exv10w3






Exhibit 10.3




Hotel Monaco




PROMISSORY NOTE



Note Amount:    $35,000,000.00



Maturity Date:    The Payment Date in March, 2012.




          THIS PROMISSORY NOTE (this “Note”), is made as of February 23, 2007 by the
undersigned, as borrower (“Borrower”), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION and
its successors or assigns, as lender (“Lender”).




R E C I T A L S:




     A. This Note evidences a loan (the “Loan”) made by Lender to Borrower in the original
principal amount of THIRTY-FIVE MILLION AND NO/100 DOLLARS ($35,000,000.00) (the “Loan
Amount”) and secured by, inter alia, that certain Deed of Trust, Security Agreement, Assignment
of Rents and Fixture Filing of even date herewith (as same may hereafter be amended, modified or
supplemented, the “Security Instrument”) from Borrower, as borrower, in favor of and for
the benefit of Lender, as lender, as security for the Loan and the other Loan Documents;



     B. Borrower and Lender intend these Recitals to be a material part of this Note.



          NOW, THEREFORE, FOR VALUE RECEIVED, Borrower does hereby covenant and promise to pay to the
order of Lender, without any counterclaim, setoff or deduction whatsoever, on the Maturity Date (as
hereinafter defined), in immediately available funds, at Commercial Real Estate Services, 8739
Research Drive URP 4, NC 1075, Charlotte, North Carolina 28262 or at such other place as Lender
may designate to Borrower in writing from time to time, in legal tender of the United States of
America, the Loan Amount and all other amounts due or becoming due hereunder, to the extent not
previously paid in accordance herewith, together with all interest accrued thereon through the date
the Loan is repaid in full, at the rate of 5.68% per annum (the “Interest Rate”) to be
computed on the basis of the actual number of days elapsed in a 360 day year, on so much of the
Loan Amount as is from time to time outstanding on the first day of the applicable Interest Accrual
Period (as hereinafter defined).



SECTION 1. DEFINITIONS




          Defined terms in this Note shall include in the singular number the plural and in the plural
number the singular. All capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Security Instrument.







 









 







SECTION 2.PAYMENTS AND LOAN TERMS





     Section 2.1. Interest and Amortization Payments.



               (a) Interest on the unpaid Principal Amount of the Loan for the first Interest Accrual Period
computed at the Interest Rate shall be payable, without any counterclaim, setoff or deduction
whatsoever, on the First Payment Date, and for each subsequent Interest Accrual Period on each
Payment Date thereafter until this Note is paid in full on the Maturity Date or otherwise. The
entire outstanding principal balance, to the extent not theretofore paid, together with all accrued
but unpaid interest thereon and any other amounts due hereunder shall be due and payable on the
Payment Date in March, 2012 (the “Maturity Date”).




               (b) To the extent any Interest Shortfall shall occur, except as otherwise provided in Section
3.2 hereof, such Interest Shortfall shall accrue additional interest at the Interest Rate.




               (c) To the extent Payments (as hereinafter defined) are or become due and payable under this
Note or under any of the other Loan Documents on a day (the “Due Date”) which is not a
Business Day, such Payments are and shall be due and payable on the first Business Day immediately
following the Due Date for such Payments. In the event that any Payment is received after 2:00
p.m. Eastern Time on any day, it shall be deemed received and paid on the subsequent Business Day.




     Section 2.2. Application of Payments.



               (a) Each and every payment (a “Payment”) made by Borrower to Lender in accordance with
the terms of this Note and/or the terms of any one or more of the other Loan Documents and all
other proceeds received by Lender with respect to the Debt, shall be applied as follows:





               (1) Payments, other than Unscheduled Payments, shall be applied (i) first, to all Late
Charges, Default Rate Interest or other premiums and other sums payable hereunder or under
the other Loan Documents (other than those sums included in clauses (ii) and (iii) of this
Section 2.2(a)(1)) in such order and priority as determined by Lender in its sole discretion
(ii) second, to all interest (other than Default Rate Interest) which shall be due and
payable with respect to the Loan Amount pursuant to the terms hereof as of the date the
Payment is received (including any Interest Shortfalls and interest thereon to the extent
permitted by applicable law) and (iii) third, on the Maturity Date, to the Loan Amount until
the Loan Amount has been paid in full.




               (2) Unscheduled Payments shall be applied at the end of the Interest Accrual Period in
which such Unscheduled Payments are received as a principal prepayment of the Loan Amount to
amortize the Loan Amount.



               (b) To the extent that Borrower makes a Payment or Lender receives any Payment or proceeds for
Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any
other party representing the estate of Borrower under any bankruptcy law, common law or equitable
cause, then, to such extent, the obligations of Borrower hereunder






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intended to be satisfied shall be revived and continue as if such Payment or proceeds had not
been received by Lender.




     Section 2.3. Prepayments.



     The Debt may not be prepaid, in whole or in part, except as set forth in Section 13.03 and
Article XV of the Security Instrument.


SECTION 3. DEFAULTS




     Section 3.1. Events of Default.



     This Note is secured by, among other things, the Security Instrument which specifies various
Events of Default, upon the happening of which all or portions of the sums owing under this Note
may be declared immediately due and payable as more specifically provided therein. Each Event of
Default under the Security Instrument or any one or more of the other Loan Documents shall be an
Event of Default hereunder.



     Section 3.2. Remedies.



     If an Event of Default shall occur hereunder or under any other Loan Document, the Principal
Amount and, to the extent permitted by applicable law, all accrued but unpaid interest on the
Principal Amount shall, commencing on the date of the occurrence of such Event of Default, at the
option of Lender, immediately and without notice to Borrower, accrue interest at the Default Rate
until such Event of Default is cured or if not cured or such cure is not accepted by Lender, until
the repayment of the Debt. The foregoing provision shall not be construed as a waiver by Lender of
its right to pursue any other remedies available to it under the Security Instrument, or any other
Loan Document, nor shall it be construed to limit in any way the application of the Default Rate.


SECTION 4.EXCULPATION




     Section 4.1. Exculpation.



          Notwithstanding anything to the contrary contained in this Note or the other Loan Documents,
the obligations of Borrower hereunder shall be non-recourse except with respect to the Property,
and as otherwise provided in Section 18.32 of the Security Instrument, the terms of which are
incorporated herein.



SECTION 5. MISCELLANEOUS




     Section 5.1. Further Assurances.



     Borrower shall execute and acknowledge (or cause to be executed and acknowledged) and deliver
to Lender all documents, and take all actions, reasonably required by Lender from time to time (i)
to confirm the rights created or now or hereafter intended to be created under this Note and the
other Loan Documents, (ii) to protect and further the validity, priority and enforceability of this
Note and the other Loan Documents, (iii) to subject to the Loan Documents any property of Borrower
intended by the terms of any one or more of the Loan Documents to be encumbered by the Loan
Documents, or (iv) to otherwise carry out the purposes of the Loan



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Documents and the transactions contemplated thereunder; provided, however,
that no such further actions, assurances and confirmations shall increase Borrower’s obligations
under this Note or any other Loan Documents.




     Section 5.2. Modification, Waiver in Writing.



     No modification, amendment, extension, discharge, termination or waiver (a
“Modification”) of any provision of this Note, the Security Instrument or any one or more
of the other Loan Documents, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or
demand on, Borrower shall entitle Borrower to any other or future notice or demand in the same,
similar or other circumstances. Lender does not hereby agree to, nor does Lender hereby commit
itself to, enter into any Modification. However, in the event Lender does ever agree to a
Modification, such Modification shall only be upon the terms and conditions set forth in the
Security Instrument.



     Section 5.3. Costs of Collection.



     Borrower agrees to pay all costs and expenses of collection incurred by Lender, in addition to
principal, interest and late or delinquency charges (including, without limitation, reasonable
attorneys’ fees and disbursements) and including all costs and expenses incurred in connection with
the pursuit by Lender of any of its rights or remedies referred to in Section 3 hereof or its
rights or remedies referred to in any of the Loan Documents or the protection of or realization of
collateral or in connection with any of Lender’s collection efforts, whether or not suit on this
Note, on any of the other Loan Documents or any foreclosure proceeding is filed, and all such costs
and expenses shall be payable on demand, together with interest at the Default Rate thereon, and
also shall be secured by the Security Instrument and all other collateral at any time held by
Lender as security for Borrower’s obligations to Lender.



     Section 5.4. Maximum Amount.



               (a) It is the intention of Borrower and Lender to conform strictly to the usury and similar
laws relating to interest and the collection of other charges from time to time in force, and all
agreements between Borrower and Lender, whether now existing or hereafter arising and whether oral
or written, are hereby expressly limited so that in no contingency or event whatsoever, whether by
acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid in the
aggregate to Lender as interest or other charges hereunder or under the other Loan Documents or in
any other security agreement given to secure the Debt, or in any other document evidencing,
securing or pertaining to the Debt, exceed the maximum amount permissible under applicable usury or
such other laws (the “Maximum Amount”). If under any circumstances whatsoever, fulfillment
of any provision hereof, or any of the other Loan Documents, at the time performance of such
provision shall be due, shall involve transcending the Maximum Amount, then ipso
facto, the obligation to be fulfilled shall be reduced to the Maximum Amount. For the
purposes of calculating the actual amount of interest or other charges paid and/or payable
hereunder, in respect of laws pertaining to usury or such other laws, all charges and other sums
paid or agreed to be paid hereunder to the holder hereof for the use, forbearance or detention of
the Debt, outstanding from time to time shall, to the extent permitted






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by applicable law, be amortized, prorated, allocated and spread from the date of disbursement
of the proceeds of this Note until payment in full of all of the Debt, so that the actual rate of
interest on account of the Debt is uniform through the term hereof. The terms and provisions of
this Section 5.4 shall control and supersede every other provision of all agreements between
Borrower or any endorser and Lender.




               (b) If under any circumstances Lender shall ever receive an amount which would exceed the
Maximum Amount, such amount shall be deemed a payment in reduction of the Loan Amount owing
hereunder and any other obligation of Borrower in favor of Lender, and shall be so applied in
accordance with Section 2.2 hereof (without any prepayment fee or other fee resulting from such
reduction of the Principal Amount), or if such excessive interest exceeds the unpaid balance of the
Loan Amount and any other obligation of Borrower in favor of Lender, the excess shall be deemed to
have been a payment made by mistake and shall be refunded to Borrower.




     Section 5.5. Waivers.



     Borrower hereby expressly and unconditionally waives presentment, demand, protest, notice of
protest or notice of any kind, including, without limitation, any notice of intention to accelerate
and notice of acceleration, except as expressly provided herein and in the other Loan Documents,
and in connection with any suit, action or proceeding brought by Lender on this Note, any and every
right it may have to (a) to the extent permitted by applicable law, a trial by jury, (b) interpose
any counterclaim therein (other than a counterclaim which can only be asserted in the suit, action
or proceeding brought by Lender on this Note and cannot be maintained in a separate action), except
as set forth in the Loan Documents and (c) have the same consolidated with any other or separate
suit, action or proceeding, except as set forth in the Loan Documents.



     Section 5.6. Governing Law.



     This Note and the obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the District of Columbia applicable to contracts made and performed in
such State and any applicable law of the United States of America.



     Section 5.7. Headings.



     The Section headings in this Note are included herein for convenience of reference only and
shall not constitute a part of this Note for any other purpose.



     Section 5.8. Assignment.



     Lender shall have the right to transfer, sell and assign this Note, the Security Instrument
and/or any of the other Loan Documents or any interest therein, and the obligations hereunder, to
any Person. All references to “Lender” hereunder shall be deemed to include the assigns of the
Lender.



     Section 5.9. Severability.



     Wherever possible, each provision of this Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Note shall be prohibited



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by or invalid under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining
provisions of this Note.




     Section 5.10. Joint and Several.



     If Borrower consists of more than one Person or party, the obligations and liabilities of each
such Person or party hereunder shall be joint and several.



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     IN WITNESS WHEREOF, this Note has been duly executed by the Borrower the day and year first
written above.



	 	 	 	 	 	 	 	 	 	 	 

	 	 	BORROWER:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	TARIFF BUILDING ASSOCIATES, L.P., a California
	 	 	limited partnership
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Square 430, LLC, a Delaware limited
	 	 	 	 	liability company, its general partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Kimpton Group Holding LLC, a Delaware
	 	 	 	 	 	 	limited liability company, its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	/s/ Gregory Wolkom
	 	 	 	 	 	 	 	 	   
	 	 	 	 	 	 	 	 	Name: Gregory J. Wolkom
	 	 	 	 	 	 	 	 	Title: CFO