PROMISSORY NOTE
$2,800,000.00 September 6, 1996
FOR VALUE RECEIVED, the undersigned, Sutton Place CCPV, L.P., a South
Carolina limited partnership ("Borrower"), whose address is One Insignia
Financial Plaza, Greenville, South Carolina 29601, promises to pay to the order
of First Union National Bank of North Carolina, a national banking association
("Lender"), at the office of Lender at One First Union Center, DC6, 301 South
College Street, Charlotte, North Carolina 28288-0166, or at such other place as
Lender may designate to Borrower in writing from time to time, the principal sum
of TWO MILLION EIGHT HUNDRED THOUSAND AND 00/100 DOLLARS ($2,800,000.00)
together with interest on so much thereof as is from time to time outstanding
and unpaid, from the date of the advance of the principal evidenced hereby, at
the rate of Nine and One Hundred Twenty-Five Thousandths (9.125%) percent per
annum (the "Note Rate"), in lawful money of the United States of America, which
shall at the time of payment be legal tender in payment of all debts and dues,
public and private.
ARTICLE I - TERMS AND CONDITIONS
1.01 Payment of Principal and Interest. Said interest shall be computed
hereunder based on a 360-day year and based on twelve (12) 30-day months for
each full calendar month and on the actual number of days elapsed for any
partial month in which interest is being calculated. In computing the number of
days during which interest accrues, the day on which funds are initially
advanced shall be included regardless of the time of day such advance is made,
and the day on which funds are repaid shall be included unless repayment is
credited prior to close of business. Payments in federal funds immediately
available in the place designated for payment received by Lender prior to 2:00
p.m. local time at said place of payment shall be credited prior to close of
business, while other payments may, at the option of Lender, not be credited
until immediately available to Lender in federal funds in the place designated
for payment prior to 2:00 p.m. local time at said place of payment on a day on
which Lender is open for business. Such principal and interest shall be payable
in equal consecutive monthly installments of $23,195.93 each, beginning on the
first day of the second full calendar month following the date of this Note
(or on the first day of the first full calendar month following the date hereof,
in the event the advance of the principal amount evidenced by this Note is the
first day of a calendar month), and continuing on the first day of each and
every month thereafter through and including September 1, 2003, and on October
1, 2003 (the "Maturity Date"), at which time the entire outstanding principal
balance hereof, together with all accrued but unpaid interest thereon, shall be
due and payable in full. Each such monthly installment shall be applied first
to the payment of accrued interest and then to reduction of principal. If the
advance of the principal amount evidenced by this Note is made on a date other
than the first day of a calendar month, then Borrower shall pay to Lender
contemporaneously with the execution hereof interest at the Note Rate for a
period from the date hereof through and including the first day of the next
succeeding calendar month.
1.02 Prepayment.
(a) This Note may be prepaid in whole but not in part (except as
otherwise specifically provided herein) at any time after the second (2nd)
anniversary of this Note provided (i) written notice of such prepayment is
received by Lender not more than sixty (60) days and not less than thirty (30)
days prior to the date of such prepayment, (ii) such prepayment is accompanied
by all interest accrued hereunder and all other sums due hereunder and under the
other Loan Documents (as hereinafter defined), and (iii) if such prepayment
occurs prior to the date that is six (6) months prior to the Maturity Date,
Lender is paid a prepayment fee in an amount equal to the greater of (A) one
(1%) percent of the principal amount being prepaid or (B) the positive excess of
(1) the present value ("PV") of all future installments of principal and
interest due under this Note including the principal amount due at maturity
(collectively, "All Future Payments"), discounted at an interest rate per annum
equal to the sum of (a) the Treasury Constant Maturity Yield Index published
during the second full week preceding the date on which such premium is payable
for instruments having a maturity coterminous with the remaining term of this
Note, and (b) fifty (50) basis points over (2) the principal amount of this Note
outstanding immediately before such prepayment [(PV of All Future Payments) -
(principal balance at time of prepayment) = prepayment fee]. "Treasury Constant
Maturity Yield Index" shall mean the average yield for "This Week" as reported
by the Federal Reserve Board in Federal Reserve Statistical Release H.15(519).
If there is no Treasury Constant Maturity Yield Index for instruments having a
maturity coterminous with the remaining term of this Note, then the index shall
be equal to the weighted average yield to maturity of the Treasury Constant
Maturity Yield Indices with maturities next longer and shorter than such
remaining average life to maturity, calculated by averaging (and rounding upward
to the nearest whole multiple of 1 /100 of 1% per annum, if the average is not
such a multiple) the yields of the relevant Treasury Constant Maturity Yield
Indices (rounded, if necessary, to the nearest 1/100 of 1% with any figure of
1/200 of 1% or above rounded upward). In the event that any prepayment fee is
due hereunder, Lender shall deliver to Borrower a statement setting forth the
amount and determination of the prepayment fee, and, provided that Lender shall
have in good faith applied the formula described above, Borrower shall not have
the right to challenge the calculation or the method of calculation set forth in
any such statement in the absence of manifest error, which calculation may be
made by Lender on any day during the thirty (30) day period preceding the date
of such prepayment. Lender shall not be obligated or required to have actually
reinvested the prepaid principal balance at the Treasury Constant Maturity Yield
or otherwise as a condition to receiving the prepayment fee. No prepayment fee
or premium shall be due or payable in connection with any prepayment of the
indebtedness, in whole, evidenced by this Note made on or after the date that is
six (6) months prior to the Maturity Date. In addition to the aforesaid
prepayment fee if, upon any such prepayment (whether prior to or after the date
that is six (6) months prior to the Maturity Date), the aforesaid prior written
notice has not been timely received by Lender, the prepayment fee shall be
increased by an amount equal to the lesser of (i) thirty (30) days' unearned
interest computed on the outstanding principal balance of this Note so prepaid
and (ii) unearned interest computed on the outstanding principal balance of this
Note so prepaid for the period from, and including, the date of prepayment
through the otherwise stated maturity date of this Note.
(b) Partial prepayments of this Note shall not be permitted,
except partial prepayments resulting from Lender applying insurance or
condemnation proceeds to reduce the outstanding principal balance of this Note
as provided in the Security Instrument (as hereinafter defined), in which event
no prepayment fee or premium shall be due. No notice of prepayment shall be
required under the circumstance specified in the preceding sentence. No
principal amount repaid may be reborrowed. Partial payments of principal shall
be applied to the unpaid principal balance evidenced hereby but such application
shall not reduce the amount of the fixed monthly installments required to be
paid pursuant to Section 1.01 above.
(c) Except as otherwise expressly provided in Section 1.02(b)
above, the prepayment fees provided above shall be due, to the extent permitted
by applicable law, under any and all circumstances where all or any portion of
this Note is paid prior to the Maturity Date, whether such prepayment is
voluntary or involuntary (including, without limitation, any prepayment made
prior to the second anniversary of the date hereof), even if such prepayment
results from Lender's exercise of its rights upon Borrower's default and
acceleration of the maturity date of this Note (irrespective of whether
foreclosure proceedings have been commenced), and shall be in addition to any
other sums due hereunder or under any of the other Loan Documents. No tender of
a prepayment of this Note with respect to which a prepayment fee is due shall be
effective unless such prepayment is accompanied by the prepayment fee. Any
tender of payment of such indebtedness made prior to the second anniversary date
hereof, whether voluntary or involuntary, must include a prepayment fee computed
as provided in Section 1.02(a) above plus an additional prepayment fee of one
percent (1%) of the principal balance of this Note.
1.03 Security. The indebtedness evidenced by this Note and the
obligations created hereby are secured by that certain Deed of Trust and
Security Agreement (the "Security Instrument") from Borrower to Lender, dated as
of the date hereof, concerning property located in Corpus Christie, Texas. The
Security Instrument together with this Note and all other documents to or of
which Lender is a party or beneficiary now or hereafter evidencing, securing,
guarantying, modifying or otherwise relating to the indebtedness evidenced
hereby, are herein referred to collectively as the "Loan Documents". All of the
terms and provisions of the Loan Documents are incorporated herein by reference.
Some of the Loan Documents are to be filed for record on or about the date
hereof in the appropriate public records.
1.04 Default. It is hereby expressly agreed that should any default
occur in the payment of principal or interest as stipulated above and such
payment is not made within fifteen (15) days of the date such payment is due
(provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents which is not cured within any applicable grace or cure
period, then a default shall exist hereunder, and in such event the indebtedness
evidenced hereby, including all sums advanced or accrued hereunder or under any
other Loan Document, and all unpaid interest accrued thereon, shall, at the
option of Lender and without notice to Borrower, at once become due and payable
and may be collected forthwith, whether or not there has been a prior demand for
payment and regardless of the stipulated date of maturity. In the event that
any payment (other than the payment of principal due on the Maturity Date) due
under the Note is not received by Lender on the date when due (subject to the
applicable grace period), then in addition to any default interest payments due
hereunder, Borrower shall also pay to Lender a late charge in an amount equal to
five percent (5.0%) of the amount of such overdue payment. So long as any
default exists hereunder beyond any applicable grace or cure period, regardless
of whether or not there has been an acceleration of the indebtedness evidenced
hereby, and at all times after maturity of the indebtedness evidenced hereby
(whether by acceleration or otherwise), interest shall accrue on the outstanding
principal balance of this Note at a rate per annum equal to four percent (4.0%)
plus the interest rate which would be in effect hereunder absent such default or
maturity, or if such increased rate of interest may not be charged or collected
under applicable law, then at the maximum rate of interest, if any, which may be
charged or collected from Borrower under applicable law (the "Default Interest
Rate"), and such default interest shall be immediately due and payable.
Borrower acknowledges that it would be extremely difficult or impracticable to
determine Lender's actual damages resulting from any late payment or default,
and such late charges and default interest are reasonable estimates of those
damages and do not constitute a penalty. The remedies of Lender in this Note or
in the Loan Documents, or at law or in equity, shall be cumulative and
concurrent, and may be pursued singly, successively or together in Lender's
discretion. Time is of the essence of this Note. In the event this Note, or
any part hereof, is collected by or through an attorney-at-law, Borrower agrees
to pay all costs of collection including, but not limited to, reasonable
attorneys' fees.
1.05 Exculpation. Notwithstanding anything in the Loan Documents to the
contrary, but subject to the qualifications hereinbelow set forth, Lender agrees
that (i) Borrower shall be liable upon the indebtedness evidenced hereby and for
the other obligations arising under the Loan Documents to the full extent (but
only to the extent) of the security therefor, the same being all properties
(whether real or personal), rights, estates and interests now or at any time
hereafter securing the payment of this Note and/or the other obligations of
Borrower under the Loan Documents (collectively, the "Security Property"), (ii)
if default occurs in the timely and proper payment of all or any part of such
indebtedness evidenced hereby or in the timely and proper performance of the
other obligations of Borrower under the Loan Documents, any judicial or other
proceedings brought by Lender against Borrower shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the liens,
security titles, estates, assignments, rights and security interests now or at
any time hereafter securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents, and no attachment, execution
or other writ of process shall be sought, issued or levied upon any assets,
properties or funds of Borrower other than the Security Property except with
respect to the liability described below in this section, and (iii) in the event
of a foreclosure of such liens, security titles, estates, assignments, rights or
security interests securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents, no judgment for any deficiency
upon the indebtedness evidenced hereby shall be sought or obtained by Lender
against Borrower, except with respect to the liability described below in this
section; provided, however, that, notwithstanding the foregoing provisions of
this section, Borrower shall be fully and personally liable and subject to legal
action (a) for proceeds paid under any insurance policies (or paid as a result
of any other claim or cause of action against any person or entity) by reason of
damage, loss or destruction to all or any portion of the Security Property, to
the full extent of such proceeds not previously delivered to Lender, but which,
under the terms of the Loan Documents, should have been delivered to Lender, (b)
for proceeds or awards resulting from the condemnation or other taking in lieu
of condemnation of all or any portion of the Security Property, or any of them,
to the full extent of such proceeds or awards not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been
delivered to Lender, (c) for all tenant security deposits or other refundable
deposits paid to or held by Borrower or any other person or entity in connection
with leases of all or any portion of the Security Property which are not applied
in accordance with the terms of the applicable lease or other agreement, (d) for
rent and other payments received from tenants under leases of all or any portion
of the Security Property paid more than one month in advance, (e) for rents,
issues, profits and revenues of all or any portion of the Security Property
received or applicable to a period after any notice of default from Lender
hereunder or under the Loan Documents in the event of any default by Borrower
hereunder or thereunder which are not either applied to the ordinary and
necessary expenses of owning and operating the Security Property or paid to
Lender, (f) for waste committed on the Security Property, damage to the Security
Property as a result of the intentional misconduct or gross negligence of
Borrower or any of its principals, officers or general partners, or any agent or
employee of any such persons, or any removal of the Security Property in
violation of the terms of the Loan Documents, to the full extent of the losses
or damages incurred by Lender on account of such failure, (g) for failure to pay
any valid taxes, assessments, mechanic's liens, materialmen's liens or other
liens which could create liens on any portion of the Security Property which
would be superior to the lien or security title of the Security Instrument or
the other Loan Documents, to the full extent of the amount claimed by any such
lien claimant, (h) for all obligations and indemnities of Borrower under the
Loan Documents relating to hazardous or toxic substances or compliance with
environmental laws and regulations to the full extent of any losses or damages
(including, but not limited to, those resulting from diminution in value of any
Security Property) incurred by Lender as a result of the existence of such
hazardous or toxic substances or failure to comply with environmental laws or
regulations, and (i) for fraud or material misrepresentation by Borrower or any
of its principals, officers, or general partners, any guarantor, any indemnitor
or any agent, employee or other person authorized or apparently authorized to
make statements or representations on behalf of Borrower, any principal, officer
or partner of Borrower, any guarantor or any indemnitor, to the full extent of
any losses, damages and expenses of Lender on account thereof. References
herein to particular sections of the Loan Documents shall be deemed references
to such sections as affected by other provisions of the Loan Documents relating
thereto. Nothing contained in this section shall (1) be deemed to be a release
or impairment of the indebtedness evidenced by this Note or the other
obligations of Borrower under the Loan Documents or the lien of the Loan
Documents upon the Security Property, or (2) preclude Lender from foreclosing
the Loan Documents in case of any default or from enforcing any of the other
rights of Lender except as stated in this section, or (3) limit or impair in any
way whatsoever the Indemnity and Guaranty Agreement and the Hazardous Substances
Indemnity Agreement each of even date executed and delivered in connection with
the indebtedness evidenced by this Note or release, relieve, reduce, waive or
impair in any way whatsoever, any obligation of any party to such Indemnity and
Guaranty Agreement and Hazardous Substances Indemnity Agreement.
ARTICLE II - GENERAL CONDITIONS
2.01 No Waiver: Amendment. No failure to accelerate the debt evidenced
hereby by reason of default hereunder, acceptance of a partial or past due
payment, or indulgences granted from time to time shall be construed (i) as a
novation of this Note or as a reinstatement of the indebtedness evidenced hereby
or as a waiver of such right of acceleration or of the right of Lender
thereafter to insist upon strict compliance with the terms of this Note, or (ii)
to prevent the exercise of such right of acceleration or any other right granted
hereunder or by any applicable laws; and Borrower hereby expressly waives the
benefit of any statute or rule of law or equity now provided, or which may
hereafter be provided, which would produce a result contrary to or in conflict
with the foregoing. No extension of the time for the payment of this Note or
any installment due hereunder, made by agreement with any person now or
hereafter liable for the payment of this Note shall operate to release,
discharge, modify, change or affect the original liability of Borrower under
this Note, either in whole or in part unless Lender agrees otherwise in writing.
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.
2.02 Waivers. Presentment for payment, demand, protest and notice of
demand, intent to accelerate, acceleration, protest and nonpayment and all other
notices are hereby waived by Borrower. Borrower hereby further waives and
renounces, to the fullest extent permitted by law, all rights to the benefits of
any moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption and homestead now or hereafter
provided by the Constitution and laws of the United States of America and of
each state thereof, both as to itself and in and to all of its property, real
and personal, against the enforcement and collection of the obligations
evidenced by this Note or the other Loan Documents.
2.03 Limit of Validity. The provisions of this Note and of all
agreements between Borrower and Lender, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Lender for the use, forbearance or retention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. To the extent of the applicability of Article 5069-1,04 of the Texas
Revised Civil Statutes, as amended, the maximum rate shall be based upon the
"indicated rate ceiling", but Lender reserves the right to implement, withdraw
or reinstate any other ceiling as an alternative to the indicated rate ceiling,
including the right to reinstate the indicated rate ceiling. If, from any
circumstance whatsoever, performance or fulfillment of any provision hereof or
of any agreement between Borrower and Lender shall, at the time performance or
fulfillment of such provision shall be due, exceed the limit for Interest
prescribed by law or otherwise transcend the limit of validity prescribed by
applicable law, then ipso facto the obligation to be performed or fulfilled
shall be reduced to such limit and if, from any circumstance whatsoever, Lender
shall ever receive anything of value deemed Interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive Interest shall be
applied to the reduction of the principal balance owing under this Note in the
inverse order of its maturity (whether or not then due) or at the option of
Lender be paid over to Borrower, and not to the payment of Interest. All
Interest (including, but not limited to, any amounts or payments deemed to be
Interest) paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
period until payment in full of the principal balance of this Note so that the
Interest thereof for such full period will not exceed the maximum amount
permitted by applicable law. This Section 2.03 will control all agreements
between Borrower and Lender.
2.04 Use of Funds. Borrower hereby warrants, represents and covenants
that no funds disbursed hereunder shall be used for personal, family or
household purposes.
2.05 Unconditional Payment. Borrower is and shall be obligated to pay
principal, interest and any and all other amounts which become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without any
abatement, postponement, diminution or deduction and without any reduction for
counterclaim or setoff. In the event that at any time any payment received by
Lender hereunder shall be deemed by a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under any bankruptcy,
insolvency or other debtor relief law, then the obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof to
Borrower and shall not be discharged or satisfied with any prior payment thereof
or cancellation of this Note, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.
2.06 Miscellaneous. This Note shall be interpreted, construed and
enforced according to the laws of the State of Texas. The terms and provisions
hereof shall be binding upon and inure to the benefit of Borrower and Lender and
their respective heirs, executors, legal representatives, successors,
successors-in-title and assigns, whether by voluntary action of the parties or
by operation of law. As used herein, the terms "Borrower" and "Lender" shall be
deemed to include their respective heirs, executors, legal representatives,
successors, successors-in-title and assigns, whether by voluntary action of the
parties or by operation of law. If Borrower consists of more than one person or
entity, each shall be jointly and severally liable to perform the obligations of
Borrower under this Note. All personal pronouns used herein, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and in no way define, limit, amplify or
describe the scope or intent of any provisions hereof. Time is of the essence
with respect to all provisions of this Note. This Note and the other Loan
Documents contain the entire agreements between the parties hereto relating to
the subject matter hereof and thereof and all prior agreements relative hereto
and thereto which are not contained herein or therein are terminated.
Borrower's Tax Identification No.:
57-1053095
IN WITNESS WHEREOF, Borrower has executed this Note under seal as of the
date first above written.
SUTTON PLACE CCPV, L.P.,
a South Carolina limited partnership
By: Sutton Place GP Limited Partnership, d/b/a
Sutton CCPV, L.P.,
a South Carolina limited partnership,
its general partner
By: GP Services X, Inc.,
a South Carolina corporation,
its general partner
By: /s/ Robert D. Long, Jr.
Name: Robert D. Long, Jr.
Title: Vice President
STATE OF SOUTH CAROLINA)
) ss.
COUNTY OF GREENVILLE )
This instrument was acknowledged before me this September 6, 1996, by
Robert D. Long, Jr., Vice President of GP Services X, Inc., a South Carolina
corporation, on behalf of and as general partner of Sutton Place GP Limited
Partnership, a South Carolina limited partnership, on behalf of and as general
partner of SUTTON PLACE CCPV, L.P., a South Carolina limited partnership.
/s/ Nancy A. Dixon
Notary Public
My Commission Expires: 6/9/98