PROMISSORY NOTE
(Fixed Rate)
Loan No. 7171 $5,350,000.00
February 8, 1996
Dallas, Texas
FOR VALUE RECEIVED, the undersigned, DALLAS/XXXX HILLS, L.P., a Texas
limited partnership ("Borrower"), jointly and severally, if more than one,
promises to pay to the order of HANOVER CAPITAL MORTGAGE CORPORATION, a Missouri
corporation ("Lender"), at the office of Lender at 0000 Xxxxxxxx, Xxxxx 000, Xx.
Xxxxx, Xxxxxxxx 00000, or at such other place as Lender may designate to
Borrower in writing from time to time, the principal sum of Five Million Three
Hundred Fifty Thousand and No/100 Dollars ($5,350,000.00), together with
interest on so much thereof as in from time to time outstanding and unpaid, at
the rate of Eight and One-Fourth percent (8.25%) per annum (the "Note Rate"), in
lawful money of the United States of America, which shall at the time of payment
be legal tender in payment of all debts and dues, public and private.
ARTICLE I - TERMS AND CONDITIONS
1.01 Payment of principal and Interest.
Said interest shall be computed hereunder based on a 360-day year and based on
twelve (12) 30-day months for each full calendar month and on the actual number
of days elapsed for any partial month in which interest is being calculated. In
computing the number of days during which interest accrues, the day on which
funds are initially advanced shall be included regardless of the time of day
such advance is made, and the day on which funds are repaid shall be included
unless repayment is credited prior to close of business. Payment in federal
funds immediately available in the palace designated for payment received by
Lender prior to 2:00 p.m. local time at said place of payment shall be credited
prior to close of business, while other payments may, at the option of Lender,
not be credited until immediately available to Lender in federal funds in the
place designated for payment prior to 2:00 p.m. local time at said place of
payment on a day on which Lender is open for business. Such principal and
interest shall be payable in equal consecutive monthly installments of
$42,182.08 each, beginning on the first day of the second full calendar month
following the date of this Note (or on the first day of the first full calendar
month following the date hereof, in the event the advance of the principal
amount evidenced by this Note is the first day of a calendar month), and
continuing on the first day of each and every month thereafter through and
including February 1, 2011, and on March 1, 2011 (the "Maturity Date"), at which
time the entire outstanding principal balance hereof, together with all accrued
but unpaid interest thereon, shall be due and payable in full. Each such monthly
installment shall be applied first to the payment of accrued interest and then
to reduction of principal. If the advance of the principal amount evidenced by
this Note is made on a date other than the first day of a calendar month, then
Xxxxxxxx shall pay to Lender contemporaneously with the execution hereof
interest at the Note Rate for a period from the date hereof through and
including the first day of the next succeeding calendar month.
1.02 Prepayment.
a) This Note may be prepaid in whole but not in part (except as otherwise
specifically provided herein) at any time after the third (3rd) anniversary of
this Note provided (i) written notice of such prepayment is received by Lender
not more than sixty (60) days and not less than thirty (30) days prior to the
date of such prepayment, (ii) such prepayment is accompanied by all interest
accrued hereunder and all other sums due hereunder or under the other Loan
Documents, and (iii) if such prepayment occurs prior to the date that is six (6)
months prior to the Maturity Date, Lender is paid a prepayment fee in an amount
equal to the greater of (A) one percent (1.0%) of the principal amount being
prepaid, and (B) the positive excess of (1) the present value ("PV") of all
future installments of principal and interest due under this Note including the
principal amount due at maturity (collectively, "All Future Payments"),
discounted at on interest rate per annum equal to the sum of (a) the Treasury
Constant Maturity Yield Index published during the second full week preceding
the date on which such premium is payable for instruments having a maturity
coterminous with the remaining term of this Note, and (b) fifty (50) basis
points over (ii) the principal amount of this Note outstanding immediately
before such prepayment ((PV of All Future Payments) (principal balance at time
of prepayment) = prepayment fee). "Treasury Constant Maturity Yield Index" shall
mean the average yield for "This Week" as reported by the Federal Reserve Board
in Federal Reserve Statistical Release H.15 (519). If there is no Treasury
Constant Maturity Yield Index for instruments having a maturity coterminous with
the remaining term of this Note, then the index shall be equal to the weighted
average yield to maturity of the Treasury Constant Maturity Yield Indices with
maturities next longer and shorter than such remaining average life to maturity,
calculated by averaging (and rounding upward to the nearest whole multiple of
1/100 of 1% per annum, if the average is not such a multiple) the yields of the
relevant Treasury Constant Maturity Yield indices (rounded, if necessary, to the
nearest 1/100 of 1% with any figure of 1/200 of 1% or above rounded upward). In
the event that any prepayment fee is due hereunder, Xxxxxx shall deliver to
Borrower a statement setting forth the amount and determination of the
prepayment fee, and, provided that Lender shall have in good faith applied the
formula described above, Borrower shall not have the right to challenge the
calculation or the method of calculation set forth in any such statement in the
absence of manifest error, which calculation may be made by Lender on any day
during the thirty (30) day period preceding the date of such prepayment. Lender
shall not be obligated or required to have actually reinvested the prepaid
principal balance at the Treasury Constant Maturity Yield or otherwise as a
condition to receiving the prepayment fee. No prepayment fee or premium shall be
due or payable in connection with any prepayment of the indebtedness evidenced
by this Note made on or after the date that is six (6) months prior to the
Maturity Date. In addition to the aforesaid prepayment fee if, upon any such
prepayment (whether prior to or after the date that is six (6) months prior to
the Maturity Date), the aforesaid prior written notice has not been received by
Xxxxxx, the prepayment fee shall be increased by an amount equal to the lesser
of (i) thirty (30) days' unearned interest computed on the outstanding principal
balance of this Note so prepaid and (ii) unearned interest computed on the
outstanding principal balance of this Note so prepaid for the period from, and
including, the date of prepayment through the otherwise stated maturity date of
this Note.
b) Partial prepayments of this Note shall not be permitted, except partial
prepayments resulting from Lender applying insurance or condemnation proceeds to
reduce the outstanding principal balance of this Note as provided in the
Security Instrument (as hereinafter defined), in which event no prepayment fee
or premium shall be due. No notice of prepayment shall be required under the
circumstance specified in the preceding sentence. No principal amount repaid may
be reborrowed. Partial payments of principal shall be applied to the unpaid
principal balance evidenced hereby but such application shall not reduce the
amount of the fixed monthly installments required to be paid pursuant to Section
1.01 above.
c) Except as otherwise expressly provided in Section 1.02(b) above, the
prepayment fees provided above shall be due, to the extent permitted by
applicable law, under any and all circumstances where all or any portion of this
Note is paid prior to the Maturity Date, whether such prepayment is voluntary or
involuntary, even if such prepayment results from Lender's exercise of its
rights upon Borrower's default and acceleration of the maturity date of this
Note (irrespective of whether foreclosure proceedings have been commenced), and
shall be in addition to any other sums due hereunder or under any of the other
Loan Documents (as hereinafter defined). No tender of a prepayment of this Note
with respect to which a prepayment fee is due shall be effective unless such
prepayment is accompanied by the prepayment fee. If the indebtedness of this
Note shall have been declared due and payable by Lender pursuant to Section 1.04
hereof due to a default by Borrower, then any tender of payment of such
indebtedness made prior to the first anniversary date hereof must include a
prepayment fee computed as provided in Section 1.02(a) above plus an additional
prepayment fee of one percent (1%) of the principal balance of this Note.
1.03 Security.
The indebtedness evidenced by this note and the obligations created hereby are
secured by that certain Mortgage and Security Agreement (the "Security
Instrument") from Borrower to Lender, dated as of February 9, 1996, concerning
property located in Dallas County, Texas. The Security Instrument together with
this Note and all other documents to or of which Xxxxxx is a party or
beneficiary now or hereafter evidencing, securing, quarantying, modifying or
otherwise relating to the indebtedness evidenced hereby, are herein referred to
collectively as the "Loan Documents". All of the terms and provisions of the
Loan Documents are incorporated herein by reference. Some of the Loan Documents
are to be filed for record on or about the date hereof in the appropriate public
records.
1.04 Default.
It is hereby expressly agreed that should any default occur in the payment of
principal or interest as stipulated above and such payment is not made wihtin
five (5) days of the date such payment is due (provided that no grace period is
provided for the payment of principal and interest due on the Maturity Date), or
should any other default occur under any of the Loan Documents which is not
cured within any applicable grace or cure period, then a default shall exist
hereunder, and in such event the indebtedness evidenced hereby, including all
sums advanced or accrued hereunder or under any other Loan Document, and all
unpaid interest accrued thereon, shall, at the option of Lender and without
notice to Borrower, at once become due and payable and may be collected
forthwith, whether or not there has been a prior demand for payment and
regardless of the stipulated date of maturity. In the event that any payment is
not received by Lender on the date when due (subject to the applicable grace
period), then in addition to any default interest payments due hereunder,
Borrower shall also pay to Lender a late charge in an amount equal to five
percent (5.0%) of the amount of such overdue payment. So long as any default
exists hereunder, regardless of whether or not there has been an acceleration of
the indebtedness evidenced hereby, and at all times after maturity of the
indebtedness evidenced hereby (whether by acceleration or otherwise), interest
shall accrue on the outstanding principal balance of this Note at a rate per
annum equal to four percent (4.0%) plus the interest rate which would be in
effect hereunder absent such default or maturity, or if such increased rate of
interest may not be collected under applicable law, then the maximum rate or
interest, if any, which may be collected from Borrower under applicable law (the
"Default Interest Rate"), and such default interest shall be immediately due and
payable. Borrower acknowledges that it would be extremely difficult or
impracticable to determine Xxxxxx's actual damages resulting from any late
payment or default, and such late charges and default interest are reasonable
estimates of those damages and do not constitute a penalty. The remedies of
Lender in this Note or in the Loan Documents, or at law or in equity, shall be
cumulative and concurrent, and may be pursued singly, successively or together
in Xxxxxx's discretion. Time is of the essence of this Note. In the event this
Note, or any part hereof, is collected by or through an attorney-at-law,
Xxxxxxxx agrees to pay all costs of collection including, but not limited to,
reasonable attorneys' fees.
1.05 Exculpation.
Notwithstanding anything in the Loan Documents to the contrary, but subject to
the qualifications hereinbelow set forth, Xxxxxx agrees that (i) Borrower shall
be liable upon the indebtedness evidenced hereby and for the other obligations
arising under the Loan Documents to the full extent (but only to the extent) of
the security therefor, the same being all properties (whether real or personal),
rights, estates and interests now or at any time hereafter securing the payment
of this Note and/or the other obligations of Borrower under the Loan Documents
(collectively, the "Security Property"), (ii) if default occurs in the timely
and proper payment of all or any part of such indebtedness evidenced hereby or
in the timely and proper performance of the other obligations of Borrower under
the Loan Documents, any judicial proceedings brought by Lender against Borrower
shall be limited to the preservation, enforcement and foreclosure, or any
thereof, of the liens, security titles, estates, assignments, rights and
security interest now or at any time hereafter securing the payment of this Note
and/or the other obligations of Borrower under the Loan Documents, and no
attachment, execution or other writ of process shall be sought, issued or levied
upon any assets, properties or funds of Borrower other than the Security
Property except with respect to the liability described below in this section,
and (iii) in the event of a foreclosure of such liens, security titles the
payment assignments, rights or security interests securing the payment of this
Note and/or the other obligations of Borrower under the Loan Documents, no
judgment for any deficiency upon the indebtedness evidenced hereby shall be
sought or obtained by Lender against Borrower, except with respect to the
liability described below in this section; provided, however, that,
notwithstanding the foregoing provisions of this section, Borrower shall be
fully and personally liable and subject to legal action (a) for proceeds paid
under any insurance policies (or paid as a result of any other claim or cause of
action against any person or entity) by reason of damage, loss or destruction to
all or any portion of the Security Property, to the full extent of such proceeds
not previously delivered to Lender, but which, under the terms of the Loan
Documents, should have been delivered to Lender; (b) for proceeds or awards
resulting from the condemnation or other taking in lieu of condemnation of all
or any portion of the Security Property, or any of them, to the full extent of
such proceeds or awards not previously delivered to Lender, but which, under the
term of the Loan Documents, should have been delivered to Lender; (c) for all
tenant security deposits or other refundable deposits paid to or held by
Borrower or any other person or entity in connection with leases of all or any
portion of the Security Property which are not applied in accordance with the
terms of the applicable lease or other agreement; (d) for rent and other
payments received from tenants under leases of all or any portion of the
Security Property paid more than one month in advance; (e) for rents, issues,
profits and revenues of all or any portion of the Security Property received or
applicable to a period after any notice of default from Lender hereunder or
under the Loan Documents in the event of any default by Borrower hereunder or
thereunder which are not either applied to the ordinary and necessary expenses
of owning and operating the Security Property or paid to Lender; (f) for waste
committed on the Security Property, Damage to the Security Property at a result
of the intentional misconduct or gross negligence of Borrower or any of its
principals, officers or general partners, or any agent or employee of any such
persons, or any removal of the Security Property in violation of the terms of
the Loan Documents, to the full extent of the losses or damages incurred by
Xxxxxx on account of such failure, (g) for failure to pay any valid taxes,
assessments, mechanic's liens, materialmen's liens or other liens which could
create liens on any portion of the Security Property which would be superior to
the lien or security title of the Security Instrument or the other Loan
Documents, to the full extent of the amount claimed by any such lien claimant,
(h) for all obligations and indemnities of Borrower under the Loan Documents
relating to hazardous or toxic substances or compliance with environmental laws
and regulations to the full extent of any losses or damages (including those
resulting from diminution in value of any Security Property) incurred by Xxxxxx
as a result of the existence of such hazardous or toxic substances or failure to
comply with environmental laws or regulations, and (i) for fraud or material
misrepresentation by Borrower or any of its principals, officers, or general
partners, any guarantor, any indemnitor or any agent, employee or other person
authorized or apparently authorized to make statements or representations on
behalf of Xxxxxxxx, any principal, officer or partner of Xxxxxxxx, any guarantor
or any indemnitor, to the full extent of any losses, damages and expenses of
Xxxxxx on account thereof. References herein to particular sections of the Loan
Documents shall be deemed references to such sections as affected by other
provision of the Loan Documents relating thereto. Nothing contained in this
section shall (1) be deemed to be a release or impairment of the indebtedness
evidenced by this Note or the other obligations of Borrower under the Loan
Documents or the lien of the Loan documents upon the Security Property, or (2)
preclude Lender from foreclosing the Loan Documents in case of any default or
from enforcing any of the other rights of Lender except as stated in this
section, or (3) limit or impair in any way whatever the indemnity and Guaranty
Agreement of even date executed and delivered in connection with the
indebtedness evidenced by this Note or release, relieve, reduce, waive or impair
in any way whatsoever, any obligation of any party to such Indemnity Agreement.
ARTICLES II - GENERAL CONDITIONS
2.01 No waiver; Amendment.
No failure to accelerate the debt evidenced hereby by reason of default
hereunder, acceptance of a partial or past due payment, or indulgences granted
from time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
of acceleration or of the right of Lender thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by any applicable
laws; and Borrower hereby expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing. No extension of
the time for the payment of this Note or any installment due hereunder, made by
agreement with any person now or hereafter liable for the payment of this Note
shall operate to release, discharge, modify, change or affect the original
liability of Borrower under this Note, either in whole or in part unless Xxxxxx
agrees otherwise in writing. This Note may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
2.02 Waivers.
Presentment for payment, demand, protest and notice of demand, protest and
nonpayment and all other notices are hereby waived by Xxxxxxxx. Borrower hereby
further waives and renounces, to the fullest extent permitted by law, all rights
to the benefits of any moratorium, reinstatement, marshalling, forbearance,
valuation, stay, extension, redemption, appraisement, exemption and homestead
now or hereafter provided by the Constitution and laws of the United States of
America and of each state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note or the other Loan Documents.
2.03 Limit of Validity.
The provisions of this Note and of all agreements between Borrower and Lender,
whether now or existing or hereafter arising and whether written or oral, are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of demand or acceleration of the maturity of this Note or otherwise,
shall the amount paid, or agreed to be paid ("Interest"), to Lender for the use,
forbearance or retention of the money loaned under this Note exceed the maximum
amount permissible under applicable law. If, from any circumstance whatsoever,
performance or fulfillment of any provision hereof or any agreement between
Borrower and Lender shall, at the time performance or fulfillment of such
provision shall be due, exceed the limit for Interest prescribed by law or
otherwise transcend the limit of validity prescribed by applicable law, then
ipso facto the obligation to be performed or fulfilled shall be reduced to such
limit and if, from circumstance whatsoever, Lender shall ever receive anything
of value deemed Interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive Interest shall be applied to the
reduction of the principal balance owing under this Note in the inverse order of
its maturity (whether or not then due) or at the option of Lender be paid over
to Borrower, and not to the payment of Interest. All Interest (including any
amounts or payments deemed to be Interest) paid or agreed to be paid to Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full or the
principal balance of this Note so that the Interest thereof for such full period
will not exceed the maximum amount permitted by applicable law. This Section
2.03 will control all agreements between Borrower and Lender.
2.04 Use of Funds.
Borrower hereby warrants, represents and covenants that no funds disbursed shall
be used for personal, family or household purposes.
2.05 Unconditional Payment.
Borrower is and shall be obligated to pay principal, interest and any and all
other amounts which become payable hereunder or under the other Loan Documents
absolutely and unconditionally and without any abatement, postponement,
diminution or deduction and without any reduction for counterclaim or setoff. In
the event that at any time any payment received by Lender hereunder shall be
deemed by a court of competent jurisdiction to have been a voidable preference
or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief
law, then the obligation to make such payment shall survive any cancellation or
satisfaction of this Note or return thereof to Borrower and shall not be
discharged or satisfied with any prior payment thereof or cancellation of this
Note, but shall remain a valid and binding obligation enforceable in accordance
with the terms and provisions hereof, and such payment shall be immediately due
and payable upon demand.
2.06 Miscellaneous.
This Note shall be interpreted, construed and enforced according to the laws of
the State of Texas. The terms and provisions hereof shall be binding upon and
inure to the benefit of Xxxxxxxx and Xxxxxx and their respective heirs,
executors, legal representatives, successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law. As used
herein, the terms "Borrower" and "Lender" shall be deemed to include their
respective heirs, executors, legal representatives, successors,
successors-in-title, and assigns, whether by voluntary action of the parties or
by operation of law. If Borrower consists of more than one person or entity,
each shall be jointly and severally liable to perform the obligations of
Borrower under this Note. All personal pronouns used herein, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and in no way define, limit, amplify or
describe the scope or intent of any provisions hereof. Time is of the essence
with respect to all provisions of this Note. This Note and the other Loan
Documents contain the entire Agreements between the parties hereto relating to
the subject matter hereof and thereof and all prior agreements relative hereto
and thereto which are not contained herein or therein are terminated.
Borrower's Tax Identification No.:00-0000000
IN WITNESS WHEREOF, Xxxxxxxx has executed this note under seal as of
the date first above written.
DALLAS/XXXX HILLS, L.P.,
A Texas limited partnership
By 0000 Xxxxxx Xxxx, Inc.,
a Texas corporation
General Partner
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx, President
[CORPORATE SEAL]
Pay to the order of---------------------------, without recourse.
HANOVER CAPITAL MORTGAGE CORPORATION,
a Missouri corporation
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx, Vice President
