1
EXHIBIT 10.5
MORTGAGE NOTE
$6,500,000.00 Dated: March 14, 1995
1120 ASSOCIATES LIMITED PARTNERSHIP
(hereinafter called "Maker")
to
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(hereinafter called "Holder")
FOR VALUE RECEIVED, 1120 ASSOCIATES LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Maker"), promises to pay to the order of SUN
LIFE ASSURANCE COMPANY OF CANADA (U.S.), a Delaware corporation, its successors
and assigns (the "Holder"), in lawful money of the United States of America,
the sum of SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($6,500,000.00) (the
"Loan") as follows:
1. The principal balance of the Loan shall bear interest at
the rate of nine and seven-eighths percent (9.875%) per annum (the "Accrual
Rate"). The principal balance and interest thereon shall be payable in
consecutive monthly installments of $69,353.11 (based on amortization of the
principal balance of the Loan over a hypothetical fifteen year term) commencing
on the first day of the second calendar month after disbursement of the Loan,
and continuing on the first day of each month thereafter, such amount being
first applied to interest and then to the reduction of principal. Interest for
the period from the date the Loan is funded until the first day of the
following calendar month shall be payable on the date hereof. Interest will be
computed according to the Bankers Rule, i.e., the actual amount of days x rate
of interest x principal/360. The entire balance of principal and all interest
outstanding hereunder shall be due and payable on March 1, 2002 ("Maturity
Date").
2
2. Prepayment of the Loan shall not be permitted during the
first forty-eight (48) months of the Loan term. Prepayment in full only of the
principal of the Loan will be permitted at any time during the last thirty-six
(36) months of the Loan term upon thirty (30) days' prior written notice to
Xxxxxx. Such prepayment shall be accompanied by additional interest
("Additional Interest") equal to the greater of (i) one percent (1%) of the
unpaid principal balance of the Loan on the date of prepayment, or (ii) that
amount which is calculated as of the date of the prepayment as follows: (A) the
Prepayment Treasury Yield (as defined below) is subtracted from 9.875%, and the
difference (but not less than 0) is (B) divided by twelve, and the quotient
thereof is then (C) multiplied by the then outstanding balance of the Loan to
determine the monthly payment differential, and (D) the present value of the
series of monthly payment differentials for the number of whole and partial
months from the prepayment date to the maturity date is determined using the
Prepayment Treasury Yield as the discount rate and compounding monthly, and (E)
the present values of such monthly payment differentials are added together.
The term "Prepayment Treasury Yield" means the yield which would be available
if the proceeds of the prepayment were invested on the date of the prepayment
in a debt obligation of the United States Treasury (other than a Flower Bond)
having a maturity most closely equivalent to that of the Loan (and if more than
one Treasury obligation has the same maturity, then the obligation offering the
highest yield), as determined by quotations published in The Wall Street
Journal on the date five (5) business days before the prepayment. If the
difference between 9.875% and the Prepayment Treasury Yield is less than 0, the
Additional Interest shall equal one percent (1%) of the unpaid principal
balance of the Loan. For purposes of calculating Additional Interest, the
first month of the Loan term shall begin on the first day of the first calendar
month after the date
-2-
3
hereof. Notwithstanding the foregoing, prepayment in full only of the
principal of the Loan will be permitted during the last three (3) months of the
Loan term upon five (5) days' prior written notice to Holder without Additional
Interest. Partial prepayment shall not be permitted at any time.
3. All payments due hereunder shall be made at the offices
of Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02181, or elsewhere, as shall be directed by
written notice by any holder hereof.
4. Maker acknowledges that the failure of Maker to make any
payment within five (5) days after the payment is due and payable will cause
Holder to incur additional expense in servicing the indebtedness evidenced by
this Note, the precise measure of which expense is not susceptible to exact
determination. Accordingly, it is further agreed that Xxxxxx may collect a
late charge of four percent (4%) of each payment more than five (5) days in
arrears, which Maker agrees is a reasonable basis on which to cover the extra
expense involved in handling delinquent payments. This shall not be construed
to obligate Holder to accept any overdue installment nor to limit Xxxxxx's
rights and remedies for Maker's default, as hereinafter set forth.
5. This Note accompanies and is secured, inter alia, by a
Mortgage and Security Agreement of even date herewith (the "Mortgage"), made
and executed by Maker upon real estate and the building and improvements
thereon known as 0000 Xxxxx Xxxxx 00, xxxxxxx on approximately 7.835 acres of
land located in Mount Laurel Township, Burlington County, New Jersey, as more
particularly identified in the Mortgage (the "Mortgaged Property"), and by an
Assignment of Leases and Agreement of even date herewith (the "Assignment of
Leases"), made and executed by Maker with respect to the Mortgaged Property.
(This Note, the Mortgage, the
-3-
4
Assignment of Leases and any other documents executed by Maker to Holder in
connection herewith are hereinafter referred to collectively as the "Loan
Documents"). All of the terms of the Loan Documents are incorporated herein by
reference and Maker does hereby covenant and agree to comply with all of the
terms, conditions and provisions of the Loan Documents. Any Event of Default
under any of the Loan Documents shall constitute an Event of Default under this
Note.
6. Maker agrees that if Maker shall, without in each
instance obtaining the prior written consent of Xxxxxx, sell, transfer, or
convey (herein all called "transfer") the Mortgaged Property or any interest
therein (other than leases of portions of the Mortgaged Property in the
ordinary course of Maker's business made in accordance with the terms of the
Assignment of Leases, and otherwise as expressly permitted in any written
agreement between Holder and Maker) whether voluntarily or by operation of law,
then, at the option of Holder, the maturity of this Note shall be advanced to
the date of such transfer, whereupon the obligations of Maker evidenced by this
Note shall immediately be due and payable. For purposes of this paragraph, any
transfer of partnership interests in Maker, other than as expressly permitted
in any written agreement between Holder and Maker, shall constitute a transfer
of the Mortgaged Property.
7. This Note, the Mortgage, the Assignment of Leases and
the other Loan Documents shall evidence and secure any future loans or advances
that may be made to or on behalf of Maker by Xxxxxx, at any time or times
hereafter intended by Maker and Holder to be so evidenced and secured, as well
as any sums paid by Holder pursuant to the terms of the Mortgage, and any such
loans, advances or payments shall be added to and shall bear interest at the
Default Rate (as hereinafter defined). The parties expressly agree that this
Note shall have the
-4-
5
full force, effect and benefits of a note to secure advances of money, the lien
of which advances relate to the date of this Note.
8. The occurrence of any of the following shall constitute
an Event of Default hereunder: Maker's failure to make payment of any
installment of principal or interest or any other sum within five (5) business
days of the date on which such installment or sum is due under this Note
(provided that Holder will only grant such 5-day grace period twice in any
twelve-month period, and any failure thereafter to make a payment on the due
date shall constitute an Event of Default without any grace period); or Maker's
nonperformance of, or noncompliance with, any of the other agreements,
conditions, covenants, provisions or stipulations contained in this Note, for a
period of twenty (20) days after written notice thereof to Maker (provided that
if such nonperformance or noncompliance cannot reasonably be cured within
twenty (20) days, an Event of Default shall not occur hereunder if Maker
initiates curing the nonperformance or noncompliance within such 20-day period
and diligently pursues such cure to completion within a reasonable time
thereafter, not to exceed ninety (90) days after such written notice); or the
occurrence of an Event of Default under the Mortgage, the Assignment of Leases
or any of the other Loan Documents. Upon the occurrence of an Event of Default
hereunder,
(a) the interest rate payable hereunder during the
continuance of the Event of Default shall be at a rate (the "Default Rate")
three (3%) percent in excess of the Accrual Rate.
(b) The entire unpaid balance of the principal debt,
additional loans or advances and all other sums paid by Xxxxxx to or on behalf
of Maker pursuant to the terms of this Note or the Mortgage, together with
unpaid interest thereon and the Acceleration Premium (as defined below), shall
at the option of the Holder and without notice become immediately due and
-5-
6
payable. The term "Acceleration Premium" shall refer to an amount equal to the
greater of (i) three percent (3%) of the unpaid principal balance of the Loan
on the date of acceleration, or (ii) that amount which is calculated as of the
date of the acceleration as follows: (A) the Acceleration Treasury Yield (as
defined below) is subtracted from 9.875%, and the difference (but not less than
0) is (B) divided by twelve, and the quotient thereof then (C) multiplied by
the then outstanding balance of the Loan to determine the monthly payment
differential, and (D) the present value of the series of monthly payment
differentials for the number of whole and partial months from the prepayment
date to the maturity date is determined using the Acceleration Treasury Yield
as the discount rate and compounding monthly, and (E) the present values of
such monthly payment differentials are added together. The term "Acceleration
Treasury Yield" means the yield which would be available if the proceeds of the
acceleration were invested on the date of the acceleration in a debt obligation
of the United States Treasury (other than a Flower Bond) having a coupon
interest rate and maturity most closely equivalent to that of the Loan, as
determined by quotations published in The Wall Street Journal on the date five
(5) business days before the acceleration. If the difference between 9.875%
and the Acceleration Treasury Yield is less than 0, the Acceleration Premium
shall equal three percent (3%) of the unpaid principal balance of the Loan.
9. Maker waives the benefit of any laws which now or
hereafter might authorize the stay of any execution to be issued on any
judgment recovered on this Note or the exemption of any property from levy or
sale thereunder. Maker also waives and releases unto Holder and its attorney,
all errors, defects and imperfections whatsoever in the entering of any
judgment or any process or proceedings relating thereto.
-6-
7
10. Maker hereby waives presentment for payment, demand,
protest, notice of protest, and of dishonor and nonpayment of this Note, and
consents that Holder may extend the time of payment or otherwise modify the
terms of payment of any part or the whole of the debt evidenced by this Note,
at the request of any person holding title to the Mortgaged Property described
in the Mortgage, and such consent shall not alter or diminish the liability of
any person hereunder.
11. The remedies of this Note, the Mortgage, the Assignment
of Leases and the other Loan Documents providing for the enforcement of the
payment of the principal sum thereby secured, together with interest thereon,
and for the performance of the covenants, conditions, and agreements herein and
therein contained, are cumulative and concurrent and may be pursued singly or
successively or together, at the sole discretion of Holder, and may be
exercised as often as occasion therefor shall occur. The waiver by Holder or
failure to enforce any covenant or condition of this Note, the Mortgage, the
Assignment of Leases or any of the other Loan Documents, or to declare any
Event of Default thereunder or hereunder, shall not operate as a waiver of any
subsequent Event of Default or affect the right of Holder to exercise any right
or remedy not expressly waived in writing.
12. Maker shall pay the cost of any revenue, tax or other
stamps now or hereafter required by law, at any time to be affixed to this Note
or the Mortgage (other than Holder's income taxes), and if any taxes hereafter
be imposed with respect to debts secured, Maker agrees to pay to Holder upon
demand the amount of such taxes, and hereby waives any contrary provisions of
any laws or rules of court now or hereafter in effect.
-7-
8
13. Notwithstanding anything to the contrary herein
contained, the liability of Maker hereunder shall be limited to and enforceable
only out of the Mortgaged Property and the rents, issues and profits therefrom,
and the lien of any judgment shall be restricted thereto and shall not extend
to Maker, Holder waiving any right Holder may have to claim a deficiency
judgment against Maker; provided, however, that Maker and its general partner
shall not be exonerated or exculpated from, and shall be liable for, any
deficiency, loss or damage suffered by Holder as a result of any security
deposits received or held by Maker, any rent received or held by Maker after an
Event of Default, or any rent prepaid more than one month in advance; or from
failure by Maker to properly account to Holder as mortgagee for any proceeds of
insurance or condemnation proceeds as required by the Mortgage; or from repairs
required by the Mortgaged Property following a casualty for which insurance
proceeds are not available due to a violation of Section 10 of the Mortgage; or
from fraud, material misrepresentation or bad faith by Maker; or from waste of
the Mortgaged Property; or from delinquent taxes or assessments; or from
Maker's violation of, or failure to perform its obligations under, Section
4(b)-(j) or Section 20 of the Mortgage. Nothing in this paragraph, however,
shall limit Xxxxxx's right against any tenants under leases assigned to Holder
as additional security, or against any other collateral securing Maker's
obligations hereunder, now or hereafter mortgaged, pledged or assigned by Maker
or anyone else to Holder. (a) Notwithstanding any provision contained in
this Note, Maker's liability for payment of interest shall not exceed the
limits imposed by applicable usury law. If any provision contained herein
requires interest payments for any period in excess of the then legally
permitted maximum rate, such provision shall automatically be deemed to require
interest payments for such period at the then legally permitted maximum rate.
-8-
9
14. Maker represents and warrants that the Loan evidenced
by this Note and secured by the Mortgage, the Assignment of Leases and the
other Loan Documents was obtained solely for the purpose of carrying on or
acquiring a business or commercial transaction.
15. The unenforceability or invalidity of any one or more of
the provisions, clauses, sentences and/or paragraphs hereof shall not render
any other provisions, clauses, sentences and/or paragraphs herein contained
unenforceable or invalid.
16. This obligation shall bind Maker and Maker's heirs,
representatives, successors and assigns, and the benefit hereof shall inure to
Holder and its successors and assigns. The word "Holder" whenever occurring
herein shall be deemed and taken to include each successive Holder hereof, and
the word "Maker" whenever occurring herein shall be deemed and taken to include
the plural, and all the covenants, waivers, warrants, promises and releases by,
and obligations or liabilities imposed upon, Maker shall bind them jointly and
severally and their, and each of their, heirs, personal representatives,
successors and assigns.
17. The parties intend that this Note shall be construed in
accordance with and governed by the laws, including the conflict of law rules,
of the State of New Jersey.
19. MAKER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION ARISING UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS.
-9-
10
IN WITNESS WHEREOF, and intending to be legally bound hereby,
Maker has caused this instrument to be duly executed the day and year first
above written.
1120 ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Palomino Corporation, a Pennsylvania corporation,
general partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxx, Vice President
Attest: /s/ X. Xxxxx Xxxxxxx
-----------------------------------------
X. Xxxxx Xxxxxxx, Secretary
-10-
