EXHIBIT 10.12
Loan No. V_33127
NOTE
$10,500,000.00 October 17, 2002
FOR VALUE RECEIVED, NORFOLK FIRST LLC, a Delaware limited liability
company and GTC II FIRST LLC, a Delaware limited liability company (hereinafter
collectively referred to as "BORROWER"), promises to pay to the order of
JPMORGAN CHASE BANK, a New York banking corporation, its successors and assigns
(hereinafter referred to as "LENDER"), the principal sum of TEN MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($10,500,000.00), in lawful money of the
United States of America, with interest thereon to be computed on the unpaid
principal balance outstanding on the first day of the applicable Interest
Accrual Period (hereinafter defined) at the Interest Rate (hereinafter defined)
in effect for such Interest Accrual Period.
1. DEFINITIONS
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Note
shall include in the singular number the plural and in the plural number the
singular. All capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Security Instrument.
"Additional Taxes" shall have the meaning set forth in Section 2.1(d)
hereof.
"Adjusted LIBOR Rate" shall mean, with respect to each Interest Accrual
Period, the rate per annum equal to the quotient of (a) the LIBOR Rate divided
by (b) a number equal to 1.00 minus the aggregate (without duplication) of the
rates (expressed as a decimal) of reserve requirements applicable to Lender on
the date two (2) Working Days prior to the beginning of such Interest Accrual
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves) under any regulations of any Governmental Authority as now
and from time to time hereafter in effect, dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "EUROCURRENCY
LIABILITIES" in Regulation D of the Board) maintained by a member bank of such
system. Adjusted LIBOR Rate may or may not be the lowest rate based upon the
market for U.S. Dollar deposits in the London Interbank Eurodollar Market at
which the Lender prices loans on the date which LIBOR Rate is determined by
Lender as set forth above.
"Adjustment Date" shall mean the first day of any Interest Accrual
Period (excluding the first day of the first Interest Accrual Period).
"Base Rate" shall mean, for any day, the greater of (a) the Prime Rate
for such day, and (b) the Federal Funds Rate for such day plus .50%.
"Board" shall mean the Board of Governors of the Federal Reserve
System, and any successor thereof.
"Business Day" shall mean any day other than (a) a Saturday or Sunday,
or (b) a day on which banking and savings and loan institutions in the State of
New York are authorized or obligated by law or executive order to be closed, and
when used in the context of a Loan bearing interest at the LIBOR Rate, is also a
day of trading by and between banks in the London interbank market.
"Capital Adequacy Rule" shall mean any law, rule or regulation
regarding capital adequacy, or any interpretation or administration thereof by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency.
"Closing Date" means the date of this Note.
"Federal Funds Rate" shall mean, for any date, the rate set forth in
the weekly statistical release designated as H.15(519) or any successor
publication, published by the Board for such day opposite the caption "Federal
Funds Effective Rate." If on the relevant day such rate is not yet so published,
the rate for such date will be the rate set forth in the daily statistical
release designated as the Composite 3:30 p.m. Quotations for U.S. Government
Securities, or any successor publication, published by the Federal Reserve Bank
of New York for such date under the caption "FEDERAL FUNDS EFFECTIVE RATE". If
on any relevant date the appropriate rate for such date is not yet published in
either of the foregoing publications, the rate for such day will be the
arithmetic mean (rounded upwards if necessary, to the nearest 1/100th of one
percent) of the rates for the last transaction in overnight Federal Funds
arranged prior to 9:00 a.m. (New York City time) on that day by three leading
brokers or dealers of Federal Funds transactions in New York City, selected by
▇▇▇▇▇▇.
"First Interest Accrual Period" shall mean the period from and
including the Closing Date to and including the ninth day of the calendar month
following the calendar month in which the Closing Date occurs.
"Governmental Authority" shall mean, with respect to any person, any
federal or state government or other political subdivision thereof and any
entity, including any regulatory or administrative authority or court,
exercising executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal in each case, having jurisdiction over such
applicable person or such person's property and any stock exchange on which
shares of capital stock of such person are listed or admitted for trading.
"Interest Accrual Period" shall mean the First Interest Accrual Period
and, thereafter, each period commencing on the tenth day of each calendar month
and ending on the ninth day of the next succeeding calendar month (or the
Maturity Date in regard to the last Interest Accrual Period).
"Interest Rate" shall mean the rate per annum (expressed as a
percentage) equal to the Adjusted LIBOR Rate plus the LIBOR Margin; or if Lender
shall exercise its rights under Section 2.5, the Base Rate.
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"LIBOR Lending Office" shall mean the office of Lender located at
Nassau, Bahamas or such other branch (or affiliate) of Lender as Lender may
designate as its LIBOR Lending Office.
"LIBOR Margin" shall mean two and 45/100 percent (2.45%) per annum.
"LIBOR Rate" shall mean, with respect to the Adjustment Date within
each Interest Accrual Period, (i) the per annum rate (rounded upwards, if
necessary, to the nearest 1/16th of 1%) for deposits in U.S. dollars for a
period equal to the applicable Interest Accrual Period, which appears on the
Telerate Page 3750 as the London Interbank Offering Rate as of 11:00 a.m.,
London time, on the day that is two London Business Days prior to that
Adjustment Date; (ii) if such rate does not appear on the Telerate Page 3750,
the LIBOR Rate shall be the arithmetic mean of the offered quotations of rates
obtained by Lender from the Reference Banks for deposits in U.S. dollars to
prime banks in the London interbank market as of approximately 11:00 a.m.,
London time, on the day that is two London Business Days prior to that
Adjustment Date for the period equal to the applicable Interest Accrual Period
and in a Representative Amount (as hereinafter defined); or (iii) if fewer that
two Reference Banks provide Lender with such quotations, the LIBOR Rate shall be
the rate per annum which Lender determines to be the arithmetic mean of the
offered quotations of rates which major banks in New York, New York selected by
Lender are quoting at approximately 11:00 a.m. New York City time on that
Adjustment Date for loans in U.S. dollars to leading European banks for the
period equal to the applicable Interest Accrual Period and in a Representative
Amount.
"London Business Day" shall mean any day on which commercial banks are
open for Business in London and on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.
"Parent" shall mean, with respect to Lender, any person controlling
Lender.
"Payment" shall have the meaning set forth in Section 2.2(a) hereof.
"Payment Date" shall mean, with respect to each month, the tenth
calendar day in such month, or if such day is not a Business Day, the next
following Business Day.
"Prime Rate" shall mean a fluctuating interest rate per annum equal to
the rate of interest announced publicly in New York, New York, from time to
time, as ▇▇▇▇▇▇'s prime rate. The Prime Rate does not necessarily represent the
lowest or best rate actually charged to any customer. Lender may make commercial
loans or other loans at rates of interest, at, above or below the Prime Rate.
"Reference Banks" shall mean four major banks in the London interbank
market selected by ▇▇▇▇▇▇.
"Representative Amount" shall mean an amount that is representative for
a single transaction in the relevant market at the relevant time and as close in
amount to the principal balance of the Note as is reasonably practical.
"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as
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may be nominated by the British Banker's Association as the information vendor
for the purpose of displaying British Bankers' Association Interest Settlement
Rates for U.S. Dollar deposits).
"Unscheduled Payments" shall mean (a) all condemnation and insurance
proceeds that Borrower is required to apply to the repayment of the Debt
pursuant to this Note, the Security Instrument or any other Loan Documents, (b)
any funds representing a voluntary or involuntary principal prepayment, and (c)
any net proceeds obtained by ▇▇▇▇▇▇ from the exercise of remedies under this
Note, the Security Instrument or the other Loan Documents after the occurrence
of an Event of Default.
"Working Day" shall mean any day on which dealings in foreign
currencies and exchange are carried on in London, England and in New York, New
York.
2. PAYMENT TERMS
Section 2.1 Principal and Interest Payments.
(a) Payments of principal and interest under this Note,
calculated in accordance with the terms hereof, shall be due and
payable as follows:
(i) interest only at the Interest Rate in effect
for the First Interest Accrual Period shall be due and payable
on the date hereof;
(ii) interest at the Interest Rate in effect for
the Interest Accrual Period ending on the day preceding such
Payment Date shall be due and payable on the Payment Date in
December, 2002, and on each subsequent Payment Date through
and including the Payment Date in October, 2005; thereafter
(iii) the entire outstanding principal amount of
this Note, together with all accrued and unpaid interest and
any other charges due hereon, shall be due and payable on the
Payment Date occurring in November, 2005 (the "MATURITY
DATE").
(b) Payments shall be paid by Borrower, without set-off
or counterclaim, by wire transfer to Lender at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or to such other location or account as Lender
may specify to Borrower from time to time, in federal or other
immediately available funds in lawful money of the United States of
America, not later than 12:00 noon, New York City time, on each Payment
Date. If any payment hereunder or under any of the Loan Documents
becomes due and payable on a day other than a Business Day, such
payment shall not be payable until the next succeeding Business Day.
Interest on the principal sum of this Note shall be calculated on the
basis of the actual number of days elapsed in a three hundred sixty
(360) day year.
(c) Lender shall determine the LIBOR Rate, Base Rate,
Prime Rate and Federal Funds Rate as in effect from time to time, and
each such determination of the LIBOR Rate, Base Rate, Prime Rate and
Federal Funds Rate shall be conclusive and binding absent manifest
error.
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(d) Payments made by Borrower under this Note shall be
made free and clear of, and without reduction for or on account of, any
present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding income and franchise taxes of the United States of
America or any political subdivision or taxing authority thereof or
therein (such non-excluded taxes being called "Additional Taxes"). If
any Additional Taxes are required to be withheld from any amounts
payable to Lender hereunder or under any of the other Loan Documents,
the amounts so payable to Lender shall be increased to the extent
necessary to yield to Lender (after payment of all Additional Taxes)
interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Note.
Section 2.2 Application of Payments.
(a) Each and every payment (a "PAYMENT") made by Borrower
to Lender in accordance with the terms of this Note and/or the terms of
any one or more of the other Loan Documents and all other proceeds
received by Lender with respect to the Debt, shall be applied as
follows:
(1) Payments other than Unscheduled Payments
shall be applied (i) first, to all interest (other than
Default Rate interest) which shall be due and payable with
respect to the Loan pursuant to the terms hereof as of the
date the Payment is received (including any unpaid interest
and interest thereon to the extent permitted by applicable
law), (ii) second, to all charges, Default Rate interest or
other premiums and other sums payable hereunder or under the
other Loan Documents (other than those sums included in clause
(i) of this Section 2.2(a)(1)) in such order and priority as
determined by Lender in its sole discretion, and (iii) on the
Maturity Date, to the Loan until the Loan has been paid in
full.
(2) Unscheduled Payments shall be applied at the
end of the Interest Accrual Period in which such Unscheduled
Payments are received as a principal prepayment of the Loan
amount to amortize the Loan.
(b) To the extent that Borrower makes a Payment or Lender
receives any Payment or proceeds for Borrower's benefit, which are
subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, debtor in possession,
receiver, custodian or any other party under any bankruptcy law, common
law or equitable cause, then, to such extent, the obligations of
Borrower hereunder intended to be satisfied shall be revived and
continue as if such Payment or proceeds had not been received by
Lender.
Section 2.3 Indemnity. ▇▇▇▇▇▇▇▇ agrees to indemnify Lender and to
hold it harmless from any cost, loss or expenses which Lender may sustain or
incur as a consequence of (a) Borrower making a payment or prepayment of
principal on the Loan on a day which is not a Payment Date with respect thereto,
(b) default by Borrower in making any prepayment after Borrower has given a
notice of prepayment, and (c) any acceleration of the maturity of the Loan by
▇▇▇▇▇▇ in accordance with the terms of this Note, including, but not limited to,
any such
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reasonable costs, loss or expense arising in liquidating the Loan and from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain the Loan hereunder.
Section 2.4 Increased Cost and Reduced Return.
(a) If, on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any applicable
law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by Lender (or its LIBOR Lending Office) with any
request or directive (whether or not having the force of law) of any
such Governmental Authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board (but excluding
with respect to any such requirement reflected in the then effective
LIBOR Rate)), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, Lender (or its LIBOR Lending Office) or shall
impose on Lender (or its LIBOR Lending Office) or on the London
interbank market any other condition affecting any loan bearing
interest at the LIBOR Rate, and the result of any of the foregoing is
to increase the cost to Lender (or its LIBOR Lending Office) of
maintaining the Loan at the LIBOR Rate, or to reduce the amount of any
sum received or receivable by Lender (or its LIBOR Lending Office)
under this Note with respect thereto, by an amount deemed by Lender to
be material, then, within fifteen (15) days after demand by Lender,
Borrower shall pay to Lender such additional amount or amounts as will
compensate Lender for such increased cost or reduction.
(b) If Lender shall have determined that, after the date
hereof, the adoption of any Capital Adequacy Rule has or would have the
effect of reducing the rate of return on capital of Lender (or its
parent) as a consequence of ▇▇▇▇▇▇'s obligations hereunder to a level
below that which Lender (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by
Lender to be material, then from time to time, within fifteen (15) days
after demand by ▇▇▇▇▇▇, Borrower shall pay to Lender such additional
amount or amounts as will compensate Lender (or its Parent) for such
reduction.
(c) Lender will promptly notify Borrower of any event of
which it has knowledge, occurring after the date hereof, which will
entitle the Lender to compensation pursuant to this Section 2.4 and
will designate a different LIBOR Lending Office if such designation
will avoid the need for, or reduce the amount of such compensation and
will not, in the judgment of Lender, be otherwise disadvantageous to
Lender. A certificate of Lender claiming compensation under either
Section 2.4(a) or 2.4(b) and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error; provided that any certificate delivered by Lender
pursuant to this Section 2.4(c) shall (i) in the case of a certificate
in respect of amounts payable pursuant to Section 2.4(a), set forth in
reasonable detail the basis for and the calculation of such amounts,
and (ii) in the case of a certificate in respect of amounts payable
pursuant to Section 2.4(b), (A) set forth at least the same amount of
detail in respect of the calculation of such amount as ▇▇▇▇▇▇ provides
in similar circumstances to other
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similarly situated borrowers from Lender, and (B) include a statement
by Lender that it has allocated to the Loan a proportionately equal
amount of any reduction of the rate of return on Lender's capital due
to a Capital Adequacy Rule as it has allocated to each of its other
outstanding loans that are effected similarly by such Capital Adequacy
Rule.
Section 2.5 Deposits Unavailable. In the event, and on each
occasion, that (a) Lender shall have determined that dollar deposits in the
principal amounts of the Loan are not generally available to Lender in the
London interbank market, for such periods and amounts then outstanding hereunder
or that reasonable means do not exist for ascertaining the LIBOR Rate, or (b)
Lender determines that the rate at which such dollar deposits are being offered
will not adequately and fairly reflect the cost to Lender of maintaining the
Loan at the LIBOR Rate during such Interest Accrual Period, Lender shall, as
soon as practicable thereafter, give written notice of such determination to
Borrower. In the event of such determination, until the circumstances giving
rise to such notice no longer exist, the Loan shall bear interest at the Base
Rate. After an Event of Default, interest shall accrue on the outstanding
principal balance of this Note at a rate per annum equal to the Default Rate.
Section 2.6 Illegality. If on or after the date of this Note,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Lender (or its LIBOR Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for Lender (or its LIBOR
Lending Office) to maintain the Loan to Borrower pursuant to this Section 2.6,
Lender shall designate a different LIBOR Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of Lender,
be otherwise disadvantageous to Lender. If Lender shall determine that it may
not lawfully continue to maintain the Loan at the LIBOR Rate to maturity and
shall so specify in such notice, the Loan shall bear interest at the Base Rate.
3. SECURITY
This Note is secured by, and ▇▇▇▇▇▇ is entitled to the benefits of, the
Security Instrument, the Assignment, the Assignment of Cap Agreement, the
Environmental Agreement, and the other Loan Documents (hereinafter defined). The
term "SECURITY INSTRUMENT" means the Deed of Trust and Security Agreement dated
the date hereof given by Borrower for the use and benefit of Lender covering the
estate of Borrower in certain premises as more particularly described therein
(which premises, together with all properties, rights, titles, estates and
interests of Borrower now or hereafter securing the Debt and/or other
obligations of Borrower under the Loan Documents, are collectively referred to
herein as the "PROPERTY"). The term "ASSIGNMENT" means the Assignment of Leases
and Rents of even date herewith executed by ▇▇▇▇▇▇▇▇ in favor of ▇▇▇▇▇▇. The
term "ASSIGNMENT OF CAP AGREEMENT" means the Assignment of Interest Rate Cap
Agreement and Security Agreement of even date herewith executed by ▇▇▇▇▇▇▇▇ and
JPMorgan Chase Bank, as Cap Seller (together with any successor or replacement
Cap Seller, the "CAP SELLER"). The term "Environmental Agreement" means the
Environmental Indemnity Agreement of even date herewith executed by ▇▇▇▇▇▇▇▇ in
favor of ▇▇▇▇▇▇. The term "Loan Documents" refers collectively to this Note, the
Security Instrument, the Assignment, the Assignment of Cap
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Agreement, the Environmental Agreement, and any and all other documents executed
in connection with this Note or now or hereafter executed by ▇▇▇▇▇▇▇▇ and/or
others and by or in favor of Lender, which wholly or partially secure or
guarantee payment of this Note or pertains to indebtedness evidenced by this
Note. In the event the Cap Seller under the interest rate cap agreement (the
"CAP AGREEMENT") assigned pursuant to the Assignment of Cap Agreement fails at
any time to have either a long term rating of AAA (or its equivalent) or a short
term rating of A-1+ (or its equivalent) or better as determined by two
independent Rating Agencies (as defined in the Security Instrument), then
provided that the Cap Seller has agreed to amend the Cap Agreement to provide
for Cap Seller to pay to the Borrower the amount, if any, due to Borrower as a
result of any early termination of the Cap Agreement for a Termination Event (as
defined in the Cap Agreement), as determined in accordance with the Cap
Agreement, then the Borrower shall concurrently with such payment by the Cap
Seller to the Borrower replace the Cap Agreement with a new interest rate cap
agreement with a commercial bank having long term or short term ratings at least
equal to the aforesaid minimum rating requirements and shall assign the
replacement interest rate cap agreement to Lender pursuant to an assignment
document substantially similar to the Assignment of Cap Agreement.
4. LATE FEE
If any installment payable under this Note (including the final
installment due on the Maturity Date) is not received by Lender on or prior to
the calendar day the same is due (without regard to any applicable cure and/or
notice period), Borrower shall pay to Lender upon demand an amount equal to the
lesser of (a) five percent (5%) of such unpaid sum or (b) the maximum amount
permitted by applicable law to defray the expenses incurred by Lender in
handling and processing such delinquent payment and to compensate Lender for the
loss of the use of such delinquent payment, and such amount shall be secured by
the Loan Documents.
5. DEFAULT AND ACCELERATION
So long as an Event of Default exists, Lender may, at its option,
without notice or demand to Borrower, declare the Debt immediately due and
payable. All remedies hereunder, under the Loan Documents and at law or in
equity shall be cumulative. In the event that it should become necessary to
employ counsel to collect the Debt or to protect or foreclose the security for
the Debt or to defend against any claims asserted by Borrower arising from or
related to the Loan Documents, ▇▇▇▇▇▇▇▇ also agrees to pay to Lender on demand
all costs of collection or defense incurred by ▇▇▇▇▇▇, including reasonable
attorneys' fees for the services of counsel whether or not suit be brought.
6. DEFAULT INTEREST
Upon the occurrence of an Event of Default Borrower shall pay interest
on the entire unpaid principal sum and any other amounts due under the Loan
Documents at the rate equal to the lesser of (a) the maximum rate permitted by
applicable law, or (b) the greater of (i) five percent (5%) above the Interest
Rate or (ii) five percent (5%) above the Prime Rate, in effect at the time of
the occurrence of the Event of Default (the "DEFAULT RATE"). The Default Rate
shall be computed from the occurrence of the Event of Default until the actual
receipt and collection of a sum of money determined by ▇▇▇▇▇▇ to be sufficient
to cure the Event of Default. Amounts
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of interest accrued at the Default Rate shall constitute a portion of the Debt,
and shall be deemed secured by the Loan Documents. This clause, however, shall
not be construed as an agreement or privilege to extend the date of the payment
of the Debt, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default.
7. PREPAYMENT
(a) The principal balance of this Note may not be prepaid
in whole or in part (except with respect to the application of casualty
or condemnation proceeds) prior to the Payment Date occurring in May,
2004. On the Payment Date occurring in May, 2004, or at any time
thereafter, the principal balance of this Note may be prepaid, in whole
but not in part (except with respect to the application of casualty or
condemnation proceeds and except in connection with the release of any
property securing this Note as expressly permitted by the Loan
Documents), on any Payment Date upon not less than thirty (30) days nor
more than ninety (90) days prior written notice to Lender specifying
the Payment Date on which prepayment is to be made (the "PREPAYMENT
Date") and upon payment of (i) interest accrued and unpaid on the
principal amount of this Note being prepaid to and including the
Prepayment Date, and (ii) all other sums then due under this Note and
the other Loan Documents. If any such notice of prepayment is given,
the principal amount so notified and the other sums required under this
paragraph shall be due and payable on the Prepayment Date. If
prepayment of this Note, in whole or in part, results from ▇▇▇▇▇▇'s
exercise of its rights upon ▇▇▇▇▇▇▇▇'s default and acceleration of the
Maturity Date of this Note (irrespective of whether foreclosure
proceedings have been commenced) prior to the Payment Date occurring in
May, 2004, Borrower shall also pay to Lender a prepayment fee equal to
1% of the principal amount of this Note prepaid, and such prepayment
fee shall be in addition to any other sums due hereunder or under any
of the other Loan Documents.
(b) Partial prepayments of principal resulting from the
application of casualty or condemnation proceeds to the Debt shall not
change the amounts of subsequent monthly installments of principal (if
any are required hereunder) nor change the dates on which such
installments are due, unless Lender shall otherwise agree in writing.
8. SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance due
hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Note, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of such
maximum rate, the Interest Rate or the Default Rate, as the case may be, shall
be deemed to be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the Debt, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of this Note
until payment in full so that the rate or amount of interest on account of
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the Debt does not exceed the maximum lawful rate of interest from time to time
in effect and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Lender to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.
9. WAIVERS
(a) Except as specifically provided in the Loan
Documents, Borrower and any endorsers, sureties or guarantors hereof
jointly and severally waive presentment and demand for payment, notice
of intent to accelerate maturity, notice of acceleration of maturity,
protest and notice of protest and non-payment, all applicable exemption
rights, valuation and appraisement, notice of demand, and all other
notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note and the bringing of
suit and diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and collateral
securing payment hereof. Borrower and any surety, endorser or guarantor
hereof agree (i) that the time for any payments hereunder may be
extended from time to time without notice and consent, (ii) to the
acceptance by Lender of further collateral, (iii) the release by Lender
of any existing collateral for the payment of this Note, (iv) to any
and all renewals, waivers or modifications that may be granted by
Lender with respect to the payment or other provisions of this Note,
and/or (v) that additional Borrowers, endorsers, guarantors or sureties
may become parties hereto all without notice to them and without in any
manner affecting their liability under or with respect to this Note. No
extension of time for the payment of this Note or any installment
hereof shall affect the liability of Borrower under this Note or any
endorser or guarantor hereof even though the Borrower or such endorser
or guarantor is not a party to such agreement.
(b) Failure of Lender to exercise any of the options
granted herein to Lender upon the happening of one or more of the
events giving rise to such options shall not constitute a waiver of the
right to exercise the same or any other option at any subsequent time
in respect to the same or any other event. The acceptance by Lender of
any payment hereunder that is less than payment in full of all amounts
due and payable at the time of such payment shall not constitute a
waiver of the right to exercise any of the options granted herein to
Lender at that time or at any subsequent time or nullify any prior
exercise of any such option without the express written acknowledgment
of the Lender.
10. EXCULPATION
(a) Notwithstanding anything in the Loan Documents to the
contrary, but subject to the qualifications below, ▇▇▇▇▇▇ and Borrower
agree that:
(i) Borrower shall be liable upon the Debt and
for the other obligations arising under the Loan Documents to
the full extent (but only to the extent) of the security
therefor; provided, however, that in the event (A) of fraud,
willful misconduct or material misrepresentation by Borrower,
its general partners, if any, its members, if any, its
principals, its affiliates, its agents or its
10
employees or by any Guarantor in connection with the loan
evidenced by this Note, (B) of Borrower's breach or default
under Sections 4.3 or 8.2 of the Security Instrument, or (C)
the Property or any part thereof becomes an asset in a
voluntary bankruptcy or insolvency proceeding, the limitation
on recourse set forth in this Subsection 10(a) will be null
and void and completely inapplicable, and this Note shall be
with full recourse to Borrower.
(ii) If a default occurs in the timely and proper
payment of all or any part of the Debt, Lender shall not
enforce the liability and obligation of Borrower to perform
and observe the obligations contained in this Note or the
Security Instrument by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that
Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to
enable Lender to enforce and realize upon the Security
Instrument, the Other Loan Documents and the interest in the
Property, the Rents and any other collateral given to Lender
created by the Security Instrument and the Other Loan
Documents; provided, however, that any judgment in any action
or proceeding shall be enforceable against Borrower only to
the extent of ▇▇▇▇▇▇▇▇'s interest in the Property, in the
Rents and in any other collateral given to Lender. ▇▇▇▇▇▇, by
accepting this Note and the Security Instrument, agrees that
it shall not, except as otherwise herein provided, sue for,
seek or demand any deficiency judgment against Borrower in any
action or proceeding, under or by reason of or under or in
connection with this Note, the Other Loan Documents or the
Security Instrument.
(iii) The provisions of this Subsection 10(a)
shall not (A) constitute a waiver, release or impairment of
any obligation evidenced or secured by this Note, the Other
Loan Documents or the Security Instrument; (B) impair the
right of Lender to name Borrower as a party defendant in any
action or suit for judicial foreclosure and sale under the
Security Instrument; (C) affect the validity or enforceability
of any indemnity, guaranty, master lease or similar instrument
made in connection with this Note, the Security Instrument, or
the Other Loan Documents; (D) impair the right of Lender to
obtain the appointment of a receiver; (E) impair the
enforcement of the Assignment executed in connection herewith;
(F) impair the right of Lender to enforce the provisions of
Article 11 of the Security Instrument; or (G) impair the right
of Lender to obtain a deficiency judgment or judgment on this
Note against Borrower if necessary to obtain any insurance
proceeds or condemnation awards to which ▇▇▇▇▇▇ would
otherwise be entitled under the Security Instrument; provided,
however, Lender shall only enforce such judgment against the
insurance proceeds and/or condemnation awards.
(iv) Notwithstanding the provisions of this
Article to the contrary, ▇▇▇▇▇▇▇▇ shall be personally liable
to Lender for the Losses it incurs due to: (A) the
misapplication or misappropriation of Rents; (B) the
misapplication or misappropriation of insurance proceeds or
condemnation awards; (C) ▇▇▇▇▇▇▇▇'s failure to return or to
reimburse Lender for all Personal Property taken from the
Property by or on behalf of ▇▇▇▇▇▇▇▇ and not replaced with
Personal Property of
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the same utility and of the same or greater value; (D) any act
of actual waste or arson by Borrower, any principal,
affiliate, general partner or member thereof or by any
Guarantor; (E) any fees or commissions paid by Borrower to any
principal, affiliate, general partner or member of Borrower or
any Guarantor in violation of the terms of this Note, the
Security Instrument or the Other Loan Documents; (F)
Borrower's failure to comply with the provisions of Section 11
of the Security Instrument; or (G) any breach of the
Environmental Agreement.
(b) Nothing herein shall be deemed to be a waiver of any
right which Lender may have under Sections 506(a), 506(b), 1111(b) or
any other provisions of the Bankruptcy Code to file a claim for the
full amount of the Debt or to require that all collateral shall
continue to secure all of the Debt, owing to Lender in accordance with
this Note, the Security Instrument and the Other Loan Documents.
11. AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute,
deliver and perform its obligations pursuant to this Note and the other Loan
Documents and that this Note and the other Loan Documents constitute legal,
valid and binding obligations of Borrower. Borrower further represents that the
loan evidenced by the Loan Documents was made for business or commercial
purposes and not for personal, family or household use.
12. NOTICES
All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner and be effective as specified in
the Security Instrument, directed to the parties at their respective addresses
as provided therein.
13. TRANSFER
Lender shall have the unrestricted right at any time or from time to
time to sell this Note and the loan evidenced by this Note and the Loan
Documents or participation interests therein. Borrower shall execute,
acknowledge and deliver any and all instruments requested by ▇▇▇▇▇▇ to satisfy
such purchasers or participants that the unpaid indebtedness evidenced by this
Note is outstanding upon the terms and provisions set out in this Note and the
other Loan Documents. To the extent, if any, specified in such assignment or
participation, such assignee(s) or participant(s) shall have the rights and
benefits with respect to this Note and the other Loan Documents as such
assignee(s) or participant(s) would have if they were the Lender hereunder.
14. WAIVER OF TRIAL BY JURY
▇▇▇▇▇▇▇▇ HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE
OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO, THOSE RELATING TO (A)
12
ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN LENDER AND BORROWER; (B) USURY OR
PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE
TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF COMMERCIAL
REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO,
INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION,
UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS
INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST;
OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY ▇▇▇▇▇▇▇▇, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. ▇▇▇▇▇▇ IS HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER.
15. APPLICABLE LAW
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia (without regard to any conflict of laws or
principles) and the applicable laws of the United States of America.
16. JURISDICTION
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF
COMPETENT JURISDICTION LOCATED IN THE COMMONWEALTH OF VIRGINIA IN CONNECTION
WITH ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.
17. NO ORAL CHANGE
The provisions of this Note and the Loan Documents may be amended or
revised only by an instrument in writing signed by the Borrower and Lender. This
Note and all the other Loan Documents embody the final, entire agreement of
▇▇▇▇▇▇▇▇ and Lender and supersede any and all prior commitments, agreements,
representations and understandings, whether written or oral, relating to the
subject matter hereof and thereof and may not be contradicted or varied by
evidence of prior, contemporaneous or subsequent oral agreements or discussions
of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇. There are no oral agreements between Borrower and
Lender.
18. REFINANCE
Borrower agrees to offer in good faith to Lender the opportunity to
refinance the Loan at its maturity, provided, however, in no event shall (a)
Lender have any obligation to so refinance the Loan at maturity, any such
refinancing to be subject to Lender's customary underwriting standards at such
time and such other conditions and requirements as Lender may impose, (b)
Borrower be obligated to accept any refinancing offered by Lender or (c)
Borrower be obligated to provide Lender with copies of any offers by third
parties to refinance the Loan or provide
13
Lender with the opportunity to match or better the terms of any third party
offer to refinance the Loan.
19. EXTENSION OF NOTE
Upon written notice by ▇▇▇▇▇▇▇▇ to Lender, not more than ninety (90)
days nor less than sixty (60) days prior to the Maturity Date, Borrower may
notify Lender of its intention to extend the Note (in whole but not in part) for
two (2) additional periods of one (1) year each ("EXTENSION TERM") on the same
terms and conditions as this Note for the initial three (3) year term, subject
to satisfaction as of the Maturity Date of each of the following terms and
conditions:
(a) No Event of Default has occurred during the term of
this Note or is continuing under the Loan Documents;
(b) The Property has maintained a Debt Coverage Ratio (as
hereinafter defined) of not less than one hundred thirty percent (130%)
for the twelve (12) month period ending upon the date Borrower requests
its extension of the Maturity Date, and the Property has a projected
Debt Coverage Ratio of not less than one hundred thirty percent (130%)
for the twelve (12) months commencing on the Maturity Date;
(c) The Property has maintained a Debt Coverage Ratio,
based on a stressed mortgage constant of 10.09, of not less than one
hundred five percent (105%) for the twelve (12) month period ending
upon the date Borrower requests its extension of the Maturity Date, and
the Property has a projected Debt Coverage Ratio, based on a constant
of 10.09, of not less than one hundred five percent (105%) for the
twelve (12) months commencing on the Maturity Date;
(d) The loan to value ratio, as established by a current
MAI appraisal prepared by an appraiser approved by ▇▇▇▇▇▇ and conducted
after Borrower requests its extension of the Maturity Date, is no more
than eighty percent (80%);
(e) Payment to Lender of a fully earned and
non-refundable extension fee equal to 0.125% of the principal amount of
this Note payable on the effective date of each such extension;
(f) Borrower shall purchase an interest rate cap
agreement acceptable to Lender from a financial institution
counterparty with a short term rating of "A-1+" or better or a long
term rating of "AAA" or better from each of the Rating Agencies, with
an interest rate equal to the maximum rate of interest set forth in the
Cap Agreement, with a notional amount equal to the outstanding
principal amount of this Note as of the effective date of the extension
of the Maturity Date and with a term equal to the extension term. In
addition to obtaining such interest rate cap agreement, ▇▇▇▇▇▇▇▇ also
agrees that Lender shall be granted a first priority security interest
in the interest rate cap agreement, and any payments to Borrower
thereunder shall be made by the counterparty directly to an account
specified and controlled by Lender for application to amounts due under
this Note (and the counterparty shall be required to acknowledge and
agree to such security interest and direct payment);
14
(g) Payment by Borrower of all reasonable costs and
expenses, including legal fees, actually incurred by Lender or
otherwise involved in extending the term of the Note. Borrower shall
pay a deposit of $7,500 (the "EXPENSE DEPOSIT") toward such costs and
expenses at the time Borrower notifies Lender of its intention to
extend the Note. If Lender determines that the conditions set forth
herein have not been satisfied, the deposit less Lender's actual costs
and expenses shall be returned to Borrower. If the actual costs and
expenses are less than the Expense Deposit, Lender shall refund the
difference to Borrower at closing. If the actual costs and expenses are
greater than the Expense Deposit, Borrower shall pay the difference at
closing;
(h) Delivery to Lender of all items reasonably required
by Lender in connection with Lender's evaluation of Borrower's request
to extend the Maturity Date, all of which must be acceptable in form
and substance to Lender, including, without limitation, current rent
rolls, operating statements and financial statements;
(i) Lender shall have determined that there has been no
material adverse change in the condition, financial, physical or
otherwise, of the Property, Borrower or any guarantor or indemnitor
since the date hereof; and
(j) At Lender's option, the extension of the term of this
Note shall be evidenced by an extension or renewal of or amendment to
the Note, or by the execution of a new note. ▇▇▇▇▇▇▇▇ further agrees to
execute and/or deliver to Lender any other documentation reasonably
requested by ▇▇▇▇▇▇, including, without limitation, security
agreements, financing statements, opinions of counsel and title
endorsements, all of which shall be reasonably satisfactory in form and
substance to Lender.
(k) For purposes hereof the term "DEBT COVERAGE RATIO"
shall mean the ratio of Cash Available for Debt Service (as defined
below) to annual debt service (i.e., principal (if any) and interest
payments) due under this Note (utilizing solely for purposes of
calculating the Debt Coverage Ratio an assumed interest rate equal to
the Interest Rate in effect on the date of determination of the Debt
Coverage Ratio) and any other notes secured by the Property or by
direct pledges of equity in the Borrower (but specifically excluding
any notes not made by the Borrower or secured by the Property or
membership interests in the Borrower). Cash Available for Debt Service,
which is generally defined below, shall be determined by Lender in a
manner substantially the same as that utilized by Lender in
underwriting loans secured by similar property types at the time of
determination of the Debt Coverage Ratio. In addition, Cash Available
for Debt Service shall be adjusted by applying (i) vacancy and/or
credit loss rates to gross income at the higher of actual, market or
the rate applied by the Rating Agencies, (ii) rental or average daily
room rates (as applicable) at the lower of actual, market or the rate
applied by the Rating Agencies, (iii) deductions for operating expenses
based on the higher of actual historical levels, market or as otherwise
applied by the Rating Agencies and (iv) deducting expenses for capital
replacements and repairs, tenant improvements and leasing commissions,
calculated at the greater of actual or minimum amounts per square foot
of the Property required by Lender and/or the Rating Agencies for
properties of similar types, location and condition. Cash Available for
Debt Service shall mean:
15
(i) all gross receipts received or (with respect
to a projected Debt Coverage Ratio) anticipated from the
Property, including, without limitation, from tenants in the
Property and paying rent under leases in effect during the
applicable twelve-month period, calculated on a cash basis
which reflects only the income actually received during the
previous twelve-month period as of the date of such
calculation, and for a projected Debt Coverage Ratio any
income anticipated to be received during the following
twelve-month period based on leases in effect as of the date
of calculation, for such time as those leases are contracted
to remain in effect without expiration by their terms or
optional termination by the tenant (unless the tenant has
waived its termination rights in writing or the term of the
lease has been extended in writing), including without
limitation all amounts to be received from tenants as payment
of operating expenses but not including refundable deposits,
late fees or charges, interest income or other non-operating
income, lease termination payments, excess tenant improvement
and leasing commission payments included as additional rent,
principal or interest payments received by Borrower on loans
to tenants and fees and reimbursements for work performed for
tenants by ▇▇▇▇▇▇▇▇, less:
(ii) all expenses actually incurred by Borrower
(without duplication), for the operation or maintenance of the
Property for the applicable twelve-month period, including
ground rents, the cost of property management (which shall be
the greater of the actual management fee payable under a
management contract in effect for the applicable twelve (12)
month period, market or the minimum fee applied by the Rating
Agencies), marketing, franchise fees (which shall be the
greater of the actual fees payable under franchise or license
agreements, market, or the minimum fee applied by nationally
recognized rating agencies), maintenance, cleaning, security,
legal, administrative, landscaping, parking maintenance,
utilities, real estate taxes and assessments and other taxes
related to the operation of the Property, insurance premiums,
necessary repairs and future replacements of equipment and
other capital expenditures, tenant improvements, leasing
commissions and other costs and expenses incurred by Borrower
during the applicable period, and for a projected Debt
Coverage Ratio, amounts reasonably estimated by Lender for
each of the foregoing items. Payments under this Note and
non-cash deductions for income tax purposes shall not be
deducted in determining Cash Available for Debt Service.
16
Executed as of the day and year first above written.
BORROWER:
NORFOLK FIRST LLC, a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
GTC II FIRST LLC, a Delaware limited liability
company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
17