SLT REALTY LIMITED PARTNERSHIP
STARWOOD LODGING TRUST
PURCHASE MONEY
PROMISSORY NOTE
$97,500,000.00 New York, New York
February 14, 1997
WHEREAS, pursuant to that certain Contribution Agreement dated as of
January 15, 1997 (the "Realty Contribution Agreement"), by and among SLT Realty
Limited Partnership, a Delaware limited partnership ("Realty Partnership"),
Starwood Lodging Trust, a Maryland real estate investment trust ("Trust" and
together with Realty Partnership, "Makers"), Starwood Lodging Corporation, SLC
Operating Limited Partnership, The Prudential Insurance Company of America, on
behalf of Prudential Property Investment Separate Account II ("Payee"), the
other Contributing Parties (as defined therein) and the Property Companies (as
defined therein), Makers are purchasing interests in the Property Companies;
WHEREAS, as partial payment of the Purchase Price (as defined in the
Realty Contribution Agreement) for the Property Companies, Makers (and their
affiliates) have requested that Payee accept this Note and Payee has agreed to
accept this Note as such partial payment; and
WHEREAS, unless otherwise indicated, capitalized terms shall have
the meanings set forth in Section 7 hereof.
NOW, THEREFORE, Makers, jointly and severally, agree as follows:
FOR VALUE RECEIVED, each Maker, jointly and severally,
unconditionally promises to pay to the order of Payee in the manner and at the
place hereinafter provided, the principal amount of NINETY SEVEN MILLION FIVE
HUNDRED THOUSAND DOLLARS ($97,500,000.00) on the Maturity Date, subject to the
obligation of Makers to prepay a portion of this Note on or prior to February
20, 1997 pursuant to Section 1(b) hereof.
Makers also promise to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at a fixed rate per annum equal
to 7.00%; provided that any principal amount not paid when due and, to the
extent permitted by applicable law, any interest not paid when due, in each case
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (both before as well as after judgment), shall bear interest
payable upon demand at a rate that is 6.00%
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per annum in excess of the rate of interest otherwise payable under this Note.
Interest on this Note shall be payable upon any prepayment of this Note (to the
extent accrued on the amount being prepaid) and on the Maturity Date. All
computations of interest shall be made by ▇▇▇▇▇ on the basis of a 360 - day
year, for the actual number of days elapsed in the relevant period (including
the first day but excluding the last day of such period). In no event shall the
interest rate payable on this Note exceed the maximum rate of interest permitted
to be charged under applicable law.
1. Payments.
(a) All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds,
payable in accordance with the wire instructions set forth in Schedule I hereto,
or at such other place as Payee may direct in writing. Whenever any payment on
this Note is stated to be due on a day that is not a Business Day, such payment
shall instead be made on the next Business Day, and such extension of time shall
be included in the computation of interest payable on this Note. Each payment
made hereunder shall be credited first to interest then due and the remainder of
such payment shall be credited to principal, and interest shall thereupon cease
to accrue upon the principal so credited. Each of Payee and any subsequent
holder of this Note agrees, by its acceptance hereof, that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make a notation of any payment
made on this Note shall not limit or otherwise affect the obligation of Makers
hereunder with respect to payments of principal or interest on this Note.
(b) Makers shall prepay $25,500,000.00 of the principal amount of
this Note together with interest accrued thereon on or prior to February 20,
1997.
(c) Makers may elect to extend the Maturity Date from April 15, 1997
to May 14, 1997 by giving written notice of such extension to Payee on or prior
to 5:00 p.m. (New York City time) on April 11, 1997 (with time being of the
essence).
2. Prepayments. Makers shall have the right at any time and from time to
time to prepay the principal of this Note in whole or in part, without premium
or penalty, upon at least 2 days' notice; provided that each such prepayment
shall be in a minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount (subject to Section 1(b) hereof). Any prepayment hereunder
shall be accompanied by interest on the principal amount of the Note being
prepaid to the date of prepayment.
3. Covenants. Each Maker, jointly and severally, covenants and agrees that
until this Note is paid in full it will:
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(a) promptly provide to Payee all financial and operational
information with respect to such Maker as Payee may reasonably request;
(b) promptly after the occurrence of an Event of Default or an
event, act or condition that, with notice or lapse of time or both, would
constitute an Event of Default, provide Payee with a certificate of the
chief executive officer or chief financial officer of such Maker
specifying the nature thereof and such Maker's proposed response thereto;
(c) maintain a net worth equal to $275,000,000 plus seventy five
percent (75%) of any equity issued by Makers after the date hereof; and
(d) not merge or consolidate with any other Person, or sell, lease
or otherwise dispose of all or any substantial part of its property or
assets to any other Person outside the ordinary course of business.
4. Representations and Warranties. Each Maker, jointly and severally,
hereby represents and warrants to Payee that:
(a) Realty Partnership is a duly organized and validly existing
partnership in good standing under the laws of the State of Delaware and
has the partnership power and authority to own and operate its properties,
to transact the business in which it is now engaged and to execute and
deliver this Note;
(b) Trust is a duly organized and validly existing real estate
investment trust in good standing under the laws of the State of Maryland
and has the power and authority to own and operate its properties, to
transact the business in which it is now engaged and to execute and
deliver this Note;
(c) this Note constitutes the duly authorized, legally valid and
binding obligation of such Maker, enforceable against such Maker in
accordance with its terms;
(d) all consents and grants of approval required to have been
granted by any Person in connection with the execution, delivery and
performance of this Note have been granted;
(e) the execution, delivery and performance by such Maker of this
Note do not (i) violate any law, governmental rule or regulation, court
order or agreement to which it is subject or by which its properties are
bound or the agreement of limited partnership, as amended, or any other
organizational documents of such Maker or (ii) result in the creation of
any lien or other encumbrance with respect to the property of such Maker;
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(f) there is no action, suit, proceeding or governmental
investigation pending or, to the knowledge of such Maker, threatened
against such Maker or any of its subsidiaries or any of their respective
assets which, if adversely determined, would have a material adverse
effect on the business, operations, properties, assets, condition
(financial or otherwise) or prospects of such Maker and its subsidiaries,
taken as a whole, or the ability of such Maker to comply with its
obligations hereunder; and
(g) the representations and warranties of Realty Partnership
contained in Section 7.02 of the Realty Contribution Agreement and of
Trust contained in Section 7.04 of the Realty Contribution Agreement (in
each case, which, by this reference, are incorporated herein in their
entirety) are and will be true, correct and complete on and as of the date
hereof to the same extent as though made on and as of the date hereof,
except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and
complete on and as of such earlier date.
5. Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) failure of Makers to pay any principal, interest or other amount
due under this Note when due, whether at stated maturity, by required
prepayment (including without limitation as required under Section 1(b)
hereof), declaration, acceleration, demand or otherwise; or
(b) failure of any Maker to pay, or the default in the payment of,
amounts due under or in respect of any promissory note, indenture or other
agreement or instrument relating to any indebtedness for borrowed money of
$1,000,000 or more owing by such Maker, to which it is a party or by which
such Maker or any of its property is bound beyond any applicable grace
period; or the occurrence of any other event or circumstance and notice or
lapse of time or both which permits acceleration of such indebtedness; or
(c) failure of any Maker to perform or observe in all material
respects any other term, covenant or agreement to be performed or observed
by it pursuant to this Note; or
(d) any representation or warranty made by any Maker to Payee in
connection with this Note shall prove to have been false in any material
respect when made (including, without limitation, the representations and
warranties contained in Sections 7.02 and 7.04 of the Realty Contribution
Agreement and incorporated by reference herein in accordance with Section
4(f)); or
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(e) any order, judgment or decree shall be entered against any Maker
decreeing the dissolution or split-up of such Maker; or
(f) suspension of the usual business activities of any Maker or the
complete liquidation, or liquidation of a substantial portion, of any
Maker's business; or
(g) (i) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of any Maker or any of its
respective affiliates in an involuntary case under Title 11 of the United
States Code entitled "Bankruptcy" (as now and hereinafter in effect, or
any successor thereto, the "Bankruptcy Code") or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary
case shall be commenced against any Maker or any of its respective
affiliates under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over any Maker or any of its respective affiliates or over
all or a substantial part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of any Maker or any of its respective affiliates for all or a substantial
part of its property shall have occurred; or a warrant of attachment,
execution or similar process shall have been issued against any
substantial part of the property of any Maker or any of its respective
affiliates, and, in the case of any event described in this clause (ii),
such event shall have continued for 30 days unless dismissed, bonded or
discharged; or
(h) an order for relief shall be entered with respect to any Maker
or any of its respective affiliates or any Maker or any of its respective
affiliates shall commence a voluntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or
a substantial part of its property; or any Maker or any of its respective
affiliates shall make an assignment for the benefit of creditors; or any
Maker or any of its respective affiliates shall be unable or fail, or
shall admit in writing its inability, to pay its debts as such debts
become due; or the partners of any Maker or any of its respective
affiliates (or any committee thereof) shall adopt any resolution or
otherwise authorize action to approve any of the foregoing; or
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(i) any Maker shall challenge, or institute any proceedings to
challenge, the validity, binding effect or enforceability of this Note or
any endorsement of this Note or any other obligation to Payee.
6. Remedies. Upon the occurrence of any Event of Default specified in
Section 5(g) or 5(h) above, the principal amount of this Note together with
accrued interest thereon shall become immediately due and payable, without
presentment, demand, notice, protest or other requirements of any kind (all of
which are hereby expressly waived by Makers). Upon the occurrence and during the
continuance of any other Event of Default Payee may, by written notice to
Makers, declare the principal amount of this Note together with accrued interest
thereon to be due and payable, and the principal amount of this Note together
with such interest shall thereupon immediately become due and payable without
presentment, further notice, protest or other requirements of any kind (all of
which are hereby expressly waived by Makers).
7. Definitions. The following terms used in this Note shall have the
following meanings (and any of such terms may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference):
"Business Day" means any day other than a Saturday, Sunday or legal
holiday under the laws of the State of New York or any other day on which
banking institutions located in such state are authorized or required by
law or other governmental action to close.
"Event of Default" means any of the events set forth in Section 5.
"Maturity Date" means April 15, 1997, unless Makers notify Payee of
Makers' election to extend the Maturity Date in accordance with Section
1(b) hereof, in which case "Maturity Date" shall mean May 14, 1997.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, bank, trust or other enterprise, whether or not
a legal entity, or any government or political subdivision or any agency,
department or instrumentality thereof.
8. Miscellaneous.
(a) All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, telefacsimile or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered
as follows: if to Makers, at its address specified opposite its signature below;
and if to Payee, at c/o Prudential Real Estate Investors, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (Fax ▇▇▇-▇▇▇-▇▇▇▇), ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Esq. (Fax ▇▇▇-▇▇▇-▇▇▇▇), with copies to:
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O'Melveny & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (Fax ▇▇▇-▇▇▇-▇▇▇▇), or in each case at such
other address as shall be designated in writing from time to time by Payee or
Makers. All such notices and communications shall be effective when received by
the other party.
(b) Makers agree to indemnify Payee against any losses, claims,
damages and liabilities and related expenses, including counsel fees and
expenses, incurred by Payee arising out of or in connection with or as a result
of the loan evidenced by this Note. In particular, Makers promise to pay all
costs and expenses, including reasonable attorneys' fees, incurred in connection
with the collection and enforcement of this Note. Makers agree to pay all
reasonable out-of-pocket expenses of Payee incurred in connection with the
enforcement and administration of this Note, the documents and instruments
referred to herein and any amendments, waivers or consents relating hereto or
thereto including, without limitation, the reasonable fees and expenses of
outside counsel for Payee. In addition, Makers agree to pay, and to save Payee
harmless from all liability for, any stamp or other documentary taxes which may
be payable in connection with Makers' execution or delivery of this Note.
(c) No failure or delay on the part of Payee or any other holder of
this Note to exercise any right, power or privilege under this Note and no
course of dealing between Makers and Payee shall impair such right, power or
privilege or operate as a waiver of any default or an acquiescence therein, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies expressly provided in this
Note are cumulative to, and not exclusive of, any rights or remedies that Payee
would otherwise have. No notice to or demand on Maker in any case shall entitle
Makers to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of Payee to any other or
further action in any circumstances without notice or demand.
(d) Makers and any endorser of this Note hereby consent to renewals
and extensions of time at or after the maturity hereof, without notice, and
hereby waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.
(e) If any provision in or obligation under this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(f) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF MAKERS AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS
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OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
(g) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY MAKER ARISING OUT
OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS NOTE EACH MAKER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. Each Maker
hereby agrees that service of all process in
any such proceeding in any such court may be made by registered or certified
mail, return receipt requested, to such Maker at its address set forth below its
signature hereto, such service being hereby acknowledged by Maker to be
sufficient for personal jurisdiction in any action against such Maker in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Payee to bring proceedings against
such Maker in the courts of any other jurisdiction.
(h) EACH MAKER AND, BY THEIR ACCEPTANCE OF THIS NOTE, ▇▇▇▇▇ AND ANY
SUBSEQUENT HOLDER OF THIS NOTE, HEREBY IRREVOCABLY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS NOTE OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS NOTE AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each Maker and, by their acceptance of this Note, Payee and any subsequent
holder of this Note, each (i) acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this relationship, and that each will continue
to rely on this waiver in their related future dealings and (ii) further
warrants and represents that each has reviewed this waiver with its legal
counsel and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF
THIS NOTE. In the event of litigation, this provision may be filed as a written
consent to a trial by the court.
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(i) Makers agree that each Maker shall be jointly and severally
liable for each and every obligation set forth in this Note.
(j) Each Maker hereby waives the benefit of any statute or rule of
law or judicial decision which would otherwise require that the provisions of
this Note be construed or interpreted most strongly against the party
responsible for the drafting thereof.
(k) Realty Partnership is a partnership and the agreement herein
contained shall remain in full force and effect notwithstanding any changes in
the individuals composing such partnership, and the terms "Realty Partnership"
and "Maker," as used herein, shall include any alternate or successor
partnerships, but any predecessor partnerships and their respective partners
shall not thereby be released from any liability. Payee may renew or extend any
of the liabilities of any of the partners of the partnership and may make
additional advances or extensions of credit to any of them or release or fail to
set off any deposit account or credit of any of them or grant other indulgences
to any of them, all from time to time, before or after the maturity hereof, with
or without further notice to or assent from any of the other partners or other
parties liable with respect hereto.
(l) Makers agree and acknowledge that time is of the essence in this
Note.
(m) The name "Starwood Lodging Trust" is a designation of Starwood
Lodging Trust and its trustees (as trustees but not personally) under a
Declaration of Trust dated August 25, 1969, as amended and restated as of June
6, 1988 and as further amended subsequent thereto, which states that all persons
dealing with Starwood Lodging Trust shall look solely to the assets of Starwood
Lodging Trust for enforcement of any claims against Starwood Lodging Trust, and
the trustees, officials, agents and security holders of Starwood Lodging Trust
assume no personal liability for obligations entered into on behalf of Starwood
Lodging Trust, and their respective individual assets shall not be subject to
the claims of any person relating to such obligations.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each Maker has caused this Note to be executed
and delivered by its duly authorized general partner, as of the day and year and
at the place first above written.
SLT REALTY LIMITED PARTNERSHIP
By: STARWOOD LODGING TRUST,
Its General Partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
STARWOOD LODGING TRUST
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Notice address for Makers:
Starwood Lodging Trust
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
S-1
TRANSACTIONS ON PROMISSORY NOTE
Amount of Amount of Outstanding
Amount of Principal Interest Principal
Loan Made Paid Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- --------- --------- --------- --------- -------
SCHEDULE I
WIRE INSTRUCTIONS
Wire instructions for Payee:
State Street Bank & Trust Company
Boston, MA
ABA#: ▇▇▇-▇▇▇-▇▇▇
Reference#: 99B PR2 "REIT DEAL"