or
Section 8 shall (a) affect any guaranty or similar agreement executed in
connection with the debt evidenced by this Note, (b) release or reduce the debt
evidenced by this Note, (c) impair the right of the Lender to enforce the
Environmental Covenants pursuant to the provisions of the Loan Agreement, (d)
impair the lien of the Security Instrument, or (e) constitute a waiver,
forfeiture, abrogation or limitation of or on any right accorded by any law
establishing a debtor-in-relief proceeding (including, but not limited to, Title
11, U.S. Code) which right provides for the assertion in such debtor-in-relief
proceeding of a deficiency arising by reason of the insufficiency of collateral
notwithstanding an agreement of the holder thereof not to assert such a
deficiency.
10. Expenses. In the event this Note is not paid when due
at any stated or accelerated maturity, the Borrower will pay, in addition to the
Principal Amount and interest hereunder, all reasonable costs of collection,
including reasonable attorney's fees.
11. Taxpayer Identification Number. This Note provides
for the Borrower's federal taxpayer identification number to be inserted on the
first page of this Note. If such number is not available at the time of
execution of this Note or is not inserted by the Borrower, the Borrower hereby
authorizes and directs the Lender to fill in such number on the first page of
this Note when the Borrower provides to Lender, advises the Lender of, or the
Lender otherwise obtains, such number.
12. Notice. Any notice to the Lender or the Borrower
provided for in this Note shall be given in the manner provided in the Loan
Agreement.
13. Governing Law and Jurisdiction. This Note and the
other Loan Documents and all matters relating thereto shall be governed by and
construed and interpreted in accordance with the laws of the State of North
Carolina. The Borrower and each Borrower Principal hereby submit to the
jurisdiction of the state and federal courts located in the State where the
Premises is located and agree that the Lender may, at its sole discretion,
enforce its rights under the Loan Documents in such courts.
14. Maximum Rate of Interest. This Note is subject to the
express condition that at no time shall the Borrower be obligated or required to
pay interest on the Principal Amount at a rate which could subject the Lender to
either civil or criminal liability as a result of being in excess of the maximum
interest rate which the Borrower is permitted by applicable law to contract or
agree to pay. If by the terms of this Note, the Borrower is at any time required
or obligated to pay interest on the Principal Amount at a rate in excess of such
maximum rate, the rate of interest under this Note shall be deemed to be
immediately reduced to such maximum rate and all previous payments in excess of
the maximum rate shall be deemed to have been payments in reduction of the
Principal Amount and not on account of the interest due hereunder.
15. No Third Party Beneficiary. The Borrower acknowledges
and agrees that (i) any arrangement for interim advancement of funds that
originally is made by the Lender named in this Note to any
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investor in the secondary mortgage market is made pursuant to a contractual
obligation of such Lender to that investor that is independent of, and separate
and distinct from, the obligation of the Borrower for the full and prompt
payment of the indebtedness evidenced by this Note, (ii) the Borrower shall not
be deemed to be a third party beneficiary of such arrangement for interim
advancement of funds, and (iii) no such interim advancement arrangement shall
constitute any person or entity making such payment as a guarantor or surety of
the Borrower's obligations, notwithstanding the fact that the obligations under
any such interim advancement arrangement may be calculated with reference to
amounts payable under this Note or the other Loan Documents.
16. Assignment. The holder of this Note may, from time to
time, sell, assign or participate or offer to sell, assign or participate the
Loan, or interests therein, to one or more Persons (including, without
limitation, assignees or participants) and is hereby authorized to disseminate
any information it has pertaining to the Loan, including, without limitation,
any security for this Note and credit information on the Borrower, any of its
principals and any Borrower Principal, to any such Person, and to the extent, if
any, specified in any such sale, assignment or participation, such Person shall
have the rights and benefits with respect to this Note and the other Loan
Documents as such Person would have if such Person were the Lender hereunder.
17. General Provisions. A determination that any
provision of this Note is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that the
application of any provision of this Note to any Person or circumstance is
illegal or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to other Persons or circumstances. The Borrower
warrants and represents to the Lender and all other holders of this Note that
the Loan is and will be for business or commercial purposes and not primarily
for personal, family, or household use. The terms, provisions, covenants and
conditions hereof shall be binding upon the Borrower and the heirs, devisees,
representatives, successors and assigns of the Borrower. Captions and headings
in this Note are for convenience only and shall be disregarded in construing it.
18. Business or Investment Purpose. The Borrower
represents and warrants that the Loan evidenced by this Note is solely for the
business or investment purpose of the Borrower, and is not for personal,
household or agricultural purposes.
19. WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER, EACH
BORROWER PRINCIPAL AND THE LENDER SHALL BE DETERMINED SOLELY FROM THIS
WRITTEN NOTE AND THE OTHER LOAN DOCUMENTS, AND ANY PRIOR ORAL OR
WRITTEN AGREEMENTS BETWEEN THE LENDER, THE BORROWER AND ANY BORROWER
PRINCIPAL CONCERNING THE SUBJECT MATTER HEREOF AND OF THE OTHER LOAN
DOCUMENTS ARE SUPERSEDED BY AND MERGED INTO THIS NOTE AND THE OTHER
LOAN DOCUMENTS.
(b) THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE,
CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION OF THIS NOTE OR
THE LOAN DOCUMENTS.
(c) THIS WRITTEN NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
20. WAIVER OF JURY TRIAL. THE LENDER, THE BORROWER AND
EACH BORROWER PRINCIPAL HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS NOTE. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY, AND VOLUNTARILY MADE BY THE LENDER, THE BORROWER AND EACH
BORROWER PRINCIPAL, AND THE LENDER, THE BORROWER AND EACH BORROWER PRINCIPAL
ACKNOWLEDGE THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS NOTE HAS
12
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN
ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE LENDER, THE BORROWER AND EACH
BORROWER PRINCIPAL FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE
HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE
WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Borrower has caused this Note to be
duly executed under seal as of the day and year first above written.
INNKEEPERS RI NORTHWEST, L.P.
By: Innkeepers RI Northwest, Inc., a
Virginia corporation, sole
general partner
By: (SEAL)
------------------------
Name:
Title:
INNKEEPERS SUMMERFIELD GENERAL, L.P.
By: Innkeepers RI Northwest, Inc., a
Virginia corporation, its
general partner
By: (SEAL)
------------------------
Name:
Title:
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