Loan No. 55-9509026
MORTGAGE NOTE
$3,982,500.00 October 31, 1995
FOR VALUE RECEIVED, MILLWOOD PARK FUND XII, LTD., a
Texas limited partnership having its principal office at 13760
Noel Road, Suite 700, Dallas, Texas 75240 ("Maker") promises to
pay to the order of FLEET REAL ESTATE CAPITAL, INC., a Rhode
Island corporation, or its assigns ("Payee") having its principal
office at 4275 Executive Square, Suite 200, La Jolla, California
92037, the Principal Amount (as defined below), together with
interest from the date hereof at the Interest Rate (as defined
below). Interest accruing hereunder shall be calculated on the
basis of a 360-day year of twelve 30-day months.
WHEN USED HEREIN, the following capitalized terms shall
have the following meanings:
"Commencement Date" shall be December 1, 1995.
"Closing Date" shall be October 31, 1995.
"Default Rate" shall be the Interest Rate plus five
percent (5%) per annum.
"Interest Rate" shall be eight and ten one hundredths
percent (8.10%) per annum.
"Lockout Period" shall be the period from October 31,
1995 through November 1, 1999.
"Maturity Date" shall be October 31, 2002.
"Monthly Amount" shall be the sum of Twenty Nine
Thousand Five Hundred and 28/100 Dollars ($29,500.28).
"Payment Date" shall be the first business day of each
month commencing on the first business day of the second full
month after the Closing Date and continuing to and including the
Maturity Date.
"Principal Amount" shall be Three Million Nine Hundred
Eighty-Two Thousand Five Hundred and No/100 United States
Dollars.
The Principal Amount and interest thereon shall be due
and payable in lawful money of the United States as follows:
(a) On the date hereof, all accrued and unpaid
interest on the unpaid balance through the end of the
month in which the Closing Date occurs shall be due and
payable. Thereafter, commencing on the Commencement
Date, eighty-three (83) equal monthly installments of
principal and interest at the Monthly Amount each shall
be due and payable. Each installment of principal and
interest shall be applied first to interest and the
remainder thereof to reduction of principal. Each
monthly installment shall be due on each Payment Date.
In addition, all amounts advanced by Payee pursuant to
applicable provisions of the Security Documents (as
hereinafter defined), together with any interest at the
Default Rate or other charges as therein provided,
shall be immediately due and payable hereunder. In the
event any such advance is not so repaid by Maker, Payee
may, at its option, first apply any payments received
hereunder to repay said advances together with any
interest thereon or other charges as provided in the
Security Documents, and the balance, if any, shall be
applied in payment of any installment then due. The
entire remaining unpaid balance of principal of this
Note, all interest accrued thereon and all other sums
payable hereunder or under the Security Documents shall
be due and payable in full on the Maturity Date.
(b) Amounts due on this Note shall be payable,
without any counterclaim, setoff or deduction
whatsoever, at the office of Payee or its agent or
designee at the address set forth in Exhibit 1 or at
such other place as Payee or its agent or designee may
from time to time designate in writing.
(c) This Note is secured by a Deed of Trust,
Mortgage, Security Agreement and Assignment of Rents
and Leases of even date herewith (the "Mortgage") from
Maker to Payee and by an Assignment of Rents and Leases
of even date herewith (the "Assignment") from Maker to
Payee. The Mortgage, the Assignment and any other
instrument given at any time to secure this Note are
hereinafter collectively called the "Security
Documents."
(d) This Note may not be prepaid prior to the end
of the Lockout Period, except as set forth herein. Any
prepayment of this Note, in whole or in part, prior to
the end of the Lockout Period, except as permitted
herein, shall constitute an "Event of Default" under
the Mortgage. Maker has the right to prepay the
principal of this Note in full or in part on any
Payment Date after the end of the Lockout Period, upon
sixty days' prior written notice and payment, together
with the portion of the principal to be prepaid, of a
prepayment premium in an amount calculated as specified
in Appendix 1. The calculation of the prepayment
premium shall be made by Payee and shall, absent
manifest error, be conclusive. In the event this Note
is prepaid from the proceeds of insurance or
condemnation awards in accordance with Sections 10, 11
and 12 of the Mortgage either prior to or after the end
of the Lockout Period, a prepayment premium shall be
payable calculated as specified in Appendix 1.
Notwithstanding the foregoing, this Note may be prepaid
without a prepayment premium during the one hundred
eighty (180) day period prior to the Maturity Date.
Upon acceleration of this Note in accordance with its
terms and the terms of the Security Documents, Maker
agrees to pay the prepayment premium described above in
the amount that would be due if a voluntary payment
were made on the date of such acceleration. A tender
of payment of the amount necessary to pay and satisfy
the entire unpaid principal balance of this Note or any
portion thereof at any time after an Event of Default
under the Mortgage or an acceleration by Payee of the
indebtedness evidenced hereby, whether such payment is
tendered voluntarily, during or after foreclosure of
the Mortgage, or pursuant to realization upon other
security, shall constitute a purposeful evasion of the
prepayment terms of this Note, shall be deemed to be a
voluntary prepayment hereof, and Maker shall be
required to pay the prepayment premium as described
above. Partial prepayments of principal shall not
change the Payment Dates or amounts of subsequent
monthly installments, unless Payee shall otherwise
agree in writing. Notwithstanding the foregoing,
nothing in this paragraph (d) shall vary or negate the
provisions of Section 18(c) of the Mortgage.
(e) If Maker defaults in the payment of any
installment of principal and interest on the date on
which it shall fall due or in the performance of any of
the agreements, conditions, covenants, provisions or
stipulations contained in this Note or in the Security
Documents, and if such default shall continue beyond
any grace period provided for in the Mortgage so as to
constitute an Event of Default thereunder, then Payee,
at its option and without further notice to Maker, may
declare immediately due and payable the entire unpaid
principal balance of this Note, together with interest
thereon at an annual rate after the date of such
default equal to the Default Rate, together with all
sums due by Maker under the Security Documents,
anything herein or in the Security Documents to the
contrary notwithstanding. The foregoing provision
shall not be construed as a waiver by Payee of its
right to pursue any other remedies available to it
under the Mortgage, this Note or any other Security
Document, nor shall it be construed to limit in any way
the application of the Default Rate. Any payment
hereunder may be enforced and recovered in whole or in
part at such time by one or more of the remedies
provided to Payee in this Note or in the Security
Documents. In the event that: (i) this Note or any
Security Document is placed in the hands of an attorney
for collection or enforcement or is collected or
enforced through any legal proceeding; (ii) an attorney
is retained to represent Payee in any bankruptcy,
reorganization, receivership, or other proceedings
affecting creditors' rights and involving a claim under
this Note or any Security Document; (iii) an attorney
is retained to protect or enforce the lien of the
Mortgage or any Security Document; or (iv) an attorney
is retained to represent Payee in any other proceedings
whatsoever in connection with this Note, the Mortgage,
any of the Security Documents or any portion of the
Mortgaged Property (as defined in the Mortgage), then
Maker shall pay to Payee all reasonable attorney's
fees, costs and expenses incurred in connection
therewith, including costs of appeal, together with
interest on any judgment obtained by Payee at the
Default Rate.
(f) If Maker defaults in the payment of any
monthly installment on the Payment Date, and such
default is not cured within five days thereafter, then
Maker shall pay to Payee a late payment charge in an
amount equal to five percent (5%) of the amount of the
installment not paid as aforesaid. Said late charge
payments, if payable, shall be secured by the Mortgage
and the other Security Documents, shall be payable
without notice or demand by Payee, and are independent
of and have no effect upon the rights of Payee under
paragraph (e) above.
(g) Maker and all endorsers, sureties and
guarantors hereby jointly and severally waive all
applicable exemption rights, valuation and
appraisement, presentment for payment, demand, notice
of demand, notice of nonpayment or dishonor, protest
and notice of protest of this Note, and all other
notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of
this Note. Maker and all endorsers, sureties and
guarantors consent to any and all extensions of time,
renewals, waivers or modifications that may be granted
by Payee with respect to the payment or other
provisions of this Note and to the release of the
collateral or any part thereof, with or without
substitution, and agree that additional makers,
endorsers, guarantors or sureties may become parties
hereto without notice to them or affecting their
liability hereunder.
(h) Payee shall not be deemed, by any act of
omission or commission, to have waived any of its
rights or remedies hereunder unless such waiver is in
writing and signed by Payee, and then only to the
extent specifically set forth in writing. A waiver of
one event shall not be construed as continuing or as a
bar to or waiver of any right or remedy to a subsequent
event.
(i) This Note shall be governed by and construed
in accordance with the laws of the State in which the
Mortgaged Property is located (the "State").
(j) The parties hereto intend and believe that
each provision in this Note comports with all
applicable law. However, if any provision in this Note
is found by a court of law to be in violation of any
applicable law, and if such court should declare such
provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all
parties hereto that such provision shall be given full
force and effect to the fullest possible extent that is
legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void
or unenforceable provision were not contained therein,
and that the rights, obligations and interest of Maker
and the holder hereof under the remainder of this Note
shall continue in full force and effect; provided,
however, that if any provision of this Note which is
found to be in violation of any applicable law concerns
the imposition of interest hereunder, the rights,
obligations and interests of Maker and Payee with
respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of the
following paragraph.
(k) It being the intention of Payee and Maker to
comply with the laws of the State with regard to the
rate of interest charged hereunder, it is agreed that,
notwithstanding any provision to the contrary in this
Note, the Mortgage, or any of the other Security
Documents, no such provision, including without
limitation any provision of this Note providing for the
payment of interest or other charges, shall require the
payment or permit the collection of any amount ("Excess
Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or
detention, or the forbearance in the collection, of all
or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is
adjudicated to be provided for, in this Note, the
Mortgage, or any of the other Security Documents, then
in such event:
(i) the provisions of this paragraph shall
govern;
(ii) Maker shall not be obligated to pay any
Excess Interest;
(iii) any Excess Interest that Payee may
have received hereunder shall, at the option of
Payee, be (x) applied as a credit against the
unpaid principal balance then due under this Note,
accrued and unpaid interest thereon not to exceed
the maximum amount permitted by law, or both, (y)
refunded to the payor thereof or (z) any
combination of the foregoing;
(iv) the applicable interest rate or rates
provided for herein shall be automatically subject
to reduction to the maximum lawful rate allowed to
be contracted for in writing under the applicable
usury laws of the aforesaid State, and this Note,
the Mortgage and the other Security Documents
shall be deemed to have been, and shall be,
reformed and modified to reflect such reduction in
such interest rate or rates;
(v) in determining whether or not the rate
of interest hereunder exceeds the maximum rate
permitted by the laws of the State, Maker and
Payee agree and intend that all sums paid
hereunder which are deemed interest for the
purpose of determining usury shall be prorated,
allocated or spread in equal parts over the
longest period of time permitted under the
applicable laws of the State; and
(vi) Maker shall not have any action or
remedy against Payee for any damages whatsoever or
any defense to enforcement of this Note, Mortgage
or any other Security Document arising out of the
payment or collection of any Excess Interest.
(l) Upon any endorsement, assignment, or other
transfer of this Note by Payee or by operation of law,
the term "Payee," as used herein, shall mean such
endorsee, assignee, or other transferee or successor to
Payee then becoming the holder of this Note. This Note
shall inure to the benefit of Payee and its successors
and assigns and shall be binding upon the undersigned
and its successors and assigns. The term "Maker" as
used herein shall include the respective successors and
assigns, legal and personal representatives, executors,
administrators, devisees, legatees and heirs of Maker.
(m) Any notice, demand or other communication
which any party may desire or may be required to give
to any other party shall be in writing and shall be
given as provided in the Mortgage.
(n) To the extent that Maker makes a payment or
Payee receives any payment or proceeds for Maker'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 Maker hereunder
intended to be satisfied shall be revived and continue
as if such payment or proceeds had not been received by
Payee.
(o) Maker shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Payee
all documents, and take all actions, reasonably
required by Payee from time to time to confirm the
rights created or now or hereafter intended to be
created under this Note and the Security Documents, to
protect and further the validity, priority and
enforceability of this Note and the Security Documents,
to subject to the Security Documents any property of
Maker intended by the terms of any one or more of the
Security Documents to be encumbered by the Security
Documents, or otherwise carry out the purposes of the
Security Documents and the transactions contemplated
thereunder; provided, however, that no such further
actions, assurances and confirmations shall increase
Maker's obligations under this Note.
(p) No modification, amendment, extension,
discharge, termination or waiver (a "Modification") of
any provision of this Note, or any one or more of the
other Security Documents, nor consent to any departure
by Maker therefrom, shall in any event be effective
unless the same shall be in a writing signed by the
party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the
specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein,
no notice to, or demand on, Maker shall entitle Maker
to any other or future notice or demand in the same,
similar or other circumstances. Payee does not hereby
agree to, nor does Payee hereby commit itself to, enter
into any Modification.
(q) Maker hereby expressly and unconditionally
waives, in connection with any suit, action or
proceeding brought by Payee on this Note, any and every
right it may have to (a) a trial by jury, (b) interpose
any counterclaim therein (other than a counterclaim
which can only be asserted in the suit, action or
proceeding brought by Payee on this Note and cannot be
maintained in a separate action) and (c) have the same
consolidated with any other or separate suit, action or
proceeding.
(r) Except as hereinafter provided,
notwithstanding any provision to the contrary in the
Mortgage or this Note, Payee shall not have any
recourse to any asset of Maker or its partners other
than the Mortgaged Property in order to satisfy the
indebtedness for payment of the principal and interest
evidenced by this Note, and Payee's sole recourse for
satisfaction of the payment of principal and interest
evidenced by this Note shall be to exercise its rights
against the Mortgaged Property encumbered by the
Mortgage and the other collateral securing this Note.
The foregoing sentence shall not be deemed or construed
to be a release of the indebtedness evidenced by this
Note or in any way impair, limit or otherwise affect
the lien of the Mortgage or any such other instrument
securing repayment of this Note or prevent Payee from
naming Maker, its partners, or their successors or
assigns as a defendant to any action to enforce any
remedy for default so long as there is no personal or
deficiency money judgment sought or entered against
Maker, its partners, or their successors or assigns for
payment of principal and interest evidenced by this
Note. Notwithstanding the foregoing provisions of this
paragraph, it is expressly understood and agreed that
the aforesaid limitation of liability shall in no way
affect or apply to Maker's or its partners' continued
personal liability for the payment to Payee of:
(i) any loss or damage occurring by reason of all
or any part of the Mortgaged Property being
encumbered by a voluntary lien (other than the
Mortgage) granted by Maker;
(ii) any Rents (as defined in the Mortgage),
issues, profits and/or income collected by Maker
in excess of normal and verifiable operating
expenses from the Mortgaged Property after default
by Maker hereunder, under the Mortgage or under
any other instrument securing or referring to this
Note;
(iii) unrefunded security deposits made by
tenants of the Mortgaged Property;
(iv) payment of Taxes, as defined in Section 5 of
the Mortgage, and insurance premiums, payment of
which is required to be made by Maker under the
Mortgage;
(v) Rents, security deposits with respect to
leases of the Mortgaged Property, insurance
proceeds, condemnation awards, and any other
payments or consideration which Maker receives and
to which Payee is entitled pursuant to the terms
of the Mortgage or of any other Security Document;
(vi) damage to the Mortgaged Property from waste
committed or permitted by Maker;
(vii) loss or damage occurring by reason of the
failure of Maker to comply with any of the
provisions of Section 35 of the Mortgage;
(viii) any loss or claim incurred by or asserted
against Payee as a result of fraud or
misrepresentation by Maker or any of the partners
thereof with respect to any certification,
representation or warranty made by Maker or such
other persons to Payee herein or in any of the
Security Documents;
(ix) all indebtedness and obligations arising
under or pursuant to that certain Environmental
Indemnity dated of even date herewith executed by
Maker, the general partner of Maker and McNeil
Real Estate Fund XII, Ltd. for the benefit of
Payee; and
(x) reasonable attorney's fees incurred by Payee
in connection with suit filed on account of any of
the foregoing clauses (i) through (ix).
IN WITNESS WHEREOF, Maker has caused this Note to be
executed and delivered as of the day and year first above
written.
MILLWOOD PARK FUND XII, LTD., a
Texas limited partnership
By: Millwood Park Corp., a
Delaware corporation, General
Partner
By: /s/ Ron K. Taylor
-----------------------
Name: Ron K. Taylor
Title: Vice President
APPENDIX 1
Calculation of Prepayment Premium
The prepayment premium shall be equal to the greater
of (A) one percent (1%) of the portion of the principal amount
of this Note being repaid or (B) the product of (i) a fraction
whose numerator is an amount equal to the portion of the
principal balance of this Note being prepaid and whose
denominator is the entire outstanding principal balance of
this Note on the date of such prepayment (after subtracting
the amount of any scheduled principal payment due on such
Payment Date), multiplied by (ii) an amount equal to the
remainder obtained by subtracting (x) an amount equal to the
entire outstanding principal balance of this Note as of the
date of such prepayment (after subtracting the amount of any
scheduled principal payment due on such Payment Date) from (y)
the present value as of the date of such prepayment of the
remaining scheduled payments of principal and interest on this
Note (including any final installment of principal payable on
the Maturity Date) determined by discounting such payments at
the Discount Rate (as hereinafter defined).
For purposes of this Note:
(x) "Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury
Rate (defined below); and
(y) "Treasury Rate" shall mean the yield calculated by
the linear interpolation of the yield, as reported
in Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading "U.S. government
securities/Treasury constant maturities" for the
week ending prior to the date of the relevant
prepayment of this Note, of U.S. Treasury constant
maturities with a maturity date (one longer and one
shorter) most nearly approximating the Maturity Date
of this Note. In the event Release H.15 is no
longer published, the Payee shall select a
comparable publication to determine the Treasury
Rate.
EXHIBIT 1
Amounts due on this note shall be payable to Fleet
Real Estate Capital, Inc. at the following address:
Fleet Real Estate Capital, Inc.
4275 Executive Square
Suite 200
La Jolla, CA 92037
Loan No.: 55-9508024