PROMISSORY NOTE
$5,000,000.00 April 3, 1997
FOR VALUE RECEIVED, the undersigned, USF&G/XXXX XXXXX REALTY PARTNERS
LIMITED PARTNERSHIP, a Maryland limited partnership ("Maker") hereby promises to
pay to the order of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation, its successor or assigns ("Noteholder") the principal sum of Five
Million and 00/100 Dollars ($5,000,000.00), with interest on the unpaid
principal balance thereof from the date of disbursement until maturity at the
rate of seven and six tenths percent (7.6%) per annum ("Interest Rate"), both
principal and interest being payable as hereinafter provided in lawful money of
the United States of America at 000 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000-0000,
or at such other place as from time to time may be designated by Noteholder.
Interest shall be calculated and paid on the basis of a 30-day month and 360-day
year.
1. Payments. Xxxxx agrees to pay Noteholder monthly as follows:
(a) interest only from the date of disbursement through June
15, 1997 and principal in the amount of Five Thousand Six Hundred Eight
and 73/100 Dollars ($5,608.73) shall be due and payable on June 15,
1997. The first month's payment is an adjusted payment; and
(b) monthly installment payments of Thirty-Seven Thousand Two
Hundred Seventy-Five and 40/100 Dollars ($37,275.40) of principal and
interest on the 15th day of July, 1997 and on the same day of each
succeeding month (the "Monthly Due Date") through and including the
15th day of May, 2002 (the "Maturity Date") on which date all unpaid
principal and interest, together with any other sums due under the
terms of this Note, shall be due and payable.
2. Treatment of Payments. All payments of principal, interest, late
charges (as described below), and Prepayment Premium (as described below), if
any, due under this Note, shall be paid in lawful money of the United States of
America to Noteholder at Noteholders' address as set forth above, or at such
other place, as Noteholder shall designate. Each installment payment under this
Note shall be applied first to the payment of any unpaid late charge, then to
accrued interest and the remainder to the reduction of unpaid principal. As to
all installment payments, time is of the essence.
3. Late Charges. If any monthly installment of principal and/or
interest is not paid in full on or before the Monthly Due Date, then a charge
for late payment ("Late Charge") of $24.85 per day (the Per Diem Late Charge")
shall be assessed by Noteholder and paid by Maker for each day that such payment
is not paid from (and including) the first day after such Monthly Due Date to
(and including) the date upon which such payment is made; provided, however,
that if any such monthly principal and/or interest payment, together with all
accrued Per Diem Late Charges, is not made in full on or before the fourteenth
day immediately following such Monthly Due Date, a Late Charge equal to 4% of
the monthly principal and/or interest payment (the "Monthly Late Charge") shall
be deemed to be immediately assessed and shall be immediately due and payable by
Maker. The Monthly Late Charge shall be payable in lieu of and not in addition
to any Per Diem Late Charges that shall have accrued during the two-week period
immediately preceding the assessment of the Monthly Late Charge. The Per Diem
Late Charge and Monthly Late Charge shall be in addition to all other rights and
remedies available to Noteholder upon the occurrence of a default under the Loan
Documents.
4. Default Interest. In the event of (a) a default under this Note, the
Mortgage or any other Loan Documents, or (b) maturity of this Note, interest
shall accrue hereunder at the greater of (i) the Prime Rate plus five percent
per annum or (ii) the Interest Rate plus five percent (5%) per annum, but not in
excess of that permitted by law ("Default Rate"). "Prime Rate" shall mean the
prime rate published in the Wall Street Journal on the date the default occurs.
5. Security. This Note is secured by a Mortgage, Security Agreement and
Fixture Filing (hereinafter called the "Mortgage") of even date herewith in
favor of Noteholder evidencing a lien on certain real property in Xxxxxx County,
Indiana, described therein, and evidencing a security interest in certain
personal property, fixtures and equipment described therein and by other
documents to which reference is hereby made for a description of the property
covered thereby, the nature and extent of the security and the rights and powers
of Noteholder in respect to such security, and for certain terms used in this
Note. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Mortgage.
6. Event of Default. Upon the failure to pay any installment of
principal and/or interest due on this Note as above promised (provided, however,
Noteholder shall provide written notice to Maker of Maker's failure to pay any
installment of principal and/or interest due on this Note as above promised one
(1) time in any twelve (12) month period in which event Maker shall have five
(5) days from delivery of such notice to pay such installment) or upon the
occurrence of a default specified in any of the Loan Documents, Noteholder shall
have the option of declaring the Indebtedness to be immediately due and payable
("the Loan Acceleration"). After Loan Acceleration, Noteholder shall have the
option of applying any payments received to principal or interest or any other
costs due pursuant to the terms of this Note or the Loan Documents.
7. Prepayment. Subject to Maker's payment of the premium for early
repayment referred to below and all accrued interest and other sums due under
this Note, the Mortgage and any other Loan Documents, if any, Maker shall have
the right to prepay all or part of the outstanding principal balance of this
Note on any date upon giving not less than thirty (30) days prior written notice
to Noteholder of Maker's intention to prepay. If the principal of this Note is
prepaid for any reason, whether voluntarily or involuntarily, or after Loan
Acceleration, Maker shall pay a premium for prepayment (the "Prepayment
Premium") in an amount equal to the Present Value of this Note (as hereinafter
defined) less the amount of principal being prepaid, including accrued interest,
if any, calculated as of the Prepayment Date. Noteholder shall notify Maker of
the amount and basis of determination of the Prepayment Premium. On or before
the Prepayment Date, Maker shall pay to Noteholder the Prepayment Premium
together with the amount of the principal being prepaid and all accrued interest
and other sums due under this Note and the Loan Documents. Noteholder shall not
be obligated to accept any prepayment of the principal balance of this Note
unless such prepayment is accompanied by the Prepayment Premium and all accrued
interest and other sums due under this Note and the Loan Documents. For purposes
of determining the Prepayment Premium, the following terms shall have the
following meanings:
(a) The "Treasury Rate" is the sum of (x) the
semi-annual yield on the Treasury Constant Maturity Series
with maturity equal to the remaining weighted average life of
the payments due on this Note, for the week prior to the
Prepayment Date, as reported in Federal Reserve Statistical
Release H.15 Selected Interest Rates, conclusively determined
by Noteholder on the Prepayment Date, and (y) one percent
(1%). The rate will be determined by linear interpolation
between the yields reported in Release H.15, if necessary. In
the event Release H.15 is no longer published, Noteholder
shall select a comparable publication to determine the
Treasury Rate.
(b) The "Discount Rate" is the rate which, when
compounded monthly, is equivalent to the Treasury Rate, when
compounded semi-annually.
(c) The "Present Value of this Note" shall be
determined by discounting all scheduled payments of principal
and interest remaining to maturity of this Note, attributed to
the amount being prepaid, at the Discount Rate. If prepayment
occurs on a date other than a regularly scheduled payment
date, the actual number of days remaining from the Prepayment
Date to the next regularly scheduled payment date will be used
to discount within this period.
Maker agrees that Noteholder shall not be obligated to actually reinvest the
amount prepaid in any Treasury obligations as a condition precedent to receiving
the Prepayment Premium.
Notwithstanding the foregoing, no Prepayment Premium will be due if
this Note is prepaid on or after January 15, 2002.
8. Limitation on Personal Liability. Except as hereinafter provided, in
the event of Loan Acceleration due to an event of default described in paragraph
6 of this Note, Lender shall not enforce any deficiency judgment against Maker
or the general partners of Maker (hereinafter referred to singularly or
collectively as the "Exculpated Parties") with respect to any and all
obligations secured by the Mortgage in excess of the amount realized upon
foreclosure against (or sale, pursuant to power of sale, of) any and all
Property therefor; provided, however, that nothing contained herein or in any
Loan Document shall:
(a) limit Noteholder's other rights and remedies against the
Exculpated Parties hereunder or thereunder, either at law or in equity;
(b) limit the enforceability of, or Noteholder's recourse
under, any certificate, indemnity, guaranty, master lease or similar
instrument furnished in connection with the Loan (including, without
limitation, the Hazardous Substances Remediation and Indemnification
Agreement, the ERISA Certificate and Indemnification Agreement, the
Certificate of Representation and Warranties, and the brokerage
indemnity); or
(c) relieve the Exculpated Parties from personal liability or
responsibility for:
(i) waste with respect to the Property;
(ii) any security deposits of tenants (i) not turned
over to Noteholder upon foreclosure, sale (pursuant to power
of sale), or conveyance in lieu thereof or (ii) not turned
over to a receiver or trustee for the Property after
appointment thereof;
(iii) any insurance proceeds or condemnation awards
received by any of the Exculpated Parties and not turned over
to Noteholder nor used in compliance with the Loan Documents;
(iv) the greater of the amounts set forth below in
8(c)(iv)(1) and (2), if any of the Exculpated Parties executes
an amendment or termination of any lease at the Property
(other than a lease with a Major Tenant (as defined in the
Mortgage) which is addressed in subsection 8(D) below) without
Noteholder's prior written consent, if such consent is
required under the Loan Documents:
(1) the present value (calculated at the
Discount Rate) of the aggregate total dollar amount
(if any) by which (A) rental income and/or other
tenant obligations prior to the amendment of such
lease exceeds (B) rental income and/or other tenant
obligations after the amendment of such lease; or
(2) any termination fee or other
consideration paid;
(v) any rents and other income from the Property
received by any of the Exculpated Parties after a default
under the Loan Documents and not otherwise applied to the
current (not deferred) fixed and operating expenses of the
Property or to the Indebtedness under this Note; provided,
however, the Exculpated Parties shall be personally liable for
any such amounts paid as management, maintenance, repair or
janitorial fees, costs, expenses or any other charges to any
of the Exculpated Parties or to a person or entity related to
or affiliated with any of the Exculpated Parties;
(vi) any assessments and taxes (accrued and/or
payable) with respect to the Property;
(vii) any sums expended by Noteholder in fulfilling
the obligations of Maker, as lessor, under any Leases of the
Property; or
(viii) all legal fees, including allocated cost of
Noteholder's staff attorneys, and other expenses incurred by
Noteholder in enforcing the Loan Documents if Maker contests,
delays, or otherwise hinders or opposes (including, without
limitation, the filing of a bankruptcy) any of Noteholder's
enforcement actions.
Notwithstanding the foregoing, this agreement by Noteholder not to
pursue recourse liability SHALL BECOME NULL AND VOID and shall be of no
further force and effect in the event:
(A) that there shall be any breach or violation of
the Due on Sale or Encumbrance section of the Mortgage; or
(B) of any fraud or material misrepresentation by any
of the Exculpated Parties in connection with the Property, the
Loan Documents, the Loan Application, or any other aspect of
the Loan; or
(C) that the Premises or any part thereof shall
become an asset in (i) an involuntary bankruptcy or insolvency
proceeding, filed by a Person other than Noteholder, which is
not dismissed within ninety (90) days of filing, or (ii) a
voluntary bankruptcy or insolvency proceeding; or
(D) that any of the Exculpated Parties executes an
amendment or termination of any lease with a Major Tenant
assigned to Noteholder under the Loan Documents, without the
prior written consent of Noteholder, if such consent is
required under the Loan Documents.
9. Non-Usurious Loan. It is the intent of Noteholder and Maker in this
Note and all other Loan Documents now or hereafter securing this Note to
contract in strict compliance with applicable usury law. In furtherance thereof,
Noteholder and Maker stipulate and agree that none of the terms and provisions
contained in this Note, or in any other instrument executed in connection
herewith including but not limited to the Loan Documents, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum interest rate permitted to be
charged by applicable law. Neither Maker nor any guarantors, endorsers or other
parties now or hereafter becoming liable for payment of this Note shall ever be
required to pay interest on this Note at a rate in excess of the maximum
interest that may be lawfully charged under applicable law, and the provisions
of this paragraph shall control over all other provisions of this Note, the Loan
Documents and any other instruments now or hereafter executed in connection
herewith which may be in apparent conflict herewith. Noteholder expressly
disavows any intention to charge or collect excessive unearned interest or
finance charges in the event the maturity of this Note is accelerated. If the
maturity of this Note is accelerated for any reason or if the principal of this
Note is paid prior to the end of the term of this Note, and as a result thereof
the interest received for the actual period of existence of this Note exceeds
the applicable maximum lawful rate, Noteholder shall, at its option, either
refund the amount of such excess or credit the amount of such excess against the
principal balance of this Note then outstanding and thereby shall render
inapplicable any and all penalties of any kind provided by applicable law as a
result of such excess interest. In the event that Noteholder collects monies
which are deemed to constitute interest which would increase the effective
interest rate on this Note to a rate in excess of that permitted to be charged
by applicable law, all such sums deemed to constitute interest in excess of the
lawful rate shall, upon such determination, at the option of Noteholder, be
either immediately returned or credited against the principal balance of this
Note then outstanding, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. By
execution of this Note Maker acknowledges that it believes this Note and all
interest and fees paid pursuant to the Loan represented by this Note, to be
non-usurious. Maker agrees that if, at any time, Maker should believe that this
Note or the Loan is in fact usurious, Maker will give Noteholder notice of such
condition and Maker agrees that Noteholder shall have ninety (90) days in which
to make appropriate refund or other adjustment in order to correct such
condition if in fact such condition exists. The term "applicable law" as used in
this Note shall mean the laws of the State of Indiana or the laws of the United
States, whichever allows the greater rate of interest, as such laws now exist or
may be changed or amended or come into effect in the future.
10. Noteholder's Attorneys' Fees. Should the Indebtedness represented
by this Note or any part thereof be collected at law or in equity or through any
bankruptcy, receivership, probate or other court proceedings or if this Note is
placed in the hands of attorneys for collection after default, or if the lien or
priority of the lien represented by the Mortgage is the subject of any Court
proceeding, Maker and all endorsers, guarantors and sureties of this Note
jointly and severally agree to pay to Noteholder in addition to the principal
and interest due and payable hereon reasonable attorneys' and collection fees
including those incurred by Noteholder for any appeal.
11. Maker's Waivers. Maker and all endorsers, guarantors and sureties
of this Note and all other persons liable or to become liable on this Note
severally waive presentment for payment, demand, notice of demand and of
dishonor and nonpayment of this Note, notice of intention to accelerate the
maturity of this Note, notice of acceleration, protest and notice of protest,
diligence in collecting, and the bringing of suit against any other party, and
agree to all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in part, with or without notice, before
or after maturity.
12. Payment of Taxes and Fees. Maker agrees to pay the cost of any
revenue, tax or other documentary fee or stamps now or hereafter required by law
to be affixed to this Note or the Mortgage.
13. Governing Law. This Note and the rights, duties and liabilities of
the parties hereunder and/or arising from or relating in any way to the
indebtedness evidenced by this Note or the transaction of which such
indebtedness is a part shall be governed and construed for all purposes by the
law of the State of Indiana.
14. WAIVER OF TRIAL BY JURY. MAKER AND ALL EXCULPATED PARTIES HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THE
LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF NOTEHOLDER, ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
MAKER:
USF&G/XXXX XXXXX REALTY
PARTNERS LIMITED PARTNERSHIP,
a Maryland limited partnership
By: USF&G Realty Partners, Inc. a
Maryland corporation, general
partner
By: __________________________
Name:____________________
Title:___________________
