EXHIBIT 10(S)
PROMISSORY NOTE
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$38,000,000.00 January 11, 1999
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇ HOLDINGS LIMITED PARTNERSHIP, a
Maryland limited partnership and ▇▇▇▇ CENTERS, INC., a Maryland corporation
(hereinafter collectively called "Maker"), promises to pay to the order of ▇▇▇▇▇
FARGO BANK, NATIONAL ASSOCIATION, a national banking association (hereinafter,
together with all subsequent holders of this Note, called "Payee"), on or before
the 12th day of January, 2002 (the "Maturity Date"), the principal sum of
THIRTY-EIGHT MILLION AND NO/100 DOLLARS ($38,000,000.00), or so much thereof as
may actually be advanced from time to time hereunder, together with interest on
the unpaid principal balance from time to time outstanding at the rate per annum
equal to the "Prime Rate" (as herein defined) of interest as it fluctuates
(hereinafter called the "Applicable Rate"); provided, however, subject to the
limitations stated herein, Maker may elect in accordance with the procedures set
forth below to have interest accrue and be paid on all or a portion of the
outstanding principal balance hereof at a rate per annum equal to the "Fixed
Increment Rate" (as herein defined).
1. Defined Terms. Certain terms used herein shall be defined as set forth
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above or immediately below. All capitalized terms, unless otherwise specifically
defined herein, shall be defined as set forth in the Deed of Trust (as herein
defined).
(a) "Appraisal": An appraisal of the Trust Property, in form and
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substance acceptable to Payee, prepared at Maker's expense, by a third-party
appraiser approved by Payee with such adjustments as ▇▇▇▇▇'s appraisal division
may reasonably determine on review.
(b) "Average Rent": The aggregate annual rent from all leases in
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question, as Rent is determined in the second sentence of Section 1(t), divided
by the aggregate rentable square feet demised by such leases.
(c) "Business Day": (i) With respect to any borrowing, payment or
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rate determination for a Fixed Increment Rate, a day, other than a Saturday or
Sunday, on which Payee is open for business in Washington, D.C. and San
Francisco, California and on which dealings in U.S. dollars are carried on in
the London interbank market; and (ii) for all other purposes, any day, excluding
(x) Saturday and Sunday, (y) any day which is a legal holiday under the laws of
the State of California and the District of Columbia, and (z) any day on which
banking
institutions located in California or the District of Columbia are required or
authorized by law or other governmental action to close.
(d) "Debt Constant Test": The determination by ▇▇▇▇▇, in its sole
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but reasonable discretion, that Net Operating Income from the most recent fiscal
quarter multiplied by four (4) is not less than an amount equal to the Loan
Amount (as defined below) multiplied by twelve percent (12%).
(e) "Event of Default": As that term is defined in the Deed of
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Trust.
(f) "Extension Test".: The determination by ▇▇▇▇▇, in its sole but
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reasonable discretion, that (i) there is no Event of Default arising under any
of the Loan Documents, (ii) the Loan to Value Test has been satisfied, and (iii)
the Debt Constant Test has been satisfied.
(g) "First Leasing Requirement". The delivery to Payee of fully
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executed leases covering not less than 100,000 rentable square feet of office
space and not less than 25,000 rentable square feet of retail space in the
Improvements on the Trust Property (as such terms are defined in the Deed of
Trust), approved by Payee or which, under the terms of the Deed of Trust, do not
require the approval of Payee generating in the aggregate Average Rent equal to
at least the Minimum Rent.
(h) "Fixed Increment": The portion of the outstanding principal
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balance hereof specified by Maker to Payee effective as of the applicable Fixed
Period Commencement Date (as herein defined); provided, however, in no event
shall the initial Fixed Increment be less than One Million and No/100 Dollars
($1,000,000.00) and all other Fixed Increments shall be available in increments
of Five Hundred Thousand and No/100 Dollars ($500,000.00) or the remaining
outstanding principal balance under this Note.
(i) "Fixed Increment Rate": The interest rate with respect to a
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Fixed Increment shall be equal to the sum of (i) One and Ninety Hundredths
percent (1.90%) plus (ii) the Fixed LIBO Rate, which Fixed LIBO Rate is divided
by one (1.00) minus the LIBO Rate Reserve Requirement; provided, however, that
upon request of Maker and the submission to Payee of all necessary documentation
evidencing (as determined by Payee) that the First Leasing Requirement (as
herein defined) is satisfied, the interest rate with respect to a Fixed
Increment shall be equal to the sum of (i) One and Seventy Hundredths percent
(1.70%) plus (ii) the Fixed LIBO Rate, which Fixed LIBO Rate is divided by one
(1.00) minus the LIBO Rate Reserve Requirement, provided, further, however, that
upon request of Maker and the submission to Payee of all necessary documentation
evidencing (as determined by ▇▇▇▇▇) that the Second Leasing Requirement (as
herein defined) is satisfied, the interest rate with respect to a Fixed
Increment shall be equal to the sum of (i) One and Forty-five Hundredths percent
(1.45%) plus (ii) the Fixed LIBO
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Rate, which Fixed LIBO Rate is divided by one (1.00) minus the LIBO Rate Reserve
Requirement. The Fixed Increment Rate shall be rounded upward to the nearest
whole multiple of one-hundredth of one percent (.01%). Effective on the first
day of the month immediately succeeding the determination by ▇▇▇▇▇ that the
First Leasing Requirement or the Second Leasing Requirement, as applicable, is
satisfied, the interest rate with respect to all Fixed Increments then in effect
shall be reduced to the applicable level set forth in this Paragraph 1(h).
(j) "Fixed LIBO Rate": The rate of interest quoted by ▇▇▇▇▇ as the
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London Inter Bank Offered Rate for deposits in U.S. Dollars at approximately
9:00 A.M. Pacific time, on a Fixed Period Commencement Date, for purposes of
calculating effective rates of interest for loans or obligations making
reference thereto for an amount approximately equal to a Fixed Increment and for
a period of time approximately equal to a Fixed Period. The Fixed LIBO Rate
shall be rounded, if necessary, to the next highest one sixteenth of one percent
(1/16%).
(k) "Fixed Period": A period as designated by Maker of thirty (30),
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sixty (60), ninety (90) or one hundred eighty (180) days from the Fixed Period
Commencement Date. Notwithstanding the foregoing, in no event shall any Fixed
Period extend beyond the Maturity Date.
(l) "Fixed Period Commencement Date": The proposed commencement of
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the applicable Fixed Period.
(m) "Fixed Rate Notice". A written notice in the form prescribed by
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Payee which confirms the Fixed Increment Rate for a particular Fixed Increment.
(n) "LIBO Rate Reserve Requirement": The daily average during the
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Fixed Period of the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other schedule changes in reserve requirements
during the Fixed Period) which is imposed under Regulations K and D (defined
below) against Eurocurrency liabilities.
(o) "Loan": The loan advanced under this Note and evidenced hereby
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and by the other Loan Documents.
(p) "Loan Amount": The principal amount outstanding under this Note
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from time to time.
(q) "Loan Documents": As that term is defined in the Deed of Trust.
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(r) "Loan to Value Test": The determination by ▇▇▇▇▇, in its sole
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but reasonable discretion pursuant to the Appraisal that the Loan to Value Ratio
(as herein defined) does not exceed seventy-five percent (75%).
(s) "Loan to Value Ratio": The ratio obtained by dividing (i) the
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Loan Amount by (ii) the then current market value of the Trust Property
determined pursuant to the Appraisal dated no earlier than sixty (60) days prior
to the date of calculation of such ratio.
(t) "Minimum Rent": In the case of office space, $20.50 per rentable
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square foot triple net with no expense stop or $28.50 per rentable square foot
on a full service basis with an estimated base year expense of $8.00 per
rentable square foot, and in the case of retail space, $27.50 per rentable
square foot triple net with no expense stop. Rent, as used in this paragraph as
applied to each lease, shall mean the nominal rent on an annual basis stated in
such lease less the sum, amortized on an annual basis over the term of such
lease in years, of any and all (i) rent abatements, (ii) tenant improvements in
excess of $25 per rentable square foot funded by Maker, and (iii) other tenant
concessions.
(u) "Net Operating Income": The sum of (i) all net income generated
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by the Trust Property as determined on a GAAP accrual basis plus (to the extent
deducted in determining such net income) interest, depreciation and amortization
and less rent concessions applicable on a cash basis to the period in question
(to the extent included in receipts in the determination of net income) as
generated pursuant to leases with bona fide third party tenants in possession of
their space pursuant to leases which are in full force and effect and have been
previously approved by Payee (or for which Payee's approval is not required
under the Loan Documents), and (ii) all other income other than from leases
arising from direct operations of or licenses or operating agreements for any
part of the Improvements determined on a GAAP accrual basis. Maker shall provide
Payee with all information and materials required by Payee necessary for the
determination of Net Operating Income.
(v) "Prime Rate": The base rate of interest per annum established
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from time to time by ▇▇▇▇▇, San Francisco, California, and designated as its
prime rate. Changes in the Applicable Rate resulting from changes in the Prime
Rate shall become effective on the date each such change in such Prime Rate is
established by Payee.
(w) "Regulation D": Regulation D of the Board of Governors of the
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Federal Reserve System from time to time in effect and shall include any
successor or other regulation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.
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(x) "Regulation K": Regulation K of the Board of Governors of the
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Federal Reserve System from time to time in effect and shall include any
successor or other regulation of said Board of Governors relating to the
international and foreign activities of United States banking organizations
applicable to member banks of the Federal Reserve System.
(y) "Second Leasing Requirement". Attainment of the First Leasing
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Requirement, Substantial Completion of the Base Building, as defined in the
Construction Loan Agreement and the delivery to Payee of fully executed leases
covering not less than eighty-five (85%) of the net rentable square footage of
the Improvements on the Trust Property, approved by Payee or which, under the
terms of the Deed of Trust, do not require the approval of Payee, generating (in
the aggregate) Average Rent equal to at least the Minimum Rent.
(z) "Unmatured Event of Default": Any event, happening or occurrence
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which would constitute an Event of Default under the Loan Documents after the
giving of any required notice or expiration of any applicable cure period or
grace period.
2. Interest Rates; Term; Repayment.
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(a) Accrual of Interest; Repayment of Loan. Interest based on a 360-
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day year will accrue on the number of days funds are actually outstanding.
Interest shall be calculated on a daily basis and shall be payable monthly in
arrears on the first day of each and every month following the date hereof until
the Maturity Date, at which time all accrued and unpaid interest and the unpaid
principal balance hereof shall be due and payable in full.
(b) Extension of Maturity Date. The Maturity Date of this Note may be
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extended by Maker for two (2) periods of one (1) year each (an "Extension
Period") upon the written request of Maker given not less than sixty (60) days
nor more than one hundred twenty (120) days prior to the then-effective Maturity
Date to be extended, each such extension being subject to satisfaction of the
following:
(1) Payment at the commencement of each applicable Extension
Period by Maker of an extension fee equal to One Quarter of One percent (0.25%)
of the principal amount of this Note;
(2) Payment prior to the first day of each applicable Extension
Period by Maker of any tax, together with penalties and interest thereon (if
any) due to either the City of Alexandria or the Commonwealth of Virginia in
connection with the Loan or any extension thereof;
(3) The delivery by Maker to Payee of an extension agreement and
such other documentation as Payee may reasonably require in
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connection therewith, all of which shall be in form and substance acceptable to
Payee (including a modification of this Note to provide that the maximum amount
of interest payable from the date of such modification shall not exceed the
maximum amount payable under law in effect during the applicable Extension
Period);
(4) At the time of such notice and on the first day of the
applicable Extension Period, there shall exist no uncured Event of Default under
any of the Loan Documents ( as defined in the Deed of Trust);
(5) Maker shall, if requested by ▇▇▇▇▇, deliver to Payee an
opinion of counsel in form and substance acceptable to Payee, stating that,
inter alia, the Loan Documents create valid and binding obligations of Maker and
are enforceable in accordance with their terms, subject to customary
qualifications;
(6) Maker shall deliver to Payee an endorsement to or reissuance
of the existing title insurance policy held by Payee in connection with the
Loan, revising the effective date of the policy to the first day of the
applicable Extension Period and stating that the coverage afforded thereby, or
the agreements thereunder, shall not be adversely affected because of such
extension;
(7) An Appraisal having an effective date not earlier than sixty
(60) days and delivered not later than thirty (30) days prior to the Maturity
Date indicating that the Loan to Value Test is satisfied;
(8) The delivery by Maker to Payee of all financial information
reasonably requested by ▇▇▇▇▇, as provided for in the Deed of Trust;
(9) Maker shall pay, at its sole cost and expense, all reasonable
costs incurred by Payee in connection with such extension, including appraisal
fees, inspection fees, survey and survey recertification fees, reasonable legal
fees, and fees for environmental studies and reports and such other professional
services which Payee in good faith determines at the time such extension is
requested are necessary to satisfy any Legal Requirement (as defined in the Deed
of Trust) and to protect the value of the Trust Property and Improvements; the
payment by Maker of these costs and expenses shall not be credited, in any way
or to any extent, against any portion of the outstanding balance of this Note;
and
(10) Payee is satisfied that the Extension Test has been met.
(c) No Obligation to Extend. Notwithstanding Maker's right to extend
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the Maturity Date of the Loan as set forth hereinabove, Maker hereby
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agrees that ▇▇▇▇▇ shall have no commitment or obligation to extend the Maturity
Date beyond January 12, 2004.
(d) Election to Fix Interest Rate. Any election to fix the interest
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rate with respect to each Fixed Increment may be made only (i) once during any
thirty (30) day period and (ii) while no Event of Default or Unmatured Event of
Default is in existence hereunder or under any of the other Loan Documents.
Maker, at its option and upon satisfaction of the conditions set forth herein,
may request a Fixed Increment Rate to be used in calculating interest on the
portion of the unpaid principal balance and for the period selected in
accordance with and subject to the following conditions:
(i) One Business Day before requesting a Fixed Increment Rate,
Maker shall give Payee advance telephonic notice that it will request a rate
quotation for a portion of the principal balance of this Note and for a period
of time which conforms to a Fixed Increment and Fixed Period as defined herein.
(ii) At approximately 9:00 A.M. (Pacific time) on the Business
Day next following said advance notice, Maker may telephonically request Payee
to quote telephonically an applicable Fixed Increment Rate for the Fixed
Increment and Fixed Period selected by Maker. At any one time during the term
hereof, no more than five (5) Fixed Increments may be outstanding. Maker shall
not be released from its obligation to pay interest at the Applicable Rate and
Payee shall incur no liability to Maker if Maker is unable to obtain a
telephonic quote on any Business Day.
(iii) If Maker accepts ▇▇▇▇▇'s telephonic quote of the Fixed
Increment Rate requested within five (5) minutes of the quotation thereof by
▇▇▇▇▇, interest at said Fixed Increment Rate shall accrue on the Fixed Increment
and for the Fixed Period selected. The date the quoted Fixed Increment Rate is
telephonically accepted by Maker shall be the Fixed Period Commencement Date for
that Fixed Period.
Payee is authorized to rely upon the telephonic request and
acceptance of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ as Maker's duly authorized
agents, or such additional authorized agents as Maker shall designate in writing
to Payee. Maker's telephonic notices, requests and acceptances shall be directed
to such officers of Payee as Payee may from time to time designate.
If Maker elects the Fixed Increment Rate, but the applicable Fixed
Period will commence on a date which is not a Business Day, such Fixed Period
shall be deemed to commence on the next Business Day after it would otherwise
commence, and any interest which accrues hereunder in the interim shall accrue
at the Applicable Rate.
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(e) Fixed Rate Notice. Maker's acceptance of a Fixed Increment Rate
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shall be confirmed by a written Fixed Rate Notice, which Payee shall deliver to
Maker. ▇▇▇▇▇'s failure to deliver the Fixed Rate Notice shall not release Maker
from Maker's obligation to pay interest at the Applicable Rate pursuant to the
terms hereof.
(f) Nonavailability of Funds. Notwithstanding anything contained
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herein to the contrary, if Maker elects the Fixed Increment Rate to apply but
Payee is unable for any reason to obtain funds in the amount of the Fixed
Increment elected for the Fixed Period elected, interest on such Fixed Increment
shall accrue at the Applicable Rate unless and until a new election of the Fixed
Increment Rate is made by Maker and Payee is then able to obtain such funds.
(g) No Effective Election. In the absence of an effective election by
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Maker of the Fixed Increment Rate in accordance with the above procedures prior
to the expiration of the then current Fixed Period with respect to any Fixed
Increment, interest on such Fixed Increment shall accrue at the Applicable Rate,
effective immediately upon the expiration of such Fixed Period.
(h) Payment of Fees and Costs. Maker shall (i) pay all legal fees
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reasonably incurred by Payee in connection with the preparation of this Note and
any and all other Loan Documents contemplated hereby (including, but not limited
to, any amendments hereto or thereto or consents, releases or waivers hereunder
or thereunder); (ii) reimburse Payee promptly upon demand for all amounts
expended, advanced or incurred by Payee pursuant to the terms of the Loan
Documents to satisfy any obligation of Maker under this Note or any other Loan
Documents, which amounts shall include all court costs, reasonable attorneys'
fees (including, without limitation, for trial, appeal or other proceedings),
fees of auditors and accountants, and investigation expenses reasonably incurred
by Payee in connection with any such matter; and (iii) any and all other costs
and expenses payable by Maker pursuant to the Loan Documents, including, without
limitation, the Loan fee in the amount of $256,750.00, an appraisal fee in the
amount of $12,000.00, an environmental review fee in the amount of $425.00,
documentary taxes and recording, brokerage, reasonable attorneys', surveyors',
accountants', engineers', architects' and inspectors' fees and title insurance
premiums. Except to the extent that certain of these costs and expenses are
included within the definition of Indebtedness (as defined in the Deed of
Trust), the costs and expenses shall not be credited, in any way or to any
extent, against any portion of the Indebtedness.
3. Special Provisions Applicable to Fixed LIBO Rate. Notwithstanding any
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other provisions hereof:
(a) Costs of Payee. Maker acknowledges and agrees that Payee may
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incur costs, expenses and losses, including, without limitation, costs, expenses
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and losses resulting from the occurrence of any of the events referred to in
subsections (b) and (c) below which increase the cost to Payee of maintaining
the Loan on a Fixed LIBO Rate basis. Accordingly, Maker shall pay to Payee
within twenty (20) days of written demand, in addition to all other amounts due
under this Note and under the Loan Documents, all amounts reasonably determined
by Payee required to compensate Payee for all such costs, expenses and losses,
if any, to the extent that such costs, expenses and losses increase the cost to
Payee of maintaining the Loan on a Fixed LIBO Rate basis, provided that ▇▇▇▇▇
agrees, as soon as reasonably possible, to give Maker notice of any such
increased costs, expenses, or losses, which written notice shall include an
explanatory certificate in reasonable detail as to the increased costs.
(b) Change in Law. If any change in applicable law or regulations or
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any interpretation thereof by any government, central bank, or agency or
instrumentality of either ("Governmental Authority") charged with the
administration thereof shall:
(i) impose, modify, or deem applicable any reserve, special
deposit or special requirements against assets held by, or deposits in or for
the account of, or loans by, or any other acquisition of funds for advances by
▇▇▇▇▇; or
(ii) impose on Payee any other conditions regarding this Note; or
(iii) subject Payee (or make it apparent that Payee is subject) to
any tax (including, without limitation, any international interest equalization
tax), levy, impost, duty, charge, fee, deduction or withholding on or from
payment due from Maker under this Note and the other Loan Documents, other than
income and franchise taxes of the United States and its political subdivisions,
or
(iv) change the basis of taxation of payments due from Maker to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (other than by a change in the statutory rate of taxation of the
overall income of Payee);
and any of the foregoing results in an increase in the cost to Payee of
maintaining the Loan on a Fixed LIBO Rate basis, then upon demand made by Payee
to Maker, Maker shall pay to Payee, from time to time, as reasonably determined
and certified by Payee, additional amounts that shall compensate Payee for such
increased cost. Payee will notify Maker of any event that entitles Payee to such
additional amounts and will furnish Maker with an explanatory certificate in
reasonable detail as to the increased cost as a result of any such event
mentioned in this subsection. Maker shall within twenty (20) days of written
demand pay such additional amounts to Payee. All such determinations by Payee
that are certified to Maker shall be
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presumed to be correct, absent manifest computational errors, provided they are
made in good faith.
(c) Reserve Cost Requirement. Maker shall pay Payee on the days on
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which interest is payable under this Note the actual costs to Payee, as
determined in good faith by ▇▇▇▇▇ and evidenced by an explanatory notice
delivered to Maker by ▇▇▇▇▇, of Payee's complying with any reserve, special
deposit or similar requirements (including, but not limited to, state law
requirements and, to the extent not already paid by Maker by inclusion within
the definition of LIBO Rate Reserve Requirement, Regulations K and D of the
Board of Governors of the Federal Reserve System of the United States) imposed
or deemed applicable against foreign assets held by, or deposits in or for the
account of, or loans by, or any other acquisition of funds for advances by Payee
of any Governmental Authority charged with the administration of such
requirements, to the extent that such requirements increase the cost to Payee of
maintaining the Loan on a Fixed LIBO Rate basis.
4. Prepayment
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(a) Ability to Prepay. Maker shall have the right prior to the
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Maturity Date, upon ten (10) days' prior written notice, to prepay all or any
portion (except any portion constituting a Fixed Increment during its applicable
Fixed Period which may only be prepaid as set forth in the following paragraphs)
of the principal balance owing hereunder from time to time; provided, however,
that (x) if such prepayment is only a partial payment of the then outstanding
principal balance hereof, such prepayment shall be accompanied by the payment of
all accrued but unpaid interest on the portion of the outstanding principal
balance of the Note being so paid through the date the prepayment is made, and
(y) for same day credit all monies shall be received at Payee's office at ▇▇▇▇▇
Fargo Bank, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on or
before 11:00 a.m., Pacific Standard Time or Pacific Daylight Time (as
applicable). All monies received after this time shall be deemed received on
the following Business Day and shall continue to accrue interest in accordance
with the terms hereof to the date funds are deemed received.
(b) Prepayment of Fixed Increment. Maker shall have the right to
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prepay any Fixed Increment only upon payment to Payee, at the time of such
prepayment, of an amount equal to all costs, fees and penalties incurred by
Payee in connection with such prepayment, such amounts to include that sum which
is equal to the excess of (i) the interest that would have been payable by Maker
for such Fixed Increment for the remainder of the applicable Fixed Period at the
applicable Fixed Increment Rate had such prepayment not been made by Maker, over
(ii) the interest that would have been payable by Maker for such Fixed Increment
for the remainder of the applicable Fixed Period at the applicable Fixed
Increment Rate in effect on the date of prepayment.
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(c) Prepayment Resulting from Acceleration. In addition, in any such
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event, the provisions of the immediately preceding paragraph hereto (relating to
the obligation of Maker to pay to Payee certain amounts in the event of the
prepayment of a Fixed Increment prior to the last day of the applicable Fixed
Period) shall apply with respect to any Fixed Increment prepaid by Maker prior
to the last day of the applicable Fixed Period as a result of the acceleration
by Payee of the outstanding principal balance hereof.
5. General Provisions.
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(a) Application of Payments. All payments on this Note shall, at the
-----------------------
option of Payee, be applied first to the payment of late charges, if any, then
to the payment of accrued interest, and after all such interest has been paid,
any remainder shall be applied to reduction of the principal balance, and, from
and after the occurrence of an Event of Default, in such order as Payee may
designate. All payments hereunder shall be delivered to Payee at ▇▇▇▇▇'s office
at ▇▇▇▇▇ Fargo Bank, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ or at such other address as Payee may from time to time designate in
writing to Maker.
(b) Waivers. Except as otherwise specifically provided in the Loan
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Documents, Maker and any endorsers hereof jointly and severally waive
presentment and demand for payment, notice of intent to accelerate maturity,
notice of acceleration of maturity, protest or notice of protest and nonpayment,
bringing of suit and diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and properties securing
payment hereof. Maker and any endorsers hereof agree that the time for any
payments hereunder may be extended from time to time without notice and consent
to the acceptance of further security or the release of any existing security
for this Note, all 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 Maker under this Note even
though Maker is not a party to such agreement.
(c) Acceleration. If an Event of Default shall occur under any of the
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Loan Documents, then Payee may, at its option, without further notice or demand,
declare the unpaid principal balance and accrued and unpaid interest on this
Note, together with any other sums owing at the time of such declaration, at
once due and payable; foreclose all security deeds, deeds of trust, mortgages
and liens securing payment hereof; pursue any and all other rights, remedies,
and recourses available to Payee, or pursue any combination of the foregoing,
all remedies hereunder and under the Loan Documents being cumulative.
(d) No Waiver. Failure to exercise any of the foregoing options shall
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not constitute a waiver of the right to exercise the same or any other option at
any subsequent time in respect to any other event. The acceptance by Payee of
any
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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 foregoing options at that time or at any subsequent time
or nullify any prior exercise of any such option without the express written
consent of Payee.
(e) Late Charges. If any payment required under this Note (other than
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the payment of the principal hereof at the Maturity Date or upon acceleration)
is not paid within ten (10) days after it becomes due and payable, Payee of this
Note may require an additional payment of a late charge for late payment to
compensate for Payee's loss of use of funds and for the expenses of handling the
delinquent payment, in an amount not to exceed three percent (3%) of such
delinquent payment. Said late charge shall be paid in any event not later than
the due date of the next subsequent installment of principal and/or interest.
In the event the maturity of the Indebtedness hereunder is accelerated by ▇▇▇▇▇,
this paragraph shall apply only to payments overdue prior to the time of such
acceleration. This paragraph shall not be deemed to be a waiver of ▇▇▇▇▇'s
right to accelerate payment of this Note under the terms hereof.
(f) Interest Rate After an Event of Default. Upon the occurrence of
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an Event of Default, at the option of Payee (i) all amounts hereunder then
bearing interest at a Fixed Increment Rate shall bear interest at the Applicable
Rate, and (ii) all amounts payable hereunder or under the Loan Documents shall
bear interest for the period beginning with the date of occurrence of such
default at a rate of interest per annum (the "Default Rate"), payable on the
first day of each and every month, equal to four percent (4%) above the
Applicable Rate, as it fluctuates, or four percent (4%) above the Fixed
Increment Rate to the extent that Payee does not exercise its option to change
the Fixed Increment Rate to the Applicable Rate, as set forth in subparagraph
(5)(f)(i) above, whichever is applicable, as in effect from time to time and
continuing until such Event of Default shall have been cured.
(g) Default Rate on Outstanding Balance. Notwithstanding any other
-----------------------------------
provision of this Note to the contrary, from and after the Maturity Date of this
Note (as it may have been extended pursuant to the terms hereof), or such
earlier date as the unpaid principal owing on this Note becomes due and payable
upon acceleration or otherwise pursuant to the terms hereof, the whole of the
unpaid principal and interest owing on this Note shall thereafter bear interest
until paid in full at the Default Rate.
(h) Legal Tender; Costs of Collection. All amounts payable hereunder
---------------------------------
are payable in lawful money of the United States of America. Maker agrees to
pay all costs of collection hereof when incurred, including reasonable
attorneys' fees, whether or not any legal action shall be instituted to enforce
this Note.
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(i) Security. This Note is issued pursuant to that certain
--------
Construction Loan Agreement of even date herewith executed by Maker and Payee
and is secured, inter alia, by the Deed of Trust. All of the agreements,
----- ----
conditions, covenants, warranties, representations, provisions and stipulations
made by or imposed upon Maker under the Loan Documents are hereby made a part of
this Note to the same extent and with the same force and effect as if they were
fully inserted herein, and Maker covenants and agrees to keep and perform the
same, or cause them to be kept and performed, strictly in accordance with their
terms.
(j) Joint and Several Liability. If this Note is executed by more
---------------------------
than one party, each such party shall be jointly and severally liable for the
obligations of Maker under this Note. If Maker is a partnership, each general
partner of Maker shall be jointly and severally liable hereunder, and each such
general partner hereby waives any requirement of law that, in the Event of a
Default hereunder or under any of the Loan Documents, ▇▇▇▇▇ exhaust any assets
of Maker before proceeding against such general partner's assets.
(k) Time of Essence. MAKER AGREES THAT TIME IS OF THE ESSENCE IN THE
---------------
PERFORMANCE OF ALL OBLIGATIONS HEREUNDER.
(l) Governing Law. This Note shall be governed by and construed
-------------
according to the laws of the Commonwealth of Virginia.
(m) Usury. It is expressly stipulated and agreed to be the intent of
-----
Maker and Payee at all times to comply with the applicable law now or hereafter
governing the interest payable on this Note or the Loan (or applicable United
States federal law to the extent that it permits Payee to contract for, charge,
take, reserve, or receive a greater amount of interest than under Virginia law).
If the applicable law is ever revised, repealed, or judicially interpreted so as
to render usurious any amount called for under this Note, or under any of the
Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the Loan, or if Payee's exercise of the option herein contained to
accelerate the maturity of this Note, or if any prepayment by Maker results in
Maker's having paid any interest in excess of that permitted by applicable law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by ▇▇▇▇▇ be credited on the principal balance of this Note
(or if the Note has been paid in full, refunded to Maker), and the provisions of
this Note and the Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the then applicable
law, but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder.
(n) Amortization. All sums paid or agreed to be paid to Payee for the
------------
use, forbearance or detention of the indebtedness evidenced hereby and by the
other Loan Documents shall, to the extent permitted by applicable law, be
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amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the usury ceiling from time to time
in effect and applicable to the Loan for so long as debt is outstanding under
the Loan.
(o) Successors and Assigns. The term "Maker" as used in this Note
----------------------
shall mean and have reference to, collectively, all parties and each of them
directly or indirectly obligated for the indebtedness evidenced by this Note,
whether as principal maker, endorser, or otherwise, together with all parties
who have acquired the property conveyed by the Deed of Trust or any portion or
portions thereof, together with the respective heirs, administrators, executors,
legal representatives, successors and assigns of each of the foregoing.
(p) No Merger. Except as may be permitted by the terms of the Deed of
---------
Trust, Maker shall not merge into or with any other company, firm or corporation
without the prior written consent of Payee; provided, however, if any merger
occurs, then the resulting merged company, firm or corporation shall become
liable as Maker under this Note to the same extent as Maker hereunder. Maker
warrants and represents that Maker has full power and authority to make and
execute this Note, and that this Note is fully and legally binding upon Maker.
(q) Notices. All notices or other communications required or
-------
permitted to be given pursuant to this Note shall be in writing and shall be
considered as properly given if mailed by first-class United States mail,
postage prepaid, registered or certified with return receipt requested, or if
sent by Federal Express or other overnight delivery service, or by delivering
same in person to the intended addressee or by prepaid telegram. Notice given in
any manner shall be effective upon receipt. For purposes of notice, the
addresses of the parties shall be as set forth below:
The address of Maker is:
▇▇▇▇ Holdings Limited Partnership
c/o Saul Centers, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
With copies of all notices to Maker to:
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
Washington, DC 20037
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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The address of Payee is:
Wells-Fargo Bank, National Association
Real Estate Group
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-1806
With copies of all notices to Payee to:
▇▇▇▇▇ Fargo Bank
Real Estate Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Credit Officer
provided, however that any party hereto shall have the right to change its
address for notice hereunder to any other location within the continental United
States by the giving of fifteen (15) business days' notice to the other party in
the manner set forth hereinabove.
(r) Purpose. The undersigned and all endorsers of this Note, and
-------
other parties primarily or secondarily liable hereon, each represents and
warrants that the amounts advanced or to be advanced under this Note and Loan
Documents and evidenced hereby are greater than $5,000 and are being made
exclusively in connection with a loan made for business or investment purposes
within the meaning and intent of Section 6.1-330.75 of the Code of Virginia
(1950), as amended.
(s) Interpretation. Whenever possible, each provision of this Note
--------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.
(t) Amendments. This Note may not be changed orally, but only by an
----------
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
(u) WAIVER OF JURY TRIAL. EACH PARTY TO THIS NOTE AND, BY ITS
--------------------
ACCEPTANCE HEREOF, PAYEE, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
Initials:_______
-15-
CONNECTION THEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND EACH PARTY AND PAYEE HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS NOTE AND
PAYEE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND PAYEE TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
6. Reduction in Recourse Provision.
--------------------------------
(a) Subject to the exceptions and qualifications described below, upon
(i) Substantial Completion of the Base Building and (ii) receipt by Payee of
estoppel certificates reasonably acceptable to Payee from tenants providing for
in the aggregate Average Rent equal to at least the Minimum Rent under leases
approved by Payee or which do not require the approval of Payee pursuant to the
Deed of Trust, for not less than fifty percent (50%) of the rentable space in
the Improvements, the undersigned shall thereafter no longer be personally
liable for the payment of the indebtedness evidenced by or created or arising
under this Note or arising under the Loan Documents for any amount in excess of
(x) Nineteen Million Dollars ($19,000,000.00) plus (y) any and all interest and
fees set forth in this Note, plus (z) any unreimbursed expenses incurred by
▇▇▇▇▇ Fargo in protecting, preserving or defending its interests in connection
with the Loan or under the Loan Documents, including, without limitation all
reasonable attorneys' fees and all other expenses incurred by ▇▇▇▇▇ Fargo in
connection with any trustee's sale or foreclosure and/or sale of all or any of
the Trust Property or other collateral covered by the Loan Documents (the
"Adjusted Amount), and any judgment or decree in any action brought to enforce
the obligation of the undersigned to pay such indebtedness in excess of the
Adjusted Amount shall be enforceable against the undersigned only to the extent
of its interest in the property encumbered by the Deed of Trust and the other
Loan Documents and any such judgment or decree shall not be subject to execution
upon or be a lien upon the assets of the undersigned other than its interest in
such property. All proceeds of any trustee's sale or foreclosure and/or sale of
all or any of the Trust Property or other collateral covered by the Loan
Documents applicable by their terms to the amount of this Note shall be
allocated first to the portion of this Note for which Maker is not personably
liable and then to the portion of this Note for which Maker is personably
liable, and Maker acknowledges that Payee may pursue any and all rights,
remedies, and recourses available to Payee under this Note or under the Loan
Initials:_______
-16-
Documents, or pursue any combination of the foregoing, in such order as Payee
may determine in its sole discretion, and that all rights, remedies and
recourses hereunder and under the Loan Documents are cumulative.
(b) The foregoing limitation of personal liability shall be subject
to the following exceptions and qualifications:
The undersigned shall be fully and personally liable for all costs,
expenses or losses incurred by ▇▇▇▇▇ as a result of any of the following:
(A) Failure to pay taxes, assessments and any other charges which
could result in prior liens against any portion of the property covered by the
Deed of Trust or the other Loan Documents;
(B) Failure to pay and discharge any mechanic's liens,
materialmen's liens or other liens against any portion of the property covered
by the Deed of Trust or the other Loan Documents;
(C) Fraud, misrepresentation or waste;
(D) Retention by the undersigned of any rental income or other
income arising with respect to any property covered by the Deed of Trust or the
other Loan Documents which, under the terms thereof, should have been paid to
Payee hereof;
(E) All insurance proceeds, condemnation awards or other similar
funds or payments attributable to any property covered by the Deed of Trust or
the other Loan Documents which, under the terms thereof, should have been paid
to Payee hereof;
(F) Failure to maintain, repair or restore any property covered
by the Deed of Trust or the other Loan Documents in accordance with the terms
thereof;
(G) The removal, demolition, damage or destruction of any
property covered by the Deed of Trust or the other Loan Documents which is
neither permitted by the terms of the Loan Documents, consented to in writing by
Payee nor is fully compensated for by insurance proceeds or condemnation awards;
and
(H) The failure of the Deed of Trust or any Other Loan Document
to constitute a first and prior lien upon the property subject only to the
exceptions set forth in Exhibit "B" to the Deed of Trust and any exceptions
permitted by any other Loan Document.
Initials:_______
-17-
(I) Any expense, damage, loss or liability incurred by the Lender
arising from the presence of oil, toxic or hazardous waste on the property
encumbered by the Deed of Trust and the other Loan Documents.
(c) Nothing contained in this paragraph shall affect or limit the
ability of Payee hereof to enforce any of its rights or remedies with respect to
any property encumbered by the Deed of Trust and the other Loan Documents.
(d) Nothing contained in this paragraph shall affect or limit the
rights of Payee hereof to proceed against any person or entity, including the
undersigned or any partner in the undersigned, with respect to the enforcement
of any separate guaranties of payment or guaranties of performance and
completion or other similar rights, but the foregoing shall not be construed to
extend and relate to any obligation of ▇▇▇▇ Centers, Inc. arising under this
Note or any other Loan Document executed contemporaneously with this Note, all
of which obligations are subject to the limitations of liability contained in
this Paragraph 6.
(e) The limitation contained in this paragraph shall be void and
completely ineffective in the event that the undersigned or any general partner
of the undersigned shall voluntarily file any petition or commence any case or
proceeding under any provision or chapter of the Federal Bankruptcy Act, the
Federal Bankruptcy Code, or any other federal or state law relating to
insolvency, bankruptcy or reorganization, or the entry of any order of relief
under the Federal Bankruptcy Code with respect to the undersigned or any general
partner in the undersigned.
[The remainder of this page is blank and the next page is a signature page]
Initials:_______
-18-
IN WITNESS WHEREOF, this Note has been duly executed as of the date first
above written.
WITNESS/ATTEST:
▇▇▇▇ HOLDINGS LIMITED
PARTNERSHIP, a Maryland limited
partnership
[CORPORATE SEAL] By: ▇▇▇▇ Centers, Inc., a Maryland
corporation
General Partner
/S/ By: /S/
------------------------ -----------------------
▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
Chairman
[CORPORATE SEAL] ▇▇▇▇ CENTERS, INC., a Maryland
corporation
/S/ By: /S/
------------------------ ---------------------
▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
Chairman
This signature page is attached to and is a part of that certain Promissory Note
in the original principal amount of Thirty-eight Million and No/100 Dollars
($38,000,000.00), from ▇▇▇▇ Holdings Limited Partnership and ▇▇▇▇ Centers, Inc.,
collectively as "Maker", to ▇▇▇▇▇ Fargo Bank, National Association, as "Payee."
Initials:_______
-19-
CERTIFICATE OF IDENTIFICATION
-----------------------------
This Note is secured by a Credit Line Deed of Trust, Security Agreement,
and Assignment of Leases and Rents (the "Deed of Trust") of even date herewith
on property located in the City of Alexandria, Virginia from ▇▇▇▇ Holdings
Limited Partnership and ▇▇▇▇ Centers, Inc. to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇., Trustees.
THIS IS TO CERTIFY that this is the Note described in such Deed of Trust
bearing even date herewith, said Deed of Trust and this Note having been
executed in my presence.
/S/
---------------------------
Notary Public
My Commission Expires: ___________________