EXHIBIT 10.27.2
FORM OF PROMISSORY NOTE
$_____________ JUNE ___, 2004
FOR VALUE RECEIVED, the undersigned, each having an address at c/o
Lodgian, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (each, a
"Borrower" and, collectively, the "Borrowers"), jointly and severally, promise
to pay to the order of ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE LENDING, INC., a Delaware
corporation (together with its successors and assigns, "Lender"), having an
address at Four World Financial Center, New York, New York 10080, or such other
place as Lender may designate in writing, the principal sum of _______
_________________________________Dollars ($_____________), with interest on the
unpaid principal balance from the date of this Note, until paid, at the Interest
Rate (as hereinafter defined) in effect from time to time hereunder. This
Promissory Note may be referred to herein as the "Note," and the loan evidenced
hereby may be referred to herein as the "Loan."
PAYMENTS OF PRINCIPAL AND INTEREST. The Borrowers shall make a payment on
the date hereof to Lender of interest only on the outstanding principal balance
of this Note at the Interest Rate (hereinafter defined), from the date hereof
through and including the last day of the calendar month in which this Note is
executed. Commencing on August 1, 2004 (the "First Payment Date") and on the
first day of each calendar month (each, a "Payment Date") thereafter to and
including the Maturity Date (hereinafter defined), the Borrowers shall make
payments to Lender of interest and principal in monthly installments in the
amounts set forth on Schedule 1 attached hereto and made a part hereof (the
"Monthly Debt Service Payment Amounts"). The entire outstanding principal
balance of the Loan, all accrued and unpaid interest thereon and all other
amounts due hereunder and under the other Loan Documents (collectively the
"Debt") if not sooner paid, shall be due and payable on July 1, 2009 (the
"Maturity Date").
Interest on the principal sum of this Note shall be calculated on the
basis of a 360 day year, and shall be charged for the actual number of days
elapsed during any month or other accrual period. Interest on this Note shall be
payable in arrears.
DEFINITIONS. The term "Interest Rate" as used in this Note shall have the
meaning set forth in Section 2.2 of the Loan Agreement (hereinafter defined).
SECURITY; LOAN DOCUMENTS. This Note is being executed and delivered
pursuant to that certain Loan and Security Agreement, dated as of the date
hereof (the "Loan Agreement"), among the Borrowers and Lender and is secured by,
among other things, those certain Mortgages/Deeds of Trust/Deeds to Secure Debt,
Assignments of Leases and Rents and Security Agreements, each dated as of the
date hereof (collectively, the "Mortgages"), each executed by the applicable
Borrower, encumbering the fee interests or ground lessee's interests of such
Borrower, as applicable, in and to certain properties more particularly
described therein (collectively, the "Properties"). This Note, the Loan
Agreement, the Mortgages, and all other documents or instruments given by the
Borrowers or any of them or any guarantor and accepted by Lender for purposes of
evidencing, securing, perfecting, or guaranteeing the indebtedness evidenced by
this Note may be referred to as the "Loan Documents." Capitalized terms used but
not otherwise defined herein shall have the respective meanings given thereto in
the Loan Agreement.
DEFEASANCE.
A. Notwithstanding anything to the contrary contained in this Note, the
Mortgages or the other Loan Documents, at any time after the earlier to occur of
(x) the second (2nd) anniversary of the date that is the "startup day," within
the meaning of Section 860G 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 and (y) forty-eight (48) months after the date of this
Note, the Borrowers shall have the right to defease all or any portion of the
Loan evidenced by this Note with U.S. Government Securities (a "Defeasance");
provided that a partial Defeasance of this Note shall be permitted only in
connection with the release of one or more of the Properties from the lien of
the Mortgages and the other Loan Documents in accordance with Section 11.4 of
the Loan Agreement and upon the satisfaction of the following conditions
precedent (all of which conditions shall become covenants upon occurrence of the
Defeasance):
(i) The Borrowers shall provide to Lender not less than thirty (30)
days' prior written notice specifying the date on which the Defeasance Deposit
(hereinafter defined) is to be made (the date so specified may be referred to as
the "Defeasance Election Date").
(ii) The Borrowers shall pay to Lender on the Defeasance Election
Date all interest accrued and unpaid on the outstanding principal amount of this
Note due through the Defeasance Election Date, or through the end of the
Interest Accrual Period during which the Defeasance Election Date occurs if the
Defeasance Election Date is other than a Payment Date, and the scheduled
principal amortization payment due on such Defeasance Election Date, or due upon
the next succeeding Payment Date if the Defeasance Election Date is other than a
Payment Date, together with all other amounts, if any, then due and payable
under this Note, the Mortgages and the other Loan Documents.
(iii) The Borrowers shall irrevocably deposit with Lender an amount
of U.S. Government Securities (hereinafter defined) which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than the due dates of the payments owing
hereunder, cash in an amount sufficient, without reinvestment, in the opinion of
a firm of independent certified public accountants reasonably acceptable to
Lender expressed in a written certification thereof delivered to Lender (the
"CPA Certificate"), (1) with respect to a total Defeasance, to pay and discharge
the Scheduled Defeasance Payments (hereinafter defined) for the principal
balance of this Note or (2) with respect to a partial Defeasance in connection
with the release of one or more Properties, to pay and discharge the Scheduled
Defeasance Payments relating to the Release Price for such Property or
Properties (the U.S. Government Securities so deposited together with any
interest or other increase from the issuer of the securities earned thereon, and
any replacements thereof, shall be referred to herein as the "Defeasance
Deposit"). All such U.S. Government Securities, if in registered form, shall be
registered in the name of Lender or its nominee (and, if registered in nominee's
name, endorsed to Lender or in blank) and, if issued in book-entry form, the
name of Lender or its
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nominee shall appear as the owner of such securities on the books of the Federal
Reserve Bank or other party maintaining such book-entry system.
(iv) The Borrowers shall cause the following to be delivered to
Lender on or prior to the Defeasance Election Date, all in form and substance
reasonably satisfactory to Lender:
(a) a security agreement, in form and substance reasonably
satisfactory to Lender, creating a first priority lien on the Defeasance Deposit
(the "Defeasance Security Agreement");
(b) the CPA Certificate;
(c) a certificate of the Borrowers certifying that all
requirements for the Defeasance set forth herein have been satisfied;
(d) an opinion of counsel for the Borrowers in form and
substance reasonably satisfactory to Lender to the effect that (i) Lender has a
perfected first priority security interest in the Defeasance Deposit, (ii) the
holder of this Note will not recognize additional income, gain or loss for
United States federal income tax purposes as a result of the Defeasance and will
be subject to United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if the Defeasance had
not occurred, (iii) any holder, trustee or custodian of this Note which is a
"real estate mortgage investment conduit" within the meaning of Section 860D of
the Code will not fail to maintain its status as such as a result of the
Defeasance and (iv) the Defeasance Security Agreement is enforceable against the
Borrowers in accordance with its terms;
(e) evidence in writing from the applicable Rating Agencies
for any Securities backed in whole or in part by this Note, to the effect that
the Defeasance will not result in a downgrading, withdrawal, or qualification of
the ratings in effect immediately prior to such Defeasance for any class of such
then outstanding Securities;
(f) evidence reasonably satisfactory to Lender that each of
the Borrowers remains validly existing and in good standing under the laws of
the state where it is organized and, to the extent required by applicable law,
qualified to do business in the state where its respective Property is located;
and the Borrowers shall maintain such existence during the time thereafter when
this Note shall be outstanding (unless a Successor Borrower (hereinafter
defined) assumes the obligations of each of the Borrowers or the Defeasing
Borrower(s) (as hereinafter defined), as the case may be, under this Note); and
(g) a certificate of the Borrowers certifying that all of the
representations, and warranties contained in the Loan Agreement and the other
Loan Documents are true and correct in all material respects as of the
Defeasance Election Date and ratifying all of the covenants and obligations of
the Borrowers under the Loan Documents as of such date and such other
certificates, documents or instruments as Lender may reasonably request or as
may be required by the Rating Agencies referred to above, provided that such
certificates, documents or instruments shall not increase the Borrowers'
obligations or decrease the Borrowers' rights under the Loan Documents.
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(v) Either (1) each of the Borrowers in the case of a total
Defeasance, or the Defeasing Borrower(s) in the case of a partial Defeasance
shall deliver to Lender a certificate stating that at all times following the
Defeasance, the Borrowers or the Defeasing Borrower(s), as the case may be,
shall have no interest in any assets other than the Defeasance Deposit, or (2)
such Borrower(s) shall satisfy all of the requirements of Section C below.
(vi) The Borrowers shall pay to Lender all reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Lender in connection with the
Defeasance.
(vii) In the event only a portion of the Loan evidenced by
this Note is the subject of the Defeasance in connection with the release of any
Lien of any applicable Mortgage on one or more individual Properties under
Section 11.4 of the Loan Agreement, the Borrowers shall execute and deliver all
necessary documents to amend and restate this Note and issue two substitute
promissory notes therefor: one note having a principal balance equal to the
defeased portion of the original Note (the "Defeased Note") and one note having
a principal balance equal to the undefeased portion of the original Note (the
"Undefeased Note"). The Defeased Note and the Undefeased Note shall have
identical terms as the original Note (and the Defeased Note and the Undefeased
Note or Notes shall be cross-defaulted with each other), except for the
principal balance. A Defeased Note cannot be the subject of any further
Defeasance. An Undefeased Note may be the subject of a further Defeasance in
accordance with the terms of this Note and the Loan Agreement (the term "Note",
as used above in this clause (vii) for these purposes, being deemed to refer to
the Undefeased Note that is the subject of further defeasance); provided,
however, that no such partial Defeasance shall take place unless the conditions
hereof and the conditions of Section 11.4 of the Loan Agreement are satisfied.
B. Upon compliance with the requirements of Section A above and compliance
with the requirements of Section 11.4 of the Loan Agreement, Lender shall cause
each of the Properties, in the case of a total Defeasance, or each Defeased
Property (as hereinafter defined), in the case of a partial Defeasance, to be
released from the lien of the applicable Mortgages and the other applicable Loan
Documents. The obligations under the Loan Documents with respect to the
Properties or each Defeased Property, as the case may be, shall no longer be
applicable, and the Defeasance Deposit shall be the sole source of collateral
securing this Note or the Defeased Note, as the case may be. Lender shall apply
the Defeasance Deposit and the payments received therefrom to the payment of all
scheduled principal and interest payments due on all successive Payment Dates
under this Note or the Defeased Note, as the case may be, after the Defeasance
Election Date to and including the Maturity Date and to payment of the entire
remaining Debt or the entire remaining principal balance, accrued and unpaid
interest and other sums due under the Defeased Note, as the case may be, on the
Maturity Date (collectively, the "Scheduled Defeasance Payments"). The
Borrowers, pursuant to the Defeasance Security Agreement or other appropriate
document, shall direct that the payments received from the Defeasance Deposit
shall be made directly to Lender and applied to satisfy the obligations of the
Borrowers under this Note or the Defeased Note, as the case may be.
C. If, after the Defeasance, the Borrowers, in the case of a total
Defeasance, or the Defeasing Borrower(s), in the case of a partial Defeasance,
will own any assets other than the Defeasance Deposit, the Borrowers or the
Defeasing Borrower(s), as the case may be, shall
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establish or designate a single-purpose, bankruptcy-remote successor entity
acceptable to Lender (the "Successor Borrower"), with respect to which a
nonconsolidation opinion reasonably satisfactory in form and substance to Lender
and any applicable Rating Agencies shall be delivered to Lender and such Rating
Agencies, in which case the Borrowers or the Defeasing Borrower(s), as the case
may be, shall transfer and assign to the Successor Borrower all of their
respective obligations, rights and duties under this Note or the Defeased Note,
as the case may be, and the Defeasance Security Agreement, together with the
pledged Defeasance Deposit. The Successor Borrower shall assume the obligations
of the Borrowers or the Defeasing Borrower(s), as the case may be, under this
Note or the Defeased Note, as the case may be, and the Defeasance Security
Agreement, and such Borrower(s) shall be relieved and released of their
respective obligations hereunder and thereunder. Each of the Borrowers or the
applicable Defeasing Borrower(s), as the case may be, shall pay not less than
$1,000 to the Successor Borrower as consideration for assuming such Borrower's
obligations.
D. As used herein, the following terms shall have the following meanings:
(i) "Defeased Property" shall mean any Property being released from
the lien of the Mortgage relating to such Property pursuant to a partial
Defeasance in accordance with the provisions of this Note and Section 11.4 of
the Loan Agreement.
(ii) "U.S. Government Securities" shall mean securities that are (i)
direct obligations of the United States of America for the full and timely
payment of which its full faith and credit is pledged or (ii) obligations of an
entity controlled or supervised by and acting as an agency or instrumentality
and guaranteed as a full faith and credit obligation which shall be fully and
timely paid by the United States of America, which in either case are not
callable or redeemable at the option of the issuer thereof (including a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the United
States Securities Act)) as custodian with respect to any such U.S. Government
Securities or a specific payment of principal of or interest on any such U.S.
Government Securities held by such custodian for the account of the holder of
such depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the securities or the specific payment of principal of or interest on
the securities evidenced by such depository receipt.
(iii) "Defeasing Borrower" shall mean the Borrower owning or
leasing, as the case may be, a Defeased Property.
(iv) "Release Price" shall have the meaning set forth in the Loan
Agreement.
E. If, after payment in full of all obligations evidenced by this Note or
any other of the Loan Documents, any of the Defeasance Deposit remains, such
remaining balance of the Defeasance Deposit shall be returned to the Borrowers
(or to the Successor Borrower, as the case may be) or Lender shall assign to the
Borrowers (or the Successor Borrower, as the case may be) all of Lender's right,
title, and interest in the Government Securities constituting the Defeasance
Deposit.
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PREPAYMENT; PREPAYMENT CONSIDERATION. The Borrowers may not prepay this
Note in whole or in part at any time except as expressly provided in Section 2.6
of the Loan Agreement.
EVENTS OF DEFAULT; ACCELERATION. Upon and at any time following the
occurrence of any Event of Default, then at the option of Lender and without
notice, the entire principal amount and all interest accrued and outstanding
hereunder and all other amounts outstanding under any of the Loan Documents
shall at once become due and payable, and Lender may exercise any and all of its
rights and remedies under any of the Loan Documents or pursuant to applicable
law. Lender may so accelerate such obligations and exercise such remedies at any
time after the occurrence of any Event of Default, regardless of any prior
forbearance.
LATE CHARGES; DEFAULT INTEREST. If an Event of Default relating to
non-payment of any principal, interest or other sums due under this Note or
under any of the other Loan Documents shall occur, then the Borrowers shall pay
to Lender, in addition to all sums otherwise due and payable, a late fee in an
amount equal to five percent (5.0%) of such principal, interest or other sums
due hereunder or under any other Loan Document (or, in the case of a partial
payment, the unpaid portion thereof), such late charge to be immediately due and
payable without demand by ▇▇▇▇▇▇.
Upon the occurrence and during the continuance of an Event of Default and
in any event from and after the Maturity Date of the Loan, the outstanding
principal balance of this Note shall bear interest until paid in full at a rate
per annum (the "Default Rate") equal to the sum of (i) four percent (4.0%) and
(ii) the Interest Rate otherwise applicable under this Note.
The Borrowers agree that such late charges and Default Rate of interest
are reasonable and do not constitute a penalty.
LAWFUL INTEREST. Notwithstanding any provision to the contrary contained
in this Note, the Loan Agreement or the other Loan Documents, the Borrowers
shall not be required to pay, and Lender shall not be permitted to collect, any
amount of interest in excess of the maximum amount of interest permitted by law
("Excess Interest"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Note, the Loan
Agreement or in any of the other Loan Documents, then in such event: (1) the
provisions of this subsection shall govern and control; (2) the Borrowers shall
not be obligated to pay any Excess Interest; (3) any Excess Interest that Lender
may have received hereunder shall be, at Lender's option, (a) applied as a
credit against either or both of the outstanding principal balance of the Loan
or accrued and unpaid interest thereunder (not to exceed the maximum amount
permitted by law), (b) refunded to the payor thereof, or (c) any combination of
the foregoing; (4) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to time under
applicable law (the "Maximum Rate"), and this Note, the Loan Agreement and the
other Loan Documents shall be deemed to have been and shall be, reformed and
modified to reflect such reduction; and (5) the Borrowers shall not have any
action against Lender for any damages arising out of the payment or collection
of any Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligation is calculated at the Maximum Rate rather than the
applicable rate under this Note or the Loan Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate,
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the rate of interest payable on such Obligations shall, to the extent permitted
by law, remain at the Maximum Rate until Lender shall have received or accrued
the amount of interest which Lender would have received or accrued during such
period on Obligations had the rate of interest not been limited to the Maximum
Rate during such period. If the Default Rate shall be finally determined to be
unlawful, then the applicable Interest Rate shall be applicable during any time
when the Default Rate would have been applicable hereunder, provided however
that if the Maximum Rate is greater or lesser than the applicable Interest Rate,
then the foregoing provisions of this paragraph shall apply.
CERTAIN RIGHTS AND WAIVERS. From time to time, without affecting the
obligation of the Borrowers or their successors or assigns to pay the
outstanding principal balance of this Note, interest thereon and other amounts
due hereunder and to observe the covenants contained herein, in the Loan
Agreement, the Mortgages or in any other Loan Document, without affecting the
guaranty of any person or entity for payment of the outstanding principal
balance of this Note, without giving notice to or obtaining the consent of any
Borrower or its successors or assigns or any guarantors or indemnitor, and
without liability on the part of Lender, Lender may, at its option, extend the
time for payment of the outstanding principal balance of this Note or any part
thereof, reduce the payments thereon, release anyone liable for payment of all
or a portion of said indebtedness, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by the
Borrowers and all makers, sureties, guarantors and endorsers hereof. This Note
shall be binding upon the Borrowers and their successors and assigns.
EACH BORROWER AND ▇▇▇▇▇▇ HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS NOTE, THE
INSTRUMENTS, ANY OTHER LOAN DOCUMENT, ANY OTHER AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.
ASSIGNMENT AND TRANSFER OF NOTE. Subject to the provisions of the Loan
Agreement, Lender shall have the right to assign or transfer, in whole or in
part (including the right to grant participation interests in) any or all of its
obligations under this Note, the Loan Agreement, the Mortgages and any or all of
the other Loan Documents. Lender shall be released of any obligations to the
extent that the same are so assigned or transferred, and the rights and
obligations of "Lender" hereunder shall become the rights and obligations of the
transferee holder.
LIMITATION ON RECOURSE. ▇▇▇▇▇▇'s rights of recourse for the obligations of
the Borrowers hereunder are limited in accordance with Article XII of the Loan
Agreement. This
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provision shall not limit any rights of Lender under the Guaranty of Recourse
Obligations or the Environmental Indemnity, each dated as of the date hereof.
ATTORNEYS' FEES, COSTS OF COLLECTION. The Borrowers shall pay to Lender on
demand all out-of-pocket costs and expenses, including reasonable attorneys'
fees and expenses, incurred by ▇▇▇▇▇▇ in collecting the indebtedness arising
hereunder or under any other Loan Documents or secured thereby or otherwise
exercising any rights or remedies of Lender hereunder or thereunder or at law or
in equity or enforcing the obligations of any parties hereto or thereto, or as a
consequence of any breach or default by any Borrower or any guarantor hereunder
or thereunder, or otherwise as a consequence of any right evidenced or secured
by this Note or the Loan Documents. Without limitation, such costs and expenses
to be reimbursed by the Borrowers shall include reasonable attorneys' fees and
expenses incurred in any bankruptcy case or proceeding and in any appeal.
APPLICABLE LAW. This Note shall be governed by and construed in accordance
with the laws of the State of New York and applicable federal law.
TIME OF ESSENCE. Time shall be of the essence as to all of the terms,
covenants and conditions of this Note. If the due date of any payment due
hereunder or under any of the other Loan Documents shall fall on a day other
than a Business Day, the Borrowers shall be required to make such payment on the
next succeeding Business Day.
JOINT AND SEVERAL OBLIGATIONS. The obligations and liabilities of the
Borrowers hereunder shall be joint and several.
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IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as
of the date first written above.
BORROWERS:
[LODGIAN ENTITIES]
By:____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Secretary, or
Authorized Signatory
SCHEDULE 1
MONTHLY DEBT SERVICE PAYMENT AMOUNTS
