Loan No. C-332003 Washington, D.C.
PROMISSORY NOTE
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$38,500,000.00 Dated as of January 10, 1997
For value received, the undersigned, herein called "Borrower," promises
to pay to the order of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a
Wisconsin corporation, who, together with any subsequent holder of this note, is
hereinafter referred to as "Lender", at 000 X. Xxxxxxxxx Xxxxxx Xxxxxxxxx, XX
00000 or at such other place as Lender shall designate in writing, in coin or
currency which, at the time or times of payment, is legal tender for public and
private debts in the United States, the principal sum of THIRTY-EIGHT MILLION
FIVE HUNDRED THOUSAND DOLLARS or so much thereof as shall have been advanced
from time to time plus interest on the outstanding principal balance at the rate
and payable as follows:
Interest shall accrue from the date of advance until maturity at the
rate of seven and eighty-eight hundredths percent (7.88%) per annum (the
"Interest Rate"). Accrued interest only on the amount advanced shall be paid on
the first day of the month following the date of advance ("Amortization Period
Commencement Date"). On the first day of the following month and on the first
day of each month thereafter until maturity, installments of principal and
interest shall be paid in the amount of $294,095.24. All installments shall be
applied first in payment of interest, calculated monthly on the unpaid principal
balance, and the remainder of each installment shall be applied in payment of
principal. The entire unpaid principal balance plus accrued interest thereon
shall be due and payable on January 2, 2013 (the "Maturity Date").
Borrower shall have the right, upon thirty (30) days advance written
notice, beginning January 1, 2002 of paying this note in full with a prepayment
fee. This fee represents consideration to Lender for loss of yield and
reinvestment costs. The fee shall be the greater of Yield Maintenance or 1% of
the outstanding principal balance of this note.
As used herein, "Yield Maintenance" means the amount, if any, by which
(i) the present value of the Then Remaining Payments (as hereinafter
defined) calculated using a periodic discount rate (corresponding to the payment
frequency under this note) which, when compounded for such number of payment
periods in a year, equals the sum of 0.5% and the per annum effective yield of
the Most Recently Auctioned United States Treasury Obligation having a maturity
date equal to the Maturity Date (or, if there is no such equal maturity date,
then the linearly interpolated per annum effective yield of the
two Most Recently Auctioned United States Treasury Obligations having maturity
dates most nearly equivalent to the Maturity Date) as reported by The Wall
Street Journal five business days prior to the date of prepayment; exceeds
(ii) the outstanding principal balance of this note (exclusive of all accrued
interest).
If such United States Treasury obligation yields shall not be reported as of
such time or the yields reported as of such time shall not be ascertainable,
then the periodic discount rate shall be equal to the sum of 0.5% and the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported, as of five business days preceding the
prepayment date, in Federal Reserve Statistical Release H. 15 (519) (or any
comparable successor publication) for actively traded United States Treasury
obligations having a constant maturity most nearly equivalent to the Maturity
Date.
As used herein, "Then Remaining Payments" means payments in such amounts and at
such times as would have been payable subsequent to the date of such prepayment
in accordance with the terms of this note.
As used herein, "Most Recently Auctioned United States Treasury Obligations"
means the U.S. Treasury bonds, notes and bills with maturities of 30 years, 10
years, 5 years, 3 years, 2 years and I year which, as of the date the prepayment
fee is calculated, were most recently auctioned by the United States Treasury.
Upon the occurrence of an Event of Default (as defined in the Lien Instrument)
followed by the acceleration of the whole indebtedness evidenced by this note,
or a condemnation or sale under threat of condemnation of all or substantially
all of the Property, the payment of such indebtedness will constitute an evasion
of the prepayment terms hereunder and be deemed to be a voluntary prepayment
hereof and such payment will, therefore, to the extent not prohibited by law,
include the prepayment fee required under the prepayment in full privilege
recited above or, if such prepayment occurs prior to January 1, 2002-and results
from an Event of Default followed by an acceleration of the whole indebtedness,
then such payment will, to the extent not prohibited by law, include a
prepayment fee equal to the greater of Yield Maintenance or 2% of the
outstanding principal balance of this note. If such prepayment occurs prior to
January 1, 2002 and results from a condemnation or sale under threat of
condemnation of all or substantially all of the Property, the prepayment fee
shall be the greater of Yield Maintenance or 1% of the outstanding principal
balance of this note.
Notwithstanding the above and provided Borrower is not in default under any
provision contained in the Loan Documents (as defined in the Lien Instrument),
this note may be prepaid in full at any time, without a prepayment fee, during
the last 90 days of the term of this note.
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Xxxxxxxx acknowledges and agrees that the Interest Rate hereunder shall
be increased if certain financial statements and other reports are not furnished
to Lender, all as described in more detail in the provision of the Lien
Instrument entitled "Financial Statements".
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This note is secured by certain property (the "Property") in the
District of Columbia described in a Deed of Trust and Security Agreement (the
"Lien Instrument") of even date herewith executed by XXXX SUBSIDIARY II LIMITED
PARTNERSHIP, a Maryland limited partnership, to XXXXXXX X. XXXXXX, as Trustee
for THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
Upon the occurrence of an Event of Default (as defined in the Lien
Instrument), the whole unpaid principal hereof and accrued interest shall, at
the option of Lender, to be exercised at any time thereafter until such Event of
Default shall be cured, become due and payable at once without notice, notice of
the exercise of, and the intent to exercise, such option being hereby expressly
waived.
All parties at any time liable, whether primarily or secondarily, for
payment of indebtedness evidenced hereby, for themselves, their heirs, legal
representatives, successors and assigns, respectively, expressly waive
presentment for payment, notice of dishonor, protest, notice of protest, and
diligence in collection; consent to the extension by Lender of the time of said
payments or any part thereof; further consent that the real or collateral
security or any part thereof may be released by Lender, without in any way
modifying, altering, releasing, affecting, or limiting their respective
liability or the lien of the Lien Instrument; and agree to pay reasonable
attorneys' fees and expenses of collection in case this note is placed in the
hands of an attorney for collection or suit is brought hereon and any attorneys'
fees and expenses incurred by Lender to enforce or preserve its rights under any
of the Loan Documents in any bankruptcy or insolvency proceeding.
Any principal, interest or other amounts payable under any of the Loan
Documents (as defined in the Lien Instrument), not paid when due (without regard
to any notice and/or cure provisions contained in any of the Loan Documents),
including principal becoming due by reason of acceleration by Lender of the
entire unpaid balance of this note, shall bear interest from the due date
thereof until paid at the Default Rate. As used herein, "Default Rate" means the
lower of a rate equal to the interest rate in effect at the time of the default
as herein provided plus 5% per annum or the maximum rate permitted by law.
No provision of this note shall require the payment or permit the
collection of interest, including any fees paid which are construed under
applicable law to be interest, in excess of the maximum permitted by law. If any
such excess interest is collected or herein provided for, or shall be
adjudicated to have been collected or be so provided for herein, the provisions
of this paragraph shall govern, and Borrower shall not be obligated to pay the
amount of such interest to the extent that it is in excess of the amount
permitted by law. Any such excess collected shall, at the option of Lender,
unless otherwise required by applicable law, be
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immediately refunded to Borrower or credited on the principal of this note
immediately upon Xxxxxx's awareness of the collection of such excess.
Notwithstanding any provision contained herein or in the Lien Instrument
to the contrary, if Lender shall take action to enforce the collection of the
indebtedness evidenced hereby or secured by the Lien Instrument (collectively,
the "Indebtedness"), its recourse shall, except as provided below, be limited to
the Property or the proceeds from the sale of the Property and the proceeds
realized by Xxxxxx in exercising its rights and remedies (i) under the Absolute
Assignment (as defined in the Lien Instrument), (ii) under the Additional
Guarantee of even date herewith executed by Xxxx Holdings Limited Partnership
("Xxxx Holdings"), the Guarantee of even date herewith executed by Xxxx Holdings
for the benefit of Lender, under the Guarantee of Recourse Obligations of even
date herewith executed by Xxxx Holdings for the benefit of Lender and under
other separate guarantees, if any, (iii) under any of the other Loan Documents
(as defined in the Lien Instrument) and (iv) in any other collateral securing
the Indebtedness. If such proceeds are insufficient to pay the Indebtedness,
Xxxxxx will never institute any action, suit, claim or demand in law or in
equity against Borrower for or on account of such deficiency; provided, however,
that the provisions contained in this paragraph
(i) shall not in any way affect or impair the validity or enforceability of
the Indebtedness or the Lien Instrument;
(ii) shall not prevent Xxxxxx from seeking and obtaining a judgment against
Xxxxxxxx, and Borrower shall be personally liable, for the Recourse Obligations;
and
(iii) shall not be applicable in the event of a violation of any of the
provisions of the Lien Instrument following the caption entitled "Due on Sale"
(i.e., Borrower shall be personally liable for all of the Indebtedness in the
event of such violation).
As used herein, the term "Recourse Obligations" means, to the extent any of the
Indebtedness remains unpaid,
(a) rents and other income from the Property from and after the date of any
default under the Loan Documents remaining uncured on the date of the
foreclosure sale of the Property pursuant to the Lien Instrument or the
conveyance of the Property to Lender in lieu of foreclosure, which rents and
other income have not been applied to the payment of principal and interest on
this note or to reasonable operating expenses of the Property,
(b) amounts incurred by Lender to repair any damage to the Property caused by
the intentional wrongful acts or omissions of Borrower or its agents,
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(c) insurance loss and condemnation award proceeds released to Borrower but not
applied in accordance with any agreement between Borrower and Lender as to their
application,
(d) amounts necessary to pay costs incurred by Xxxxxx in the investigation and
clean-up of hazardous materials and toxic substances on or affecting the
Property,
(e) damages suffered by Xxxxxx as a result of fraud or knowing misrepresentation
in connection with the Indebtedness by Borrower or any other person or entity
acting on behalf of Xxxxxxxx, and
(f) amounts necessary to pay real estate taxes, special assessments and
insurance premiums with respect to the Property (to the extent not previously
deposited with Lender by Borrower pursuant to the provisions of the Lien
Instrument following the caption entitled "Deposits by Grantor") either paid by
Xxxxxx and not reimbursed prior to, or remaining due or delinquent on, either
(i) the later of (A) the date on which title vests in the purchaser at the
foreclosure sale of the Property pursuant to the Lien Instrument or (B) the date
on which Borrower's statutory right of redemption shall expire or be waived or
(ii) the date of the conveyance of the Property to Lender in lieu of
foreclosure.
This note, the interpretation and the rights, obligations, duties and
liabilities hereunder shall be governed and controlled by the laws of the
District of Columbia.
XXXX SUBSIDIARY II LIMITED PARTNERSHIP, a Maryland limited partnership
By: Xxxx Centers, Inc., a Maryland corporation, general partner
By:
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X. Xxxxxxx Xxxx XX
Chairman
Attest:
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(corporate seal)
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