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REAL ESTATE NOTE
$8,400,000.00 Atlanta, Georgia
June 1, 1998
FOR VALUE RECEIVED, THE UNDERSIGNED Xxxxxxx Properties Residential,
L.P., a Georgia limited partnership, whose sole general partner is Xxxxxxx
Realty Investors, Inc., a Georgia corporation (the "Borrower") promises to pay
to the order of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its
successors and assigns (the "Lender") the principal sum of EIGHT MILLION FOUR
HUNDRED THOUSAND AND NO/100 DOLLARS ($8,400,000.00), together with interest on
the principal balance of this Real Estate Note (the "Note"), from time to time
remaining unpaid, from the date of disbursement by the Lender hereof at the
applicable interest rate hereinafter set forth, together with all other sums due
hereunder or under the terms of the Security Deed (as hereinafter defined) in
lawful money of the United States of America which shall be legal tender in
payment of all debts at the time of payment. Both principal and interest and all
other sums due hereunder shall be payable at the office of the Lender at Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000-0000, Attn: Real Estate Investment
Department, or at such other place either within or without the State of Ohio,
as the Lender hereof may from time to time designate. Said principal and
interest shall be paid over a term, at the times, and in the manner set forth
below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note,
from the date of disbursement hereof at the rate of 7.15%
percent per annum, shall be due and payable on June 15, 1998.
(ii) Thereafter, principal and interest on the unpaid principal
balance of this Note at the rate of 7.15% percent per annum
shall be paid in one hundred nineteen (119) consecutive monthly
installments commencing on July 15, 1998 and continuing on the
fifteenth day of each calendar month thereafter, with each such
installment to be in the sum of Fifty-Six Thousand Seven Hundred
Thirty-Four and 17/100 Dollars ($56,734.17).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid
interest thereon, if not sooner paid, shall be due and payable in full on June
15, 2008 (the "Maturity Date").
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Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the reduction
of the outstanding principal balance of this Note. Interest due hereunder shall
be calculated on the basis of a 360-day year composed of twelve (12) thirty (30)
day months; provided, in no event shall such calculation cause the interest rate
on this Note to exceed the maximum rate permitted under applicable law.
Late Payment Charge:
The Lender of this Note may collect a late payment charge, prior to the
acceleration of this Note, in an amount equal to five percent (5%) of the
aggregate monthly installment which is not paid on the due date, for the
purposes of covering the extra expenses involved in handling delinquent
installments. Any full payment of principal and/or interest which is postmarked
by the United States Postal Service on or before the due date shall not be
considered delinquent and a late payment charge shall not be assessed.
Prepayment:
(A) Borrower shall have the right to prepay, in full but not in part,
the obligation evidenced by this Note upon giving (i) not less than thirty (30)
days' prior written notice to Lender of Borrower's intention to so prepay the
Note, and (ii) payment to Lender of the Prepayment Premium (as hereinafter
defined), if any, then due to Lender as hereinafter provided. As used herein,
the term "Prepayment Premium" shall mean the greater of (x) one percent (1.0%)
of the outstanding principal balance of this Note, or (y) a sum equal to (a) the
present value of the scheduled monthly payments hereunder from the date of
prepayment to the Maturity Date and (b) the present value of the amount of
principal and interest due on the Maturity Date (assuming all scheduled monthly
payments due hereunder prior to the Maturity Date were made when due), minus (c)
the outstanding principal balance hereof as of the date of prepayment. The
present value described in (a) and (b) of the immediately preceding sentence are
to be computed on a monthly basis as of the date of prepayment, discounted at
the yield to maturity of the U.S. Treasury Note or Bond that is closest in
maturity to the Maturity Date as reported in the Wall Street Journal (or if the
Wall Street Journal is no longer published, as reported in such other daily
financial publication of national circulation which shall be designated by
Lender) on the fifth (5th) business day preceding the date of prepayment.
Borrower shall be obligated to prepay this Note on the date set forth in the
notice to Lender required hereinabove, after such notice has been delivered to
Lender. Notwithstanding the foregoing or any other provision herein to the
contrary, if the Lender elects to apply insurance proceeds, condemnation awards
or any escrowed amounts, if applicable, to the reduction of the principal
balance of this Note in the manner provided in the Security Deed (as hereinafter
defined), no Prepayment Premium shall be due or payable as a result of such
application, and the monthly installments due and payable hereunder shall be
reduced accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by this
Note is accelerated by Lender hereof at any time due to a default by Borrower in
the terms, covenants or conditions contained in this Note, the Security Deed or
any of the other Loan Document (as hereinafter defined), then a tender of
payment of an amount necessary to satisfy the entire
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outstanding principal balance and all accrued unpaid interest of this Note made
by Borrower, or by anyone on behalf of Borrower, at any time prior to, at, or as
a result of, a foreclosure sale or sale pursuant to power of sale shall
constitute a voluntary prepayment hereunder prior to the contracted Maturity
Date of this Note thus requiring payment to Lender of a Prepayment Premium equal
to the applicable Prepayment Premium as set forth in subparagraph (A) above.
(C) Borrower acknowledges that Lender (a) has advanced the amounts
evidenced by this Note with the expectation that such amounts would be
outstanding until the Maturity Date unless prepaid in accordance with the
foregoing prepayment provisions, (b) would not have been willing to advance such
amounts on the terms set forth in this Note for a shorter period of time, (c) in
making the loan evidenced by this Note, is relying on Borrower's
creditworthiness and its agreement to pay in strict accordance with the terms
set forth in the Note, and (d) would not make the loan without full and complete
assurance by Borrower of its agreement not to prepay all or a part of the
principal of this Note except as expressly permitted herein. Borrower
acknowledges that if this Note were to be prepaid prior to the Maturity Date
other than in accordance with the foregoing prepayment provisions, Borrower
would not receive the benefit of the bargain agreed to by Xxxxxxxx and Lender.
In addition, Xxxxxxxx has been advised and acknowledges that Lender is relying
on the receipt of payments under this Note to, among other things, match and
support its obligations under contracts entered into by Lender with third
parties and that in the event of a prepayment, Xxxxxx could suffer loss and
additional expenses which are extremely difficult and impractical to ascertain.
The Prepayment Premium is a good faith resolution by Borrower and Lender of the
damages Lender would suffer, and it is not intended as a penalty.
(D) Notwithstanding anything in this "Prepayment" section of this Note
to the contrary, Borrower may prepay in full, but not in part, the obligation
evidenced by this Note at any time during the last ninety (90) days prior to the
Maturity Date without any prepayment premium.
BY INITIALING BELOW, BORROWER EXPRESSLY ACKNOWLEDGES THAT PURSUANT TO
THE PROVISIONS OF THIS NOTE, BORROWER HAS NO RIGHT TO PREPAY THIS NOTE IN WHOLE
OR IN PART WITHOUT PAYMENT OF THE PREPAYMENT PREMIUM EXCEPT AS SET FORTH ABOVE,
AND THAT BORROWER SHALL BE LIABLE FOR THE PAYMENT OF THE PREPAYMENT PREMIUM UPON
ANY PAYMENT OF THE OUTSTANDING PRINCIPAL OF THIS NOTE BEFORE ITS DUE DATE,
WHETHER VOLUNTARY OR INVOLUNTARY OR AFTER ACCELERATION OF THE NOTE WHETHER THE
ACCELERATION OF THE MATURITY HEREOF IS DUE TO BORROWER'S DEFAULT OR OTHERWISE.
FURTHERMORE, BY INITIALING BELOW, BORROWER WAIVES ANY RIGHTS IT MAY HAVE UNDER
ANY APPLICABLE STATE LAWS AS THEY RELATE TO ANY PREPAYMENT RESTRICTIONS
CONTAINED IN THIS PREPAYMENT SECTION OR OTHERWISE IN THIS NOTE AND EXPRESSLY
ACKNOWLEDGES THAT XXXXXX HAS MADE THE LOAN IN RELIANCE UPON SUCH AGREEMENTS AND
WAIVER OF BORROWER AND THAT LENDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH
AGREEMENTS AND WAIVER OF BORROWER. BORROWER ACKNOWLEDGES THAT SPECIFIC WEIGHT
HAS BEEN GIVEN TO THE CONSIDERATION GIVEN FOR SUCH AGREEMENTS, WHICH
CONSIDERATION IS THE GRANTING OF THE LOAN.
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/s/ CSR
----------------------
Borrower's initials
Additional Conditions:
This Note is secured by a Deed to Secure Debt and Security Agreement
(herein referred to as the "Security Deed") and by an Assignment of Leases,
Rents and Profits (herein referred to as the "Assignment") of even date herewith
encumbering certain real property located in Gwinnett County, Georgia and other
property as more particularly described in the Security Deed (hereinafter
collectively referred to as the "Property"). The Security Deed and the
Assignment contain terms and provisions which provide grounds for acceleration
of the indebtedness evidenced by this Note, together with additional remedies in
the event of default hereunder or thereunder. Failure on the part of the Lender
hereof to exercise any right granted herein or in the aforesaid Security Deed or
the Assignment shall not constitute a waiver of such right or preclude the
subsequent exercise and enforcement thereof. This Note, the Security Deed, the
Assignment and all other documents and instruments executed as further evidence
of, as additional security for, or executed in connection with the indebtedness
evidenced by this Note are hereinafter collectively referred to as the "Loan
Documents."
Except as otherwise provided, all parties to this Note, including
endorsers, sureties and guarantors, hereby jointly and severally waive
presentment for payment, demand, protest, notice of protest, notice of demand
and of nonpayment or dishonor and of protest, notice of intent to accelerate the
maturity of this Note, notice of acceleration of maturity of this Note, and any
and all other notices and demands whatsoever, and agree to remain bound hereby
until the principal and interest of this Note are paid in full, notwithstanding
any extensions of time for payment which may be granted by Xxxxxx, even though
the period of extension be indefinite, and notwithstanding any inaction by, or
failure to assert any legal rights available to the Lender of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or otherwise,
at any time, or from time to time, Borrower shall be liable to Lender, in each
instance, for all costs and expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees (as hereinafter
defined).
Default:
If default shall be made in the payment of principal and/or interest as
stipulated above or in the payment of any other sums due hereunder or under any
of the other Loan Documents, or should any default be made in the performance of
any of the terms, covenants and conditions contained herein or in any of the
other Loan Documents, then in any or all of such events, at the option of
Lender, the entire outstanding principal balance of this Note, together with all
accrued unpaid interest thereon and all other sums advanced by Xxxxxx on behalf
of Borrower shall become and be immediately due and payable then or thereafter
as Lender may elect, regardless of the Maturity Date hereof. All such amounts
shall bear interest after the Maturity Date, by
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acceleration or otherwise, at the lesser of either (i) the highest rate of
interest then allowed by the laws of the State of Georgia, or, if controlling,
the laws of the United States, or (ii) the then applicable interest rate of this
Note plus five-hundred (500) basis points (five per cent per annum).
During the existence of any default, Lender may apply any sums received,
including but not limited to, insurance proceeds or condemnation awards to any
amount then due and owing hereunder or under the terms of any of the other Loan
Documents as Lender may determine. Neither the right nor the exercise of the
right herein granted unto Lender to apply such proceeds as aforesaid shall
preclude Lender from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason of
Xxxxxxxx's default under the terms of this Note, or any of the other Loan
Documents.
Notwithstanding any provisions herein to the contrary, Xxxxxx's right,
power and privilege to accelerate the maturity of the indebtedness evidenced
hereby shall be conditioned upon, (a) with respect to any Monetary Default (as
hereafter defined), Lender giving Borrower written notice of such Monetary
Default and a five (5) day period ("Monetary Cure Period") after the date of
such notice within which to cure such Monetary Default; provided, however, that
such Monetary Cure Period shall be limited to once per loan year for the term of
the Loan; and (b) with respect to any Non-Monetary Default (as hereinafter
defined), Lender giving Borrower written notice of such Non-Monetary Default and
a thirty (30) day period after the date of such notice within which to cure such
Non-Monetary Default; provided, however, that if such Non-Monetary Default
cannot reasonably be cured within the 30 day period Borrower shall have a
reasonable period of time in which to cure the Non-Monetary Default provided
that Xxxxxxxx commences the cure of such default within the 30 day period and
thereafter diligently pursues the cure to completion. Any notice required
hereunder shall be given as provided in the Security Deed. Lender shall have no
obligation to give Borrower notice of any Incurable Default (as hereinafter
defined) prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare same to be
immediately due and payable and exercise all other rights and remedies herein
granted or otherwise available to Lender at law or in equity. As used herein,
the term "Monetary Default" shall mean any default which can be cured by the
payment of money including, but not limited to, the payment of principal and
interest due under this Note and the payment of taxes, assessments and insurance
premiums when due as provided in the Security Deed. As used herein, the term
"Non-Monetary Default" shall mean any default which is not a Monetary Default or
an Incurable Default. As used herein, the term "Incurable Default" shall mean
(i) any voluntary or involuntary sale, assignment, encumbering or transfer in
violation of the covenants of Section 30 of the Security Deed or (ii) if
Borrower or its general partner should make an assignment for the benefit of
creditors, become insolvent, or file a petition in bankruptcy (including but not
limited to, a petition seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Security Deed to the
contrary, the total liability for payments in the nature of interest including
but not limited to Prepayment
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Premiums, default interest and late fees shall not exceed the limits imposed by
the laws of the State of Georgia or the United States of America relating to
maximum lawful rate of interest. Lender shall not be entitled to receive,
collect or apply, as interest on the indebtedness evidenced hereby, any amount
in excess of the maximum lawful rate of interest permitted to be charged by
applicable law or regulations, as amended or enacted from time to time. In the
event Lender ever receives, collects or applies, as interest, any such excess,
such amount which would be excessive interest shall be applied to reduce the
unpaid principal balance of the indebtedness evidenced by this Note. If the
unpaid principal balance of such indebtedness is paid in full, any remaining
excess shall be forthwith paid to Borrower. If any clauses or provisions herein
contained operate or prospectively operate to invalidate this Note, then such
clauses or provisions only shall be held for naught, as though not herein
contained and the remainder of this Note shall remain operative and in full
force and effect.
Exculpation:
The liability of Borrower with respect to the payment of principal and
interest hereunder shall be "non-recourse" and, accordingly, Xxxxxx's source of
satisfaction of said indebtedness and Xxxxxxxx's other obligations hereunder and
under the other Loan Documents shall be limited to the Property and Xxxxxx's
receipt of the rents, issues and profits from the Property and any other
security or collateral now or hereafter held by Xxxxxx and Lender shall not seek
to procure payment out of any other assets of Borrower, or any person or entity
comprising Borrower, nor to seek judgment (except as hereinafter provided) for
any sums which are or may be payable under this Note or under any of the other
Loan Documents, or for any claim or judgment (except as hereinafter provided)
for any deficiency remaining after foreclosure of the Security Deed.
Notwithstanding the foregoing, nothing herein contained shall be deemed to be a
release or impairment of the indebtedness evidenced by this Note or the security
therefor intended by the other Loan Documents or be deemed to preclude Lender
from exercising its rights to foreclose the Security Deed or to enforce any of
its other rights or remedies under the Loan Documents, including but not limited
to that certain Guaranty (the "Guaranty") of even date herewith from Xxxxxxx
Realty Investors, Inc. to Lender.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Xxxxxxxx's and Xxxxxxxx's general partner's continued personal liability for all
sums due to:
(1) fraud or material misrepresentation made in or in connection
with this Note or any of the other Loan Documents;
(2) failure to pay taxes and assessments prior to delinquency, or
to pay charges for labor, materials or other charges which may
create liens on any portion of the Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property or (iii) rentals
received by or on behalf of Xxxxxxxx subsequent to the
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date on which Xxxxxx makes written demand therefor pursuant to
any of the Loan Documents;
(4) causing or permitting waste to occur in, on or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) the return to Lender of all unearned advance rentals and
security deposits that have been paid by tenants of the
Property to the extent that such fees have not been refunded
to or forfeited by such tenants;
(6) the return to Lender of any and all fees paid to Borrower by
any tenant of the Property which fees permit the tenant to
terminate its lease;
(7) loss by fire or any other casualty to the extent not
compensated by insurance proceeds collected by Xxxxxx;
(8) the return of, or reimbursement for, all Fixtures and Personal
Property (as defined in the Security Deed) owned by Xxxxxxxx
taken from the Property by or on behalf of Xxxxxxxx, out of
the ordinary course of business, and not replaced by items of
equal or greater value than the original value of the Fixtures
and Personal Property so removed;
(9) all court costs and Reasonable Attorneys' Fees (as hereinafter
defined) actually incurred which are provided for in this Note
or in any of the other Loan Documents;
(10) (i) the removal of any chemical, material or substance in
excess of legal limits, to which exposure is prohibited,
limited, or regulated by any federal, state, county, or local
authority which may or could pose a hazard to the health and
safety of the occupants of the Property, regardless of the
source of origination; (ii) the restoration of the Property to
comply with all governmental regulations pertaining to
hazardous waste found in, on or under the Property, regardless
of the source of origination; and (iii) any indemnity or other
agreement to hold Lender harmless from and against any and all
losses, liabilities, damages, injuries, costs and expenses of
any and every kind arising as a result of the existence and/or
removal of Hazardous Materials (as defined in the Security
Deed) and from the violation of Hazardous Waste Laws (as
defined in the Security Deed). Borrower shall not be liable
hereunder if the Property becomes contaminated subsequent to
Xxxxxx's acquisition of the Property by foreclosure or
acceptance of a deed in lieu thereof or subsequent to any
transfer of ownership of the Property which was approved or
authorized by Lender pursuant to the Security Deed, provided
that such transferee assumes in writing all obligations of
Borrower under the Loan Documents pertaining to Hazardous
Materials. Liability under this subparagraph (10) shall extend
beyond repayment of this Note and compliance with the terms of
the Security Deed, unless Borrower at such time provides
Lender with an
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environmental assessment report acceptable to Lender, in its
sole discretion, showing the Property to be free of Hazardous
Materials and not in violation of Hazardous Waste Laws. The
burden of proof under this subparagraph with regard to
establishing the date upon which such Hazardous Materials were
placed or appeared in, on or under the Property shall be upon
Borrower;
(11) (i) any and all costs incurred in order to cause the Property
to comply with the Accessibility Laws (as defined in the
Security Deed), and (ii) any indemnity or other agreement to
hold Lender harmless from and against any and all losses,
liabilities, damages, injuries, costs or expenses of any kind
arising as a result of non-compliance with any Accessibility
Laws. Borrower shall not be liable hereunder for compliance
with any Accessibility Laws that first become effective, or
for any violation of any Accessibility Laws resulting from
alterations or improvements to the Property that are performed
subsequent to Lender's acquisition of the Property by
foreclosure or acceptance of a deed in lieu thereof or
subsequent to any transfer of ownership of the Property which
was approved or authorized by Lender pursuant to the Security
Deed; provided that such transferee assumes in writing all
obligations of Borrower pertaining to Accessibility Laws
pursuant to the Loan Documents; and
(12) amounts under any letter of credit and any renewals and/or
replacements thereof supplied by Borrower to Lender in
connection with this Note or the loan evidenced and secured by
the Loan Documents in the event that the bank issuing such
letter of credit becomes insolvent, files or has filed against
it any bankruptcy or similar proceeding or is closed (either
temporarily or permanently), or placed in receivership,
conservatorship or liquidation by the Federal Deposit
Insurance Corporation, Resolution Trust Corporation or any
other local, state or federal government agency or otherwise
fails or refuses to honor such letter of credit; and
The obligations of Borrower in subparagraphs (1) through (12) above,
except as provided in subparagraphs (10) and (11), shall survive the repayment
of this Note, and satisfaction of the Security Deed.
Notwithstanding anything to the contrary contained in this Note or in
the other Loan Documents, as long as the Guaranty referenced above has not been
released by Xxxxxx, the "exculpation" and "non-recourse" provisions of this
section shall not be effective and Borrower shall be personally, fully, and
completely liable for the payment of this Note and performance under the Loan
Documents until the Guaranty has been released by Xxxxxx.
Full Recourse:
Notwithstanding any provisions in this Note to the contrary including,
without limitation, the provisions set forth in the section captioned
"Exculpation" hereinabove, Borrower and the general partners of Borrower shall
be personally liable, jointly and severally, for the entire
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indebtedness evidenced by this Note (including all principal, interest and other
charges) in the event Borrower (i) violates the covenant governing the placing
of subordinate financing on the Property as set forth in Paragraph 31 of the
Security Deed, or (ii) violates the covenant restricting transfers of interest
in the Property or transfers of ownership interests in Borrower as set forth in
Paragraph 30 of the Security Deed.
Miscellaneous:
As used herein, the phrase "reasonable attorneys' fees" shall mean fees
charged by attorneys selected by Lender based upon such attorneys' then
prevailing hourly rates as opposed to any amount or percentage specified by any
statute then in effect in the State of Georgia.
THE PROVISIONS of this Note shall be governed by the laws of the State
of Georgia and the United States and shall be binding upon the Borrower, its
successors and assigns and shall inure to the benefit of Lender, its successors
and assigns. Time is of the essence of this contract.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the
day and year first above written.
Xxxxxxx Properties Residential, L.P.,
a Georgia limited partnership
By: Xxxxxxx Realty Investors, Inc.,
its sole General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President
(CORPORATE SEAL)
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