Exhibit 4(ii) to Buckhead America Corporation
December 31, 1996 Form 10-KSB
MORTGAGE NOTE
Loan No. 04-05-FL-0001
$4,600,000 November 7, 1996
FOR VALUE RECEIVED, HERITAGE INN ASSOCIATES. LP., a Georgia limited
partnership, having its principal place of business at 0000 Xxxxxxxx Xxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter referred to as "Maker"), promises
to pay to the order of BLOOMFIELD ACCEPTANCE COMPANY, LLC., a Michigan limited
liability company, at its principal place of business at Suite 000, 000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000 (hereinafter referred to as
"Payee"), or at such place as the holder hereof may from time to time designate
in writing, the principal sum of Four Million Six Hundred Thousand Dollars
($4,600,000), 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. A payment of interest only upon the execution of this Note,
representing the interest that will accrue hereunder through
November 10,1996;
B. A constant payment of $43,028.34. (such amount hereinafter the
"Monthly Debt Service Payment Amount"), on the eleventh day of
December, 1996, and on the eleventh day of each calendar month
thereafter up to and Including the eleventh day of November,
2016, each of such payments to be applied (a) to the payment
of interest computed at the Initial Interest Rate (as
hereinafter defined); and (b) the balance applied toward the
reduction of the principal sum; and
C. The balance of said principal sum, together with all accrued
and unpaid interest thereon and any other amounts due under
this Note shall be due and payable on the eleventh day of
December, 2016 (the" Maturity Date").
Interest on the principal sum of this Note shall be calculated on the basis of
the actual number of days elapsed in a three-hundred-sixty (360) day year. The
constant payment required hereunder is based upon an amortization schedule of
twenty (20) years. All amounts due under this Note shall be payable without
setoff, counterclaim or any other deduction whatsoever.
1. The term 'Applicable Interest Rate" as used in this Note shall mean
from (a) the date of this Note through but not including the Optional Prepayment
Date (as hereinafter defined), a rate of Nine and Fifty Five Hundredths percent
(9.55%) per annum (the "Initial Interest Rate') and (b) from and after the
Optional Prepayment Date through and including the date this Note is paid in
full, a rate per annum equal to the greater of (I) the Initial Interest Rate
plus five (5) percentage points or (ii) the Treasury Rate (as hereinafter
defined) plus five (5) percentage points (the "Revised Interest Rate"). For
purposes of this Note, (A) the term "Optional Prepayment Date" shall mean,
December 11, 2011 and (B) the term 'Treasury Rate" shall mean, as of the
Optional Prepayment Date, 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 Optional Prepayment Date
to the Maturity Date, 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 Xxxxx.
2. This Note is evidence of that certain loan made by Payee to Maker
contemporaneously herewith (the "Loan"). This Note is secured by (a) a Mortgage,
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 and
covering the fee estate of Maker in certain premises as more particularly
described therein (the "Mortgage"), (b) an Assignment of Leases and Rents of
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even date herewith executed by 58 Maker in favor of Xxxxx (the "Assignment of
Leases'), and (a) the other Loan Documents (as hereinafter defined). The term
"Loan Documents"' as used in this Note relates collectively to this Note, the
Mortgage, the Assignment of Leases, 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.
3. If any sum payable under this Note is not paid on the date on which
it is due. Maker shall pay to Payee upon demand an amount equal to the lesser of
five percent (5%) 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 (as hereinafter defined), then
payment shall be due on the first Business Day immediately prior to that
required payment date. The term "Business Day" shall mean a day other than (i) a
Saturday or Sunday. or (ii) any day on which banking and savings and loan
institutions in New York are authorized or obligated by law or executive order
to be closed.
4 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 (all such sums hereinafter collectively referred to as the "Debt"), or
any portion thereof, shall without notice become immediately due and payable at
the option of Payee (i) if any payment required in this Note is not paid on the
date on which it is due; or (ii) upon the happening of any other Event of
Default (as defined in the Mortgage). 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 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 a rate (the
"Default Rate") equal to the lesser of (a)the maximum rate permitted by
applicable law, or (b) five percent (5%) above the Applicable Interest Rate The
Default Rate shall be computed from the occurrence of the Event of Default until
the actual receipt and collection of the Debt (or that portion thereof that is
then due). This charge shall be added to the Debt and shall be secured by the
Mortgage. 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.
6. This Note may not be prepaid prior to the Optional Prepayment Date;
provided, however, Maker shall have the right and option to release the
Mortgaged Property (as defined in the Mortgage) from the lien of the Mortgage in
accordance with the terms and provisions set forth in Paragraph 56 of the
Mortgage (the "Defeasance Option"). Notwithstanding the foregoing sentence,
Maker shall have the privilege to prepay the entire principal balance of this
Note and any other amounts outstanding on any scheduled payment date during the
three (3) months preceding the Optional Prepayment Date without payment of the
Yield Maintenance Premium (as defined in the Mortgage) or any other premium or
penalty. In addition, on the Optional Prepayment Date or on any scheduled
payment date thereafter, the Maker may, at its option and upon thirty (30) days
prior written notice from Maker to Payee, prepay in whole or in part the
outstanding principal balance of this Note and any other amounts outstanding
without payment of the Yield Maintenance Premium or any other premium or
penalty. If prior to the Optional Prepayment 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 Mortgaged Property, either
through foreclosure or the exercise of the other remedies available to Payee
under the Mortgage, such tender by Maker shall be deemed to be voluntary and
Maker shall pay, in addition to the Debt, the Yield Maintenance Premium, it any,
that would be required under the Defeasance Option.
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7 (a) From and after the date that the Cash Management Agreement (as
defined in the Mortgage) is executed pursuant to Paragraph 57 of the Mortgage
until the Optional Prepayment Date, Maker shall cause all Rents (as defined in
the Mortgage) and other sums collected from, or arising with respect to, the
Mortgaged Property to be deposited in the deposit account (the "Deposit Account)
established pursuant to the Cash Management Agreement. The Cash Management
Agreement shall require the deposit bank to wire all amounts that it receives in
the Deposit Account to the Maker on a weekly basis, provided, however, that on
the sixth (6th) day of each month (or if such 6th day is not a Business Day, the
first Business Day preceding such day) the deposit bank shall wire the amount
collected in the Deposit Account to the Maker.
(b) For each calendar year commencing on December 11, 2010, and for
each calendar year thereafter, the Maker shall submit to the Payee for the
Payee's written approval an annual budget (an "Annual Budget") not later than
sixty (60) days prior to the commencement of such calendar year, in form
satisfactory to Payee setting forth in reasonable detail budgeted monthly
operating income and monthly operating capital and other expenses for the
Mortgaged Property. Each Annual Budget shall contain, among other things.
limitations on management fees, third party service fees, and other expenses as
the Payee may reasonably determine. Payee shall have the right to approve such
Annual Budget 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) 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 Maker a
reasonably detailed description of such objections) and Maker shall promptly
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. Each such Annual Budget
approved by Payee in accordance with terms hereof shall hereinafter be referred
to as an "Approved Annual Budget" 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.
8. In the event that the Maker does not prepay the entire principal
balance of this Note and any other amounts outstanding on or before the Optional
Prepayment Date, the provisions of subparagraph 7(b) as set forth above shall
remain in full force and effect, and the following subparagraphs also shall
apply:
(a) From and after the Optional Prepayment Date, interest shall accrue
on the unpaid principal balance from time to time outstanding on this Note at
the Revised Interest Rate. Interest accrued at the Revised Interest Rate and not
paid pursuant to the preceding sentence shall be deferred and added to the Debt
and shall earn interest at the Revised Interest Rate to the extent permitted by
applicable law (such accrued interest is hereafter defined as "Accrued
Interest"). All of the Debt, including any Accrued Interest. shall be due and
payable on the Maturity Date.
(b) Maker shall pay on the Optional Prepayment Date and the eleventh day
of each calendar month thereafter up to and including the Maturity Date the
following payments from Rents in the listed order of priority:
(i) First, payments to the Tax and Insurance Escrow Fund (as defined in
the Mortgage) in accordance with the terms and conditions of the
Mortgage;
(ii) Second, a payment of the Monthly Debt Service Payment Amount to be
applied first to the payment of interest computed at the Initial
Interest Rate with the remainder applied to the reduction of the
outstanding principal balance of the Note;
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(iii) Third, payments to the Replacement Escrow Fund (as defined in the
Mortgage) in accordance with the terms and conditions of the
Mortgage;
(iv) Fourth, payments for monthly Cash Expenses (as hereinafter defined).
less management fees payable to affiliates of Maker, pursuant to the
terms and conditions of the related Approved Annual Budget;
(v) Fifth, payment for Extraordinary Expenses (as hereinafter defined)
approved by Payee, if any;
(vi) Sixth. payments to the Payee to be applied against the outstanding
principal due under this Note until such principal amount is paid in
full;
(vii) Seventh, payments to the Payee for Accrued interest;
(viii)Eighth, payments to the Payee of any other amounts due under the
Loan Documents; and
(ix) Lastly, payment to the Maker of any excess amounts.
(c) Nothing in this paragraph 8 shall limit, reduce or otherwise affect
Maker's obligations to make payments of the Monthly Debt Service Payment Amount,
payments to the Tax and Insurance Escrow Fund, the Replacement Escrow Fund, and
payments of other amounts due hereunder and under the other Loan Documents,
whether or not Rents are available to make such payments.
(d) In the event that the Maker must incur an extraordinary operating
expense or capital expense not set forth in the Annual Budget or allotted for in
the Replacement Escrow Fund (each an "Extraordinary Expense"), then the Maker
shall promptly deliver to Payee a reasonably detailed explanation of such
proposed Extraordinary Expense for the Payee's approval.
(e) For the purposes of this Note, "Cash Expenses" shall mean. for any
period, the operating expenses for the Operation and maintenance of the
Mortgaged 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 Escrow Fund, and the Replacement Escrow Fund.
9. 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 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 Payee's exercise of
the option to accelerate the Maturity Date, or if any prepayment or 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 Xxxxx's express intent
that all excess amounts theretofore collected by Payee 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 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 note 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
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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.
10. 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 "Make?'
shall include their respective successors, assigns, heirs, executors and
administrators. If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
11. 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.
12 Subject to the qualifications below. Payee shall not enforce the
liability and obligation of Maker to perform and observe the obligations
contained in this Note, the Mortgage or the other Loan Documents by any action
or proceeding wherein a money judgment shall be sought against Maker, 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 Mortgage and the other Loan
Documents, or in the Mortgaged 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 or its partners only to the extent of Maker's
or its partners' interest in the Mortgaged Property, in the Rents and in any
other collateral given to Payee, and Payee, by accepting this Note, the Mortgage
and the other Loan Documents, agrees that it shall not sue for, seek or demand
any deficiency judgment against Maker or its partners in any such action or
proceeding under or by reason of or under or in connection with this Note, the
Mortgage 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 Mortgage; (c) affect the validity or enforceability of 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 or the
Environmental Indemnity; or (t) constitute a waiver of the right of Payee to
enforce the liability and obligation of Maker, 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:
(a) fraud or intentional misrepresentation by Maker or any guarantor in
connection with the Loan;
(b) the gross negligence or willful misconduct of Maker;
(c) physical waste of the Mortgaged Property;
(d) the breach of any representation, warranty, covenant or
indemnification provision in that certain Environmental and
Hazardous Substance Indemnification Agreement of even date herewith
given by Maker to Payee or in the Mortgage concerning environmental
laws, hazardous substances and asbestos;
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(e) the removal or disposal of any portion of the Mortgaged Property
after an Event of Default;
(t) the misapplication or conversion by Maker of (i) any insurance
proceeds paid by reason of any loss, damage or destruction to the
Mortgaged Property, (ii) any awards or other amounts received in
connection with the condemnation of all or a portion of the
Mortgaged Property, or (iii) any Rents (as defined in the Mortgage),
following an Event of Default;
(g) costs incurred by Xxxxx (including reasonable attorneys' fees) in
the collection or enforcement of the Debt, the protection or
foreclosure of the security therefor, or the enforcement of the Loan
Documents;
(h) failure to pay taxes (provided that the liability cf Maker shall be
only for amounts in excess of the amount held by Payee in escrow for
the payment of taxes, computed without taking into consideration any
portion of any such escrow that Payee may have applied in
satisfaction of any portion of the Debt other than those taxes),
assessments, changes for labor or materials or other charges that
can create liens on any portion of the Mortgaged Property; and
(i) any security deposits collected with respect to the Mortgaged
Property which are not delivered to Payee upon a sale or foreclosure
of the Mortgaged Property or other 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 Mortgage) prior to the occurrence of the Event of Default that
gave rise to such sale or foreclosure or action in lieu thereof.
Notwithstanding anything to the contrary in this Note or any of the Loan
Documents, (i) 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 Mortgage or to require that all collateral shall continue to secure all of
the Debt owing to Payee in accordance with the Loan Documents, and (ii) the Debt
shall be fully recourse to Maker, in the event that:
(i) the first full monthly payment of principal and interest under this
Note is not paid when due;
(ii) Maker fails to permit on site inspections of the Mortgaged Property,
fails to provide financial information (if unremedied after any
applicable notice and cure period under the Mortgage), or fails to
maintain its status as a single purpose entity, each as required by,
and in accordance with the terms and provisions of; the Mortgage;
(iii) Maker fails to obtain Xxxxx's prior written consent to any
subordinate financing or other voluntary lien encumbering the
Mortgaged Property; or
(iv) Maker fails to obtain Xxxxx's prior written consent to any
"Transfer" (as defined in the Mortgage), as required by the
Mortgage.
13. 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 Mortgage and the
other Loan Documents and that this Note, the Mortgage and the other Loan
Documents constitute valid and binding obligations of Maker.
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14. All notices or other communications required or permitted to be
given pursuant hereto shall be given in the manner specified in the Mortgage
directed to the parties at their respective addresses as provided therein
15. 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.
16. This Note shall be governed by and construed in accordance with the
laws of the State of Florida, in which the real property encumbered by the
Mortgage is located, and the applicable laws of the United States of America.
Maker has duly executed this Note the day and year first above written.
MAKER:
HERITAGE INN ASSOCIATES, L.P., a Georgia limited
partnership, by its general partner, XXX XX XXXXXXX. INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name and Title: Xxxxxxx X. Xxxxxxx, President
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