Exhibit 10.17
PROMISSORY NOTE
US$9,000,000 New York, New York
June 30, 2005
1. PROMISE TO PAY.
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FOR VALUE RECEIVED, SOUTH BEACH RESORTS, LLC, a Florida limited liability
company ("BORROWER") whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ promises to pay to the order of Marathon Structured Finance Fund
L.P., a Delaware limited partnership, and its successors and assigns ("LENDER")
the sum of Nine Million and No/100 Dollars (US$9,000,000) (the "LOAN"), together
with all other amounts added thereto pursuant to this Note or otherwise payable
to Lender under the Loan Documents (as hereinafter defined), including, but not
limited to, the Prepayment Fee (as defined below) and Exit Fee (as defined
below) (or so much thereof as may from time to time be outstanding), together
with interest thereon as hereinafter set forth.
This Note is secured by, among other things, that certain Mortgage,
Assignment of Rents and Security Agreement effective as of even date herewith
(the "MORTGAGE") encumbering, among other things, the property commonly known as
the Boulevard Hotel (the "PROPERTY"). This Note, the Mortgage, the Loan
Agreement of even date herewith (the "LOAN AGREEMENT") and any other documents
evidencing or securing the Loan or executed in connection therewith, and any
modification, renewal or extension of any of the foregoing are collectively
called the "LOAN DOCUMENTS." Except as otherwise provided herein, capitalized
terms used in this Note shall have the same meanings as are assigned to such
terms in the Loan Agreement.
All payments under this Note shall be made to Lender not later than 1:00
P.M., New York City time, on the date when due and shall be made in lawful money
of the United States of America in immediately available funds as follows: (i)
by wire transfer to ▇▇▇▇▇ Fargo, ABA: ▇▇▇-▇▇▇-▇▇▇, Account Name: Situsserv
Master Clearing Account, Account Number: ▇▇▇-▇▇▇-▇▇▇▇, Reference: Boulevard
Hotel or (ii) by mail to such other place as Lender shall from time to time
designate. Any funds received by Lender after 1:00 P.M., New York City time
shall, for all purposes hereof, be deemed to have been paid on the next
succeeding Business Day. Whenever any payment to be made hereunder or under any
other Loan Document shall be stated to be due on a day that is not a Business
Day, the due date thereof shall be the immediately preceding Business Day.
2. INTEREST PAYMENTS.
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Subject to Section 7.2 hereof, interest shall accrue on the principal
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balance hereof from time to time outstanding and Borrower shall pay interest
thereon at a floating rate per annum equal to the greater of (i) the LIBOR
Interest Rate or (ii) the Base Rate (the "APPLICABLE INTEREST RATE"). Interest
shall be calculated based on a three hundred sixty (360) day year and charged
for the actual number of days elapsed.
As used herein,
"BASE RATE" shall mean a rate per annum equal to ten percent (10.0%).
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a legal
holiday on which national banks are not open for general business in (i) the
State of New York, (ii) the State of Florida, or (iii) any state in which the
Lender directs the Borrower to make payments hereunder.
"EURODOLLAR BUSINESS DAY" shall mean any Business Day on which commercial banks
are open for international business (including dealings in dollar deposits) in
London, England.
"FUNDING PARTY" shall mean any bank or other entity, if any, which is indirectly
or directly funding Lender with respect to the Loan, in whole or in part,
including, without limitation, any direct or indirect assignee of, or
participant in, the Loan.
"LIBOR" shall mean, with respect to any Interest Period, the rate per annum
(rounded upwards, if necessary, to the nearest one-eighth (1/8th) of one percent
(1%)) reported, with respect to the initial Interest Period, at 11:00 a.m.
London time on the date of this Note (or if such date is not a Eurodollar
Business Day, the immediately preceding Eurodollar Business Day), and
thereafter, at 11:00 a.m. London time on the date two (2) Eurodollar Business
Days prior to the tenth (10th) day of the calendar month in which such Interest
Period commences (such date, the "LIBOR DETERMINATION DATE"), on Dow ▇▇▇▇▇
Telerate Service Page 3750 (British Bankers Association Settlement Rate) as the
non-reserve adjusted London Interbank Offered Rate for U.S. dollar deposits
having a thirty (30) day term and in an amount of $1,000,000.00 or more (or on
such other page as may replace said Page 3750 on that service or such other
service or services as may be nominated by the British Bankers Association for
the purpose of displaying such rate, all as determined by Lender in its sole but
good faith discretion). In the event that (i) more than one such LIBOR is
provided, the average of such rates shall apply, or (ii) no such LIBOR is
published, then LIBOR shall be determined from such comparable financial
reporting company as Lender in its sole but good faith discretion shall
determine. LIBOR for any Interest Period shall be adjusted from time to time by
increasing the rate thereof to compensate Lender and any Funding Party for any
aggregate reserve requirements (including, without limitation, all basic,
supplemental, marginal and other reserve requirements and taking into account
any transitional adjustments or other scheduled changes in reserve requirements
during any Interest Period) which are required to be maintained by Lender or
such Funding Party with respect to "Eurocurrency Liabilities" (as presently
defined in Regulation D of the Board of Governors of the Federal Reserve System)
of the same term under Regulation D, or any other regulations of a Governmental
Authority having jurisdiction over Lender or such Funding Party of similar
effect.
"LIBOR INTEREST RATE" shall mean LIBOR plus seven percent (7.0%).
3. PAYMENT.
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(a) Borrower shall make a payment to Lender of interest only on the
date hereof (the "CLOSING DATE") for the period from the Closing Date
through and including the next succeeding tenth (10th) day of a calendar
month, whether such tenth (10th) day shall occur in the calendar month in
which the Closing Date occurs or in the month immediately succeeding the
month in which the Closing Date occurs (unless the Closing Date is the
eleventh day of a calendar month, in which case no such separate payment of
interest shall be due). Each interest accrual period thereafter shall
commence on the eleventh (11th) day of each calendar month and shall end on
and include the tenth (10th) day of the next occurring calendar month (the
"INTEREST PERIOD").
(b) Subject to the terms of Section 3(c) hereof, commencing on August
11, 2005 and continuing on the eleventh (11th) day each calendar month
thereafter (each a "MONTHLY PAYMENT DATE"), Borrower shall make payments of
interest on the then outstanding principal balance hereof calculated in
arrears at the Applicable Interest Rate. All amounts due under this Note
shall be payable without setoff, counterclaim or any other deduction
whatsoever.
(c) Notwithstanding the amount due at the Applicable Interest Rate,
commencing August 11, 2005, Borrower shall make monthly payments in arrears
on the eleventh day of each month computed at the Payment Rate. The Payment
Rate shall be calculated based on a 360 day year and charged for the actual
number days elapsed. Borrower's monthly payment shall be applied first to
interest due at the Applicable Interest Rate for such month, and second to
Accrued Interest (defined below), if any, until paid in full. As used
herein, "PAYMENT RATE" means an amount equal to Net Cash Flow for such
period; provided, however, in no event shall the Payment Rate exceed the
total of current interest and Accrued Interest then outstanding, "NET CASH
FLOW" means, for any period, the actual net cash flow of the Borrower after
deducting therefrom deposits to (but not withdrawals from) the Reserve
Funds, and "RESERVE FUNDS" means, collectively, all funds deposited by
Borrower pursuant to Article 6 of the Loan Agreement.
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(d) To the extent the amount due on a Monthly Payment Date calculated
at the Applicable Interest Rate exceeds the Payment Rate, the excess
interest shall accrue ("ACCRUED INTEREST"), shall be added to principal
outstanding under this Note, and shall itself bear interest at the
Applicable Interest Rate. The aggregate outstanding amount of Accrued
Interest shall not exceed Three Hundred Thousand and No/100 Dollars
($300,000.00) (the "MAXIMUM INTEREST ACCRUAL"). In the event Accrued
Interest reaches the Maximum Interest Accrual, no further interest accrual
shall be permitted, and Borrower shall immediately commence monthly
interest payments at the greater of the Applicable Interest Rate or the
Payment Rate. Once a repayment of Accrued Interest has occurred, Borrower
shall not be permitted to again accrue interest up to the Maximum Interest
Accrual.
(e) This Note shall be due and payable on January 11, 2007, or any
earlier date on which this Note shall be required to be paid in full,
whether by acceleration or otherwise ("MATURITY DATE").
(f) In consideration of Lender's agreement to make the Loan to the
Borrower, on the earlier to occur of (i) the Maturity Date, and (ii) the
date on which this Note is or shall be required to be paid in full, whether
by prepayment, acceleration or otherwise, the Borrower shall pay a $180,000
fee to Lender (the "EXIT FEE").
4. PREPAYMENT.
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(a) Borrower acknowledges that Lender is making the Loan at the
Applicable Interest Rate and upon the other terms set forth herein in
reliance upon ▇▇▇▇▇▇▇▇'s promise to pay the Loan over the complete term of
the Loan and that Lender may suffer loss or other detriment if Borrower
were to prepay all or any portion of the Note prior to the Maturity Date.
Except as set forth in Section 4(b) below, ▇▇▇▇▇▇▇▇ agrees that it may not
prepay the Loan in whole or in part at any time prior to the Maturity Date.
(b) Notwithstanding the foregoing, Borrower may prepay the outstanding
principal amount of Loan, in whole (but not in part), as long as each of
the following conditions are satisfied:
(i) Borrower provides written notice to Lender of its intent to
prepay not more than sixty (60) days and not less than thirty (30)
days prior to the intended prepayment date;
(ii) Borrower pays with any prepayment (1) all accrued interest,
(2) all other outstanding amounts then due and unpaid under this Note
and the other Loan Documents, (3) the Prepayment Fee, and (4) the Exit
Fee;
(iii) If prepayment is not made on a Monthly Payment Date,
Borrower shall pay an amount equal to the unearned interest computed
on the principal amount being prepaid which would accrue for the
period from the date of prepayment through and including the end of
the Interest Period in which such prepayment occurs; and
(iv) Notwithstanding anything contained herein to the contrary,
no prepayment shall be permitted on any date other than a Monthly
Payment Date, unless consented to by Lender in its sole and absolute
discretion.
(c) Following an Event of Default, in the event ▇▇▇▇▇▇ declares this
Note immediately due and payable the Prepayment Fee and Exit Fee shall be
paid upon any tender of payment at any time or upon foreclosure of the
Mortgage.
(d) ▇▇▇▇▇▇▇▇'s notice of prepayment in accordance with this Section 4
shall be irrevocable, and the principal balance of this Note shall be
absolutely and unconditionally due and payable on the date specified in
such notice.
(e) In the event Borrower receives any payment (i) with respect to a
lease of the Property (other than rental payments and expense
reimbursements) including, without limitation, lease termination,
cancellation or similar fees, or (ii) as a result of the sale of a Unit as
provided in Article 7 of the Loan Agreement, Borrower shall immediately
prepay the principal balance of this Note in an amount equal to such
payment. No Prepayment Fee will be due with respect to any such prepayment.
As used herein, "PREPAYMENT FEE" shall mean an amount equal to (i) $750,000
minus (ii) the aggregate amount of interest theretofore actually paid by the
Borrower as of the date of the prepayment.
5. FUNDING LOSSES; CHANGES IN LAW; ETC.
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(a) Borrower hereby agrees to pay to Lender any amount necessary to
compensate Lender and any Funding Party for any losses or costs (including,
without limitation, the costs of breaking any LIBOR contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate thereon)
(collectively, "FUNDING LOSSES") sustained by Lender or any Funding Party:
(i) if the Loan, or any portion thereof, is repaid for any reason
whatsoever on any date other than a Monthly Payment Date; (ii) upon the
conversion of the interest rate on the Loan to the Base Rate; (iii) as a
consequence of (A) any increased costs that Lender or any Funding Party may
sustain in maintaining the borrowing evidenced hereby, or (B) the reduction
of any amounts received or receivable from Borrower, in either case, due to
the introduction of, or any change in, any law or any applicable regulation
or treaty (including the administration or interpretation thereof), whether
or not having the force of law, or due to the compliance by Lender or the
Funding Party, as the case may be, with any directive, whether or not
having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having
jurisdiction; and/or (iv) any other set of circumstances not attributable
to ▇▇▇▇▇▇'s or a Funding Party's acts. Payment of Funding Losses hereunder
shall be in addition to any obligation to pay the Prepayment Fee and Exit
Fee.
(b) If Lender determines (i) that U.S. dollar deposits in an amount
approximately equal to the then outstanding principal balance of the Loan
are not generally available at such time in the London Interbank Market for
deposits in Eurodollars, (ii) that the rate at which such deposits are
being offered will not adequately and fairly reflect the cost to Lender or
a Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the
portion of the Loan being funded by such Funding Party), or of funding the
same in such market for such Interest Period, due to circumstances
affecting the London Interbank Market generally, (iii) that reasonable
means do not exist for ascertaining LIBOR, or (iv) that the LIBOR Interest
Rate would be in excess of the maximum interest rate which Borrower may by
law pay, then, in any such event, Lender shall so notify Borrower and, as
of the date of such notification with respect to an event described in
clause (ii) or clause (iv) above, or as of the expiration of the applicable
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Interest Period with respect to an event described in clause (i) or clause
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(iii) above, interest on the Loan shall accrue at the Base Rate until such
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time as the situations described above are no longer in effect, or as
otherwise provided herein; provided, however, if the situation described in
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clause (ii) above occurs, (x) Borrower shall have the option, to be
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exercised by written notice to Lender, to pay Lender (in the manner
reasonably required by Lender) for such increased cost of maintaining the
LIBOR Interest Rate, and (y) if the same only affects a portion of the
Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least One Million Dollars
($1,000,000.00)), and interest shall continue to accrue on the remaining
portion at the LIBOR Interest Rate.
(c) If the introduction of, or any change in, any law, regulation or
treaty, or in the interpretation thereof by any governmental authority
charged with the administration or interpretation thereof, shall make it
unlawful for Lender or any Funding Party to maintain the LIBOR Interest
Rate with respect to the Loan, or any portion thereof, or to fund the Loan,
or any portion thereof, in Eurodollars in the London Interbank Market, then
(i) the Loan (or such portion of the Loan) shall thereafter bear interest
at the Base Rate (unless the Default Rate shall be applicable), and (ii)
Borrower shall pay to Lender the amount of Funding Losses (if any) incurred
in connection with such conversion. The accrual of interest at the Base
Rate shall continue until such Monthly Payment Date, if any, as the
situation described in this Section 5(c) is no longer in effect.
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(d) If Lender or a Funding Party, as the case may be, shall have
determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards",
or the adoption of any other law, rule, regulation or guideline (including,
but not limited to, any United States law, rule, regulation or guideline)
regarding capital adequacy, or any change becoming effective in any of the
foregoing or in the enforcement or interpretation or administration of any
of the foregoing by any court or any domestic or foreign governmental
authority, central bank or comparable agency charged with the enforcement
or interpretation or administration thereof, or compliance by Lender or its
holding company or such Funding Party or its holding company, as the case
may be, with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on the capital of Lender, ▇▇▇▇▇▇'s holding company, such Funding
Party or such Funding Party's holding company, as the case may be, to
a level below that which Lender or its holding company or the Funding
Party or its holding company, as the case may be, could have achieved but
for such applicability, adoption, change or compliance (taking into
consideration Lender's or its holding company's or such Funding Party's or
its holding company's, as the case may be, policies with respect to capital
adequacy) (the foregoing being hereinafter referred to as "CAPITAL ADEQUACY
EVENTS"), then, upon demand by Lender, Borrower shall pay to Lender, from
time to time, such additional amount or amounts as will compensate Lender
or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under this Section 5 shall be paid
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to Lender within five (5) Business Days of receipt by Borrower of written
notice from ▇▇▇▇▇▇ setting forth the amount due and the basis for the
determination of such amount. Failure on the part of Lender to demand
payment from Borrower for any such amount attributable to any particular
period shall not constitute a waiver of Lender's right to demand payment of
such amount for any subsequent or prior period. Lender shall use reasonable
efforts to deliver to Borrower prompt notice of any event described in this
Section 5 and of the amount to be paid as a result thereof; provided,
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however, that any failure by Lender to so notify Borrower shall not affect
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Borrower's obligation to make the payments to be made as a result thereof.
All amounts that may become due and payable by Borrower in accordance with
the provisions of this Section 5 shall constitute additional interest
hereunder and shall be secured by the Mortgage and the other Loan
Documents.
(f) If Lender or any Funding Party requests compensation for any
losses or costs to be reimbursed pursuant to any one or more of the
provisions of this Section 5, or if any event occurs which would cause any
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portion of either of the Note no longer to bear interest at the LIBOR
Interest Rate, then, upon request of Borrower, Lender or such Funding Party
shall use reasonable efforts, in a manner consistent with such
institution's practice in connection with loans similar to the Loan, to
designate a different lending office for funding or booking the Loan or to
assign its rights and obligations under this Note to another of its
offices, branches or affiliates if such designation or assignment, in
Lender's sole but good faith judgment, (i) would eliminate, mitigate or
reduce amounts payable by Borrower in connection with Funding Losses or
Capital Adequacy Events or, would allow the Loan to continue to bear
interest at the LIBOR Interest Rate without additional cost to Lender, and
(ii) would not be otherwise prejudicial to Lender. Borrower hereby agrees
to pay all reasonably incurred costs and expenses incurred by Lender or any
Funding Party in connection with any such designation or assignment.
6. LOAN TAXES.
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(a) Any and all payments by Borrower to Lender hereunder and under the
other Loan Documents shall be made free and clear of, and without deduction
for, any and all present or future taxes, levies, imposts, deductions,
charges, withholdings or liabilities with respect thereto, except for the
following, for which Borrower shall not be responsible: (i) taxes imposed
on or measured by ▇▇▇▇▇▇'s net income or net receipts; or (ii) franchise
taxes imposed on Lender by the jurisdiction in which (A) Lender is
organized, (B) Lender is "doing business" (unless such determination of
"doing business" is made solely as a result of Lender's interest in the
Loan and the security therefor), or (C) Lender's applicable lending office
is located (all such taxes, levies, imposts, deductions, charges or
withholdings and liabilities (except those described in the foregoing
clauses (i) and (ii)) being hereinafter referred to as "LOAN TAXES"). If
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Borrower shall be required by law to deduct or withhold any Loan Taxes from
or in respect of any sum payable hereunder or under any other Loan
Document, then (1) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that
after making all required deductions or withholdings (including
deductions applicable to additional sums payable under this Section 6),
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Lender receives an amount equal to the sum it would have received had no
such deductions or withholdings (including deductions applicable to
additional sums payable under this Section 6) been made, (2) Borrower shall
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make such deductions or withholdings, and (3) Borrower shall pay the full
amount deducted or withheld to the relevant taxing authority in accordance
with applicable law. Borrower will indemnify Lender for the full amount of
any Loan Taxes (including, without limitation, any Loan Taxes (as well as
taxes described in clauses (i) and (ii) of the second preceding sentence)
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imposed by any jurisdiction on any amounts payable under this Section 6)
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paid or payable by Lender and any liability (including, without limitation,
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Loan Taxes were correctly or legally asserted.
A certificate as to the amount of such payment or liability delivered to
Borrower by Lender shall be conclusive absent manifest error. The
agreements and obligations of Borrower contained in this Section 6 shall
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survive the payment in full of principal and interest under this Note.
(b) Within thirty (30) days after the date of any payment of Loan
Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or
other evidence satisfactory to Lender evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the lender originally named
herein), Lender shall deliver to Borrower, upon request, a Form W-9 (unless
it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower, upon request, either (i) a Form W-8BEN which indicates a 0% rate
of tax or (ii) a Form W-8ECI. If Lender is not a U.S. Person, Lender
further undertakes to deliver to Borrower additional Forms W-8BEN or W-8ECI
(or any successor forms) or other manner of certification, as the case may
be, (A) on or before the date that any such form expires or becomes
obsolete, (B) after the occurrence of any event requiring a change in the
most recent form previously delivered by it to Borrower, and (C) such
extensions or renewals thereof as may reasonably be requested by Borrower,
certifying that ▇▇▇▇▇▇ is entitled to receive payments hereunder without
deduction or withholding of any Loan Taxes. However, in the event that any
change in law, rule, regulation, treaty or directive, or in the
interpretation or application thereof (a "LAW CHANGE"), has occurred prior
to the date on which any delivery pursuant to the preceding sentence would
otherwise be required which renders such form inapplicable, or which would
prevent Lender from duly completing and delivering any such form, or if
such Law Change results in Lender being unable to deliver a Form W-9 (or
other satisfactory evidence that it is otherwise eligible for an exemption
from backup withholding tax or other withholding tax), Lender shall not be
obligated to deliver such forms but shall, promptly following such Law
Change, but in any event prior to the time the next payment hereunder is
due following such Law Change, advise Borrower in writing whether it is
capable of receiving payments without any deduction or withholding of Loan
Taxes. In the event of such Law Change, Borrower shall have the obligation
to make Lender whole and to "gross-up" under Section 6(a), despite the
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failure by ▇▇▇▇▇▇ to deliver such forms.
(d) If ▇▇▇▇▇▇ receives a refund in respect of Loan Taxes paid by
▇▇▇▇▇▇▇▇, it shall promptly pay such refund, together with any other
amounts paid by Borrower pursuant to Section 6(a) in connection with such
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refunded Loan Taxes, to Borrower; provided, however, that Borrower agrees
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to promptly return such refund to Lender if it receives notice from Lender
that it is required to repay such refund. Nothing contained herein shall be
construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 6 shall constitute
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additional interest hereunder and shall be secured by the Mortgage and the
other Loan Documents. The provisions of this Section 6 shall survive any
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payment or prepayment of the Loan and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 6 to "Lender" shall be deemed to
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include any participant in ▇▇▇▇▇▇'s interest in the Loan and any assignees
of ▇▇▇▇▇▇'s interest in the Loan.
7. DEFAULT.
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7.1 Events of Default.
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Any of the following shall constitute an "EVENT OF DEFAULT" under this
Note: (a) failure to pay any amount owed pursuant to this Note when such payment
is due; or (b) the occurrence of an Event of Default under any of the other Loan
Documents.
7.2 Remedies.
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So long as an Event of Default remains outstanding: (a) interest shall
accrue at a rate equal to the Applicable Interest Rate plus five percent (5%)
per annum (the "DEFAULT RATE"); (b) Lender may, at its option and without notice
(such notice being expressly waived), declare this Note immediately due and
payable; and (c) Lender may pursue all rights and remedies available under the
Mortgage or any other Loan Documents. ▇▇▇▇▇▇'s rights, remedies and powers, as
provided in this Note and the other Loan Documents, are cumulative and
concurrent, and may be pursued singly, successively or together against
Borrower, any guarantor of the Loan, the security described in the Loan
Documents, and any other security given at any time to secure the payment
hereof, all at the sole discretion of Lender. Additionally, Lender may resort to
every other right or remedy available at law or in equity without first
exhausting the rights and remedies contained herein, all in ▇▇▇▇▇▇'s sole
discretion. Failure of Lender, for any period of time or on more than one
occasion, to exercise its option to accelerate the Maturity Date shall not
constitute a waiver of the right to exercise the same at any time during the
continued existence of any Event of Default or any subsequent Event of Default.
If any attorney is engaged: (i) to collect the Loan or any sums due under the
Loan Documents, whether or not legal proceedings are thereafter instituted by
▇▇▇▇▇▇; (ii) to represent Lender in any bankruptcy, reorganization, receivership
or other proceedings affecting creditors' rights and involving a claim under
this Note; (iii) to protect the liens of the Mortgage or any of the Loan
Documents; (iv) to represent Lender in any other proceedings whatsoever in
connection with the Mortgage or any of the Loan Documents including post
judgment proceedings to enforce any judgment related to the Loan Documents; or
(v) in connection with seeking an out-of-court workout or settlement of any of
the foregoing, then Borrower shall pay to Lender all costs, reasonable
attorneys' fees and expenses in connection therewith, in addition to all other
amounts due hereunder.
8. LATE CHARGE.
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If payments of principal, interest due under this Note, or any other
amounts due under the other Loan Documents are not timely made when due,
Borrower, without notice or demand by Lender, promptly shall pay an amount
("LATE CHARGE") equal to five percent (5%) of each delinquent payment.
9. APPLICABLELAW; SEVERABILITY.
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THIS NOTE SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES. THE INVALIDITY, ILLEGALITY OR UNENFORCEABILITY OF ANY PROVISION
OF THIS NOTE SHALL NOT AFFECT OR IMPAIR THE VALIDITY, LEGALITY OR ENFORCEABILITY
OF THE REMAINDER OF THIS NOTE, AND TO THIS END, THE PROVISIONS OF THIS NOTE ARE
DECLARED TO BE SEVERABLE.
10. WAIVER.
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Borrower, for itself and all endorsers, guarantors and sureties of this
Note, and their heirs, legal representatives, successors and assigns, hereby
waives presentment for payment, demand, notice of nonpayment, notice of
dishonor, protest of any dishonor, notice of protest and protest of this Note,
and all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that their
respective liability shall be unconditional and without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇, for itself and all endorsers, guarantors and sureties and
their heirs, legal representatives, successors and assigns, of this Note, and
their heirs, legal representatives, successors and assigns, hereby consents to
every extension of time, renewal, waiver or modification that may be granted by
Lender with respect to the payment or other provisions of this Note, and to the
release of any makers, endorsers, guarantors or sureties, and their heirs, legal
representatives, successors and assigns, and of any collateral given to secure
the payment hereof, or any part hereof, with or without substitution, and agrees
that additional makers, endorsers, guarantors or sureties and their heirs, legal
representatives, successors and assigns, may become parties hereto without
notice to Borrower or to any endorser, guarantor or surety and without affecting
the liability of any of them.
11. SECURITY, APPLICATION OF PAYMENTS.
------------------------------------
This Note is secured by the liens, encumbrances and obligations created
hereby and by the other Loan Documents and the terms and provisions of the other
Loan Documents are hereby incorporated herein. Payments will be applied in such
priority and proportions as Lender in its discretion shall deem proper, to the
extent consistent with law.
12. MISCELLANEOUS.
-------------
12.1 Amendments.
----------
This Note may not be terminated or amended orally, but only by a
termination or amendment in writing signed by ▇▇▇▇▇▇.
12.2 Lawful Rate of Interest.
--------------------------
In no event whatsoever shall the amount of interest paid or agreed to be
paid to Lender pursuant to this Note or any of the Loan Documents exceed the
highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Note and the
other Loan Documents shall involve exceeding the lawful rate of interest which a
court of competent jurisdiction may deem applicable hereto ("EXCESS INTEREST"),
then ipso facto, the obligation to be fulfilled shall be reduced to the highest
----------
lawful rate of interest permissible under such law and if, for any reason
whatsoever, Lender shall receive, as interest, an amount which would be deemed
unlawful under such applicable law, such interest shall be applied to the Loan
(whether or not due and payable), and not to the payment of interest, or
refunded to Borrower if such Loan has been paid in full. Neither Borrower nor
any guarantor, endorser or surety nor their heirs, legal representatives,
successors or assigns shall have any action against Lender for any damages
whatsoever arising out of the payment or collection of any such Excess Interest.
12.3 Captions.
--------
The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.
12.4 Notices.
-------
Notices shall be given under this Note in conformity with the terms and
conditions of the Loan Agreement.
12.5 Joint and Several.
-------------------
The obligations of Borrower under this Note shall be joint and several
obligations of Borrower and of each Borrower, if more than one, and of each
Borrower's heirs, personal representatives, successors and assigns.
12.6 Time of Essence.
-----------------
Time is of the essence of this Note and the performance of each of the
covenants and agreements contained herein.
13. EXCULPATION.
-----------
Subject to the qualifications below, Lender shall not enforce the liability
and obligation of Borrower to perform and observe the obligations contained in
this Note by any action or proceeding wherein a money judgment shall be sought
against Borrower, except that Lender may bring a foreclosure action, an action
for specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under this Note, the Loan
Agreement, the Mortgage and the other Loan Documents, or in the Property or any
other collateral given to Lender 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 Borrower only to the extent of
Borrower's interest in the Property and in any other collateral given to Lender,
and Lender, by accepting this Note and the other Loan Documents, shall not sue
for, seek or demand any deficiency judgment against Borrower in any such action
or proceeding under or by reason of or under or in connection with this Note or
the other Loan Documents. The provisions of this Section 13 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 Lender to name
Borrower 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 Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) constitute a prohibition against Lender to seek a deficiency
judgment against Borrower in order to fully realize on any security given by
Borrower in connection with the Loan or to commence any other appropriate action
or proceeding in order for Lender to exercise its remedies against such
security; or (f) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by ▇▇▇▇▇▇ (including attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by ▇▇▇▇▇▇▇▇, Guarantor
or any other guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) the breach of any representation, warranty, covenant or
indemnification provision in the Mortgage concerning environmental
laws, hazardous substances and asbestos and any indemnification of
Lender with respect thereto in either document;
(iv) [intentionally deleted];
(v) the misapplication, misappropriation or conversion by
▇▇▇▇▇▇▇▇ of (A) any insurance proceeds paid by reason of any loss,
damage or destruction to the Property, (B) any awards or other amounts
received in connection with the condemnation of all or a portion of
the Property, (C) any rents following an Event of Default or (D) any
security deposits or rents collected in advance;
(vi) any personal property having a value greater than $1,000
taken from the Property by or on behalf of Borrower or the Guarantor
and not replaced with personal property of the same utility and of the
same of greater value;
(vii) any fees or commissions paid by ▇▇▇▇▇▇▇▇ after the
occurrence of an Event of Default to any Guarantor in violation of the
terms of this Note or the other Loan Documents;
(viii) [intentionally deleted];
(ix) any security deposits, advance deposits or any other
deposits collected with respect to the Property which are not
delivered to Lender upon a foreclosure of the Property or action in
lieu thereof, except to the extent any such security deposits were
applied in accordance with the terms and conditions of any of the
Leases prior to the occurrence of the Event of Default that gave rise
to such foreclosure or action in lieu thereof;
(x) any failure by Borrower to permit on-site inspections of the
Property as required by the Loan Agreement and the other Loan
Documents;
(xi) any failure of Borrower to appoint a new property manager
upon the request of ▇▇▇▇▇▇ as required by the terms of the Loan
Documents;
(xii) ▇▇▇▇▇▇▇▇'s breach of, or failure to comply with, the
representations, warranties and covenants contained in Section 4.1.7
of the Loan Agreement; and/or
(xiii) ▇▇▇▇▇▇▇▇'s breach of the representations and warranties
contained in Section 3.1.30 of the Loan Agreement.
Notwithstanding anything to the contrary in this Note or any of the Loan
Documents, (A) Lender shall not be deemed to have waived any right which Lender
may have under Section 506(a), 506(b), 1111(b) or any other provisions of the
Bankruptcy Code to file a claim for the full amount of the Debt or to require
that all collateral shall continue to secure all of the Debt owing to Lender in
accordance with the Loan Documents, and (B) the Debt shall be fully recourse to
Borrower in the event that: (i) the first full monthly payment of interest under
the Note is not paid when due; (ii) Borrower fails to provide financial
information to Lender as required by the Loan Agreement or fails to comply with
any provision of Section 3.1.26 of the Loan Agreement; (iii) Borrower fails to
obtain ▇▇▇▇▇▇'s prior consent to any subordinate financing or other voluntary
lien encumbering the Property; (iv) Borrower fails to obtain ▇▇▇▇▇▇'s prior
consent to any assignment, transfer, or conveyance of the Property or any
interest therein as required by the Mortgage or the Loan Agreement; (v) Borrower
or any Guarantor files a voluntary petition under the Bankruptcy Code or any
other federal or state bankruptcy or insolvency law; (vi) an affiliate, officer,
director, or representative which controls, directly or indirectly, Borrower
files, or joins in the filing of, an involuntary petition against Borrower under
the Bankruptcy Code or any other federal or state bankruptcy or insolvency law,
or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower from any Person; (vii) Borrower files an answer
consenting to or otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person under the Bankruptcy Code or any other
federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any Person;
(viii) any affiliate, officer, director, or representative which controls
Borrower consents to or acquiesces in or joins in an application for the
appointment of a custodian, receiver, trustee, or examiner for Borrower or any
portion of the Property; or (ix) Borrower makes an assignment for the benefit of
creditors, or admits, in writing or in any legal proceeding, its insolvency or
inability to pay its debts as they become due.
In addition to the foregoing, unless and until Borrower provides the
"Additional Insurance Coverage" (as defined below), in the event of a Casualty:
(a) if Lender elects to declare the balance of the Debt due and
payable pursuant to the terms of the Mortgage, the Debt shall be fully
recourse to Borrower and the Guarantors; and
(b) if Lender elects to apply the insurance proceeds attributable to a
Casualty to Restoration and/or repair of the Property, the Borrower and the
Guarantors shall be personally liable for (i) payment of the debt service
due hereunder, and (ii) any costs incurred in such Restoration and/or
repair in the event of a shortfall in the Net Proceeds payable therefor.
As used herein,
"ADDITIONAL INSURANCE COVERAGE" shall mean (i) $1,600,000 in property insurance
coverage (covering wind damage) in addition to Borrower's property insurance in
place as of the date hereof, as evidenced by a certificate delivered to Lender,
and (ii) business interruption insurance for a Casualty resulting from wind
damage, all of which shall comply with the requirements set forth in Article 5
of the Loan Agreement, except that there shall be no exclusion for wind.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors'
rights;
"CASUALTY" shall mean damage or destruction of the Property, in whole or in
part, by fire or other casualty
"DEBT" shall mean the Loan together with all interest accrued and unpaid thereon
and all other sums (including the Prepayment Fee, the Exit Fee and all
outstanding fees, costs and expenses) due to Lender with respect to the Loan
Documents;
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, commission, office
or authority of any nature whatsoever or any governmental unit (federal, state,
commonwealth, county, district, municipal, city or otherwise) whether now or
hereafter in existence;
"GUARANTOR" shall collectively mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual, and ▇▇▇▇
▇▇▇▇▇▇, an individual; and
"NET PROCEEDS" shall mean: (i) the net amount of all insurance proceeds payable
as a result of a Casualty to any portion of the Property, after deduction of
reasonable costs and expenses (including reasonable attorneys' fees and costs),
if any, in collecting such insurance proceeds.
"PERSON" shall mean any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, unincorporated association, any other
entity, any Governmental Authority and any fiduciary acting in such capacity on
behalf of any of the foregoing.
"RESTORATION" shall mean the restoration, repair, or replacement of the Property
to at least the equal value and substantially the same character as that
existing prior to a Casualty.
14. SALE OF LOAN.
------------
Lender, at any time and without the consent of Borrower, may grant
participations in or sell, transfer, assign and convey all or any portion of its
right, title and interest in and to the Loan, this Note, the Mortgage and the
other Loan Documents, any guaranties given in connection with the Loan and any
collateral given to secure the Loan.
15. CONSENT TO JURISDICTION.
-----------------------
BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT, SUBJECT TO ▇▇▇▇▇▇'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. BORROWER HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO ▇▇▇▇▇▇▇▇, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS
BEEN POSTED.
16. WAIVER OF JURY TRIAL.
▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇▇▇▇ WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE AND THE OTHER
LOAN DOCUMENTS. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THIS
WAIVER IN ENTERING INTO THIS NOTE AND THE OTHER LOAN DOCUMENTS AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. ▇▇▇▇▇▇▇▇
AND ▇▇▇▇▇▇ WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING
THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO PROMISSORY NOTE]
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has executed this Note or has caused the same
to be executed UNDER SEAL as of the date first set forth above.
BORROWER:
SOUTH BEACH RESORTS, LLC, a Florida
limited liability company
By: SBR Holding Company, LLC, a Florida
limited liability company, its managing
member
By:/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [SEAL]
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: Managing Member
