Exhibit 10.6
May 8, 2000
Apple Suites, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Re: The notes (collectively, the "Notes") dated
September 20, 1999, October 5, 1999,
November 29, 1999 and December 22, 1999 in
the aggregate principal amount of
$68,569,500
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Gentlemen:
We are the owner and holder of the Notes and the mortgages,
deeds of trust, deeds to secure debt and like instruments securing the Notes
dated the same dates as the Notes (collectively, the "Existing Security
Documents"). On the date hereof we have provided financing in the amount of
$11,616,750 in connection with the purchase by your wholly-owned subsidiary of
property located in Malvern, Pennsylvania (the "Malvern Property") which
financing is evidenced by a note of even date herewith made by you in the amount
of $11,616,750 (the "Malvern Note") and is secured by a mortgage encumbering the
Malvern Property (the "Malvern Mortgage") and by mortgages, deeds of trust,
deeds to secure debt and like instruments encumbering the properties (the
"Existing Properties") encumbered by the Existing Security Documents
(collectively, the "Malvern Cross-Collateralization Security Documents"). In
addition, if you or your wholly-owned subsidiary acquires the property located
in Boulder, Colorado (the "Boulder Property") pursuant to the Agreement of Sale
dated November 22, 1999 among the undersigned and you, among others (as amended,
the "Agreement of Sale"), we shall provide financing in accordance with the
Agreement of Sale in connection with such acquisition in which event such
financing shall be evidenced by a note made by you (the "Boulder Note") and will
be secured by a deed of trust encumbering the Boulder Property (the "Boulder
DOT") and by mortgages, deeds of trust, deeds to secure debt and like
instruments encumbering the Existing Properties and the Malvern Property
(collectively, the "Boulder Cross-Collateralization Security Documents").
You have advised us that you intend to finance the Existing
Properties with another lender and in connection therewith repay in full the
amounts evidenced and secured by the Notes and the Existing Security Documents
and have requested that upon such financing and repayment we agree to release
the Existing Properties as security for the Malvern Note and the Boulder Note.
We hereby agree that, simultaneously with the
repayment in full of all amounts evidenced and secured by the Notes and the
Existing Security Documents (which for the avoidance of doubt does not include
amounts evidenced by the Malvern Note and the Boulder Note) and provided there
then exists no monetary default with respect to the Malvern Note or the Boulder
Note or any bankruptcy related default under the Malvern Mortgage or Boulder
DOT, we shall release the Existing Properties from the Malvern
Cross-Collateralization Security Documents and the Boulder
Cross-Collateralization Security Documents, except that cross-collateralization
between the Malvern Property and the Boulder Property as to the Malvern Note and
the Boulder Note shall remain in place. We acknowledge that the "repayment in
full" of amounts secured by the Existing Security Documents does not include any
amounts owed to us under management agreements or license agreements with us but
is limited to amounts evidenced by the Notes and protective advances made by us,
if any, pursuant to the Existing Security Documents.
You have further advised us that the financing described above
may be in two tranches, with the second or junior tranche being amortized with
the net proceeds available from the public offering of your shares. The use of
net proceeds to amortize any indebtedness other than Xxxxxx's indebtedness would
conflict with the terms of the Malvern Note and, if executed, the Boulder Note.
We hereby agree that if the amounts evidenced and secured by the Notes and the
Existing Security Documents are repaid in full as described above and if the
structure of the repayment financing contains a second or junior tranche in an
amount of not more than $13,000,000 which requires amortization from such net
proceeds, simultaneously with the repayment of the Notes, the Malvern Note and,
if executed, the Boulder Note will be modified to permit Net Equity Proceeds (as
defined in the Malvern Note) to be applied in reduction of the principal balance
of any such second or junior tranche in lieu of being applied in reduction of
the Malvern Note and, if executed, the Boulder Note.
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This letter agreement may be executed in one or more
counterparts, each of which shall be deemed an original. Said counterparts shall
constitute but one and the same instrument and shall be binding upon each of the
undersigned individually as fully and completely as if all had signed but one
instrument and shall be unaffected by the failure of any of the undersigned to
execute any or all of said counterparts.
Very truly yours,
PROMUS HOTELS, INC.
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Executive Vice President
Accepted and agreed to this 8th
day of May, 2000.
APPLE SUITES, INC., a
Virginia corporation
By /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Chairman of the Board and President
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