PROMISSORY NOTE
U.S. $5,300,000.00
April 13, 1994
FOR VALUE RECEIVED, and at the times hereinafter specified,
WINDSOR PARTNERS LIMITED PARTNERSHIP, a Texas limited partnership ("Maker"),
whose address is c/o The Berkshire Group, Harbor Plaza, 470 Atlantic Avenue,
Boston, Massachusetts 02210, hereby promises to pay to the order of SUN LIFE
INSURANCE COMPANY OF AMERICA, a Maryland corporation (hereinafter referred to,
together with each subsequent holder hereof, as "Holder"), at l SunAmerica
Center, Century City, Los Angeles, California 90067-6022, or at such other
address as may be designated from time to time hereafter by any Holder, the
principal sum of FIVE MILLION THREE HUNDRED THOUSAND AND NO/lOOTHS DOLLARS
($5,300,000.00), together with interest on the principal balance outstanding
from time to time, as hereinafter provided, in lawful money of the
United States of America.
The balance of principal outstanding from time to time under this
promissory note (this "Note") shall bear interest at the rate of nine and
one-quarter percent (9.25%) per annum, based on a 360-day year. Interest
only shall be payable in advance on the date hereof for the period from and
including the date hereof through and including April 30, 1994. Commencing on
June 1, 1994, and on the first day of each month thereafter through and
including April 1, 2001, combined payments of principal and interest shall be
payable, in arrears, in the amount of $43,601.80 each (such amount
representing an amount sufficient to fully amortize the amount of this Note
over a thirty-year period). The entire outstanding principal balance,
together with all accrued and unpaid interest and all other sums due
hereunder, shall be due and payable in full on May 1, 2001.
During the first forty-two (42) months after the date of this Note,
Maker shall have no right to prepay all or any part of this Note. At any time
after the date forty-two (42) months after the date of this Note, Maker shall
have the right to prepay the full principal amount of this Note and all
accrued but unpaid interest hereon as of the date of prepayment, provided
that (a) Maker gives not less than thirty (30) days' prior written notice to
Holder of Maker's election to prepay this Note, and (b) Maker pays a
prepayment premium to Holder equal to the greater of (i) one percent (1%) of
the outstanding principal amount of this Note multiplied by the quotient of
the number of full months remaining to maturity of this Note divided by the
number of full months comprising the term of this Note or (ii) the Present
Value of this Note (as defined below), less the amount of principal being
prepaid, calculated as of the prepayment date. Holder shall notify Maker of
the amount and basis of determination of the prepayment premium. Holder shall
not be obligated to accept any prepayment of the principal balance of this
Note unless such prepayment is accompanied by the applicable prepayment
premium and all accrued interest and other sums due under this Note. In no
event shall Maker be permitted to make any partial prepayments of this Note.
If Holder accelerates this Note for any reason, then in addition to Maker's
obligation to pay the then outstanding principal balance of this Note and all
accrued but unpaid interest thereon, Maker shall pay an additional amount
equal to the prepayment premium that would be due to Holder if Maker were
voluntarily prepaying this Note at the time that such acceleration occurred,
or if under the terms hereof no voluntary prepayment would be permissible on
the date of such acceleration, Maker shall pay a prepayment premium calculated
as set forth in the Deed of Trust (as hereinafter defined). Notwithstanding
the foregoing to the contrary, (A) in the event Holder accelerates this Note
pursuant to Section 5.4 of the Deed of Trust, Holder may, at its option, waive
payment of any prepayment premium in connection therewith; (B) Maker shall
have the right to prepay (1) the full principal amount of this Note and all
accrued but unpaid interest hereon as of the date of prepayment without
payment of a prepayment premium if such prepayment is made voluntarily
(and not as a result of acceleration) within the last six (6) months of the
term of this Note, or (2) a portion of the principal balance of this Note
under the terms of Section 5.4(b) of the Deed of Trust subject to the payment
of the prepayment premium described therein; and (C) no prepayment premium
shall be due with respect to a prepayment of this Note under Section 4.5 or
4.8 of the Deed of Trust.
The "Present Value of this Note" with respect to any prepayment of
this Note, as of any date, shall be determined by discounting all scheduled
payments of principal and interest remaining to maturity of this Note,
attributed to the amount being prepaid, at the Discount Rate. If prepayment
occurs on a date other than a regularly scheduled payment date, the actual
number of days remaining from the prepayment date to the next regularly
scheduled payment date will be used to discount within such period.
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate, when compounded semiannually.
The "Treasury Rate" is the semi-annual yield on the Treasury
Constant Maturity Series with maturity equal to the remaining weighted average
life of this Note, for the week prior to the prepayment date, as reported in
Federal Reserve Statistical Release H.15 - Selected Interest Rates,
conclusively determined by Holder on the prepayment date. The rate will be
determined by linear interpolation between the yields reported in Release
H.15, if necessary. In the event Release H.15 is no longer published, Holder
shall select a comparable publication to determine the Treasury Rate.
Holder shall not be obligated actually to reinvest the amount prepaid
in any treasury obligations as a condition precedent to receiving any
prepayment premium.
Whenever any payment to be made under this Note shall be
stated to be due on a Saturday, Sunday or public holiday or the equivalent for
banks generally under the laws of the State of Texas (any other day being a
"Business Day"), such payment may be made on the next succeeding Business Day.
The entire balance of principal, interest, and other sums due upon
the maturity hereof, by acceleration or otherwise, shall bear interest from
the date due until paid at the rate of eighteen percent (18%) per annum (the
"Default Rate"); provided, however, that (i) notwithstanding any other
provision of this Note to the contrary, interest at the Default Rate shall be
based on the actual number of days in the then-current calendar year (whether
365 or 366); (ii) neither the Default Rate nor any other interest rate under
this Note shall exceed the maximum non-usurious interest rate permitted by
applicable state or Federal law; and (iii) the foregoing provision
concerning interest at the Default Rate shall be subject to the Usury Savings
Clause, hereinafter set forth.
If any payment under this Note is not made within five (5) days of
the date when due, interest shall accrue at the Default Rate from the date
five (5) days after the date such payment was due until payment is actually
made.
All payments hereunder shall be applied first to the payment of
prepayment premiums, if any, then to the repayment of any sums advanced by
Holder for the payment of any insurance premiums, taxes, assessments, or other
charges against the property securing this Note (together with interest
thereon at the Default Rate from the date of advance until repaid), then to
the payment of accrued and unpaid interest, and then to the reduction
of principal.
Payments under this Note shall be payable in immediately available
funds without setoff, counterclaim or deduction of any kind, and shall be made
by electronic funds transfer from a bank account established and maintained by
Maker for such purpose.
This Note is secured by a Deed of Trust, Security Agreement,
Fixture Filing, Financing Statement and Assignment of Leases and Rents of even
date herewith granted by Maker for the benefit of the named Holder hereof (the
"Deed of Trust"), encumbering certain property known as Windsor Apartments,
2811 North Shiloh Road, Garland, Texas, as more particularly described in such
Deed of Trust (the "Property"). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Deed of Trust.
Any failure to pay any sum hereunder when due or failure to perform
any covenant or agreement herein contained within the applicable grace period
established by the Deed of Trust, if any, shall constitute an "Event of
Default" hereunder and under the Deed of Trust and under each other document
securing or executed in connection with this Note (collectively, the "Loan
Documents") and any default (after the expiration of any applicable grace or
cure periods) or Event of Default under any of the Loan Documents shall
constitute an Event of Default hereunder and under each other Loan Document.
Upon the occurrence of any such Event of Default, the entire balance of
principal, accrued interest, and other sums owing hereunder shall, at the
option of Holder, become at once due and payable without notice or demand.
Maker hereby certifies and declares that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this Note, and to constitute this Note the legal,
valid and binding obligation of Maker, enforceable in accordance with the
terms hereof, have been done and performed and happened in due and strict
compliance with all applicable laws.
Maker and all parties now or hereafter liable for the payment hereof,
primarily or secondarily, directly or indirectly, and whether as endorser,
guarantor, surety, or otherwise, hereby severally (a) waive presentment,
demand, protest, notice of protest and/or dishonor, and all other demands or
notices of any sort whatever with respect to this Note, (b) consent to
impairment or release of collateral, extensions of time for payment,
and acceptance of partial payments before, at, or after maturity, (c) waive
any right to require Holder to proceed against any security for this Note
before proceeding hereunder, (d) waive diligence in the collection of this
Note or in filing suit on this Note, and (e) agree to pay all costs and
expenses, including reasonable attorneys' fees, which may be incurred in the
collection of this Note or any part thereof or in preserving, securing
possession of, and realizing upon any security for this Note.
The provisions of this Note and of all agreements between Maker and
Holder are, whether now existing or hereafter made, hereby expressly limited
so that in no contingency or event whatever, whether by reason of
acceleration of the maturity hereof, prepayment, demand for payment or
otherwise, shall the amount paid, or agreed to be paid, to Holder for the
use, forbearance, or detention of the principal hereof or interest hereon,
which remains unpaid from time to time, exceed the maximum amount permissible
under applicable law, it particularly being the intention of the parties
hereto to conform strictly to the Texas and Federal law, whichever is
applicable. If from any circumstance whatever, the performance or fulfillment
of any provision hereof or of any other agreement between Maker and Holder
shall, at the time performance or fulfillment of such provision is due,
involve or purport to require any payment in excess of the limits
prescribed by applicable law, then the obligation to be performed or
fulfilled is hereby reduced to the limit of such validity, and if from any
circumstance whatever Holder should ever receive as interest an amount which
would exceed the highest lawful rate, the amount which would be excessive
interest shall be applied to the reduction of the principal balance owing
hereunder (or, at Holder's option, be paid over to Maker) and shall not be
counted as interest. To the
extent permitted by applicable law, determination of the legal maximum amount
of interest shall at all times be made by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term
of this Note, all interest at any time contracted for, charged, or received
from Maker in connection with this Note and all other agreements between Maker
and Holder, so that the actual rate of interest on account of the indebtedness
represented by this Note is uniform throughout the term hereof. This paragraph
shall be referred to herein as the "Usury Savings Clause."
Maker warrants and represents to Holder that the loan evidenced by
this Note is for business, commercial, investment, or other similar purpose
and not primarily for personal, family, household, or agricultural use, as
such terms are used in Chapter One of the Texas Credit Code.
Except as expressly hereinafter set forth, the recourse of Holder
with respect to the obligations evidenced by this Note shall be solely to
the Property, Chattels, and Intangible Personalty described in the
Deed of Trust. Notwithstanding anything to the contrary contained in this
Note or in any Loan Document, nothing shall be deemed in any way to impair,
limit or prejudice the rights of Holder (a) in foreclosure proceedings or in
any ancillary proceedings brought to facilitate Holder's foreclosure on
the Property or any portion thereof; (b) to recover from Maker damages or
costs (including without limitation reasonable attorneys' fees) incurred by
Holder as a result of waste of the Property or Chattels by Maker; (c) to
recover from Maker any condemnation or insurance proceeds attributable to the
Property which were not paid to Holder or used to restore the Property in
accordance with the terms of the Deed of Trust or as otherwise agreed in
writing; (d) to recover from Maker any rents, profits, security deposits,
advances, rebates, prepaid rents or other similar sums attributable to the
Property collected by or for Maker following an Event of Default under any
Loan Document and not properly applied to the reasonable fixed and operating
expenses of the Property, including payments of this Note; (e) to pursue the
personal liability of Maker under the provisions of Section 5.11 or 5.12 of
the Deed of Trust, including any indemnification provisions under such
Section; (f) to exercise any specific rights or remedies afforded Holder under
any other provisions of the Loan Documents or by law or in equity or to
recover under any guarantee given in connection with this Note; provided,
however, that any personal liability of Maker or any general partner of Maker
shall be limited as otherwise set forth in this Note and Section 9.4 of the
Deed of Trust; (g) to recover from Maker the amount of any accrued taxes,
assessments, and/or utility charges affecting the Property (whether or not the
same have been billed) that are either unpaid by Maker or paid by Holder under
the Deed of Trust, and to collect from Maker any sums expended by Holder in
fulfilling the obligations of Maker, as lessor, under any leases
affecting the Property; provided, however, that with respect to Maker's
liability for accrued taxes, Maker shall be credited with any amounts escrowed
by Maker for payment of such taxes under Section 4.4 of the Deed of Trust; and
(h) to pursue any personal liability of Maker under the Environmental
Indemnity Agreement executed by Maker in favor of Holder of even date
herewith. The agreement contained in this paragraph to limit the personal
liability of Maker shall become null and void and be of no further force and
effect in the event (i) that the Property or any part thereof or any interest
therein, or any interest in Maker, shall be further encumbered by a
voluntary lien securing any obligation upon which Maker or any General Partner
(as such term is defined in the Deed of Trust) shall be personally liable for
repayment, whether as obligor or guarantor; provided, however, that with
respect to mechanic's or materialman's liens, this subsection (i) shall not
become operative until the expiration of thirty (30) days after that date
Maker receives written notice of such lien, during which thirty (30) days
Maker may attempt to cause any such lien to be released of record or, in lieu
thereof, furnish Holder with a bond in form and with sureties satisfactory to
Holder indemnifying Holder against any loss, cost, damages, or expenses
arising in connection with such lien; (ii) of any breach or violation of
Section 5.4, 5.5 or 5.7 of the Deed of Trust; (iii) of any fraud or material
misrepresentation by Maker in connection with the Property, the Loan Documents
or the application made by Maker for the loan evidenced by this Note; or (iv)
Maker acts outside the ordinary course of business with respect to the Leases
and such activity by Maker causes a loss to Holder; provided, however, if
Maker operates the Property as any other prudent operator of an apartment
complex in Garland, Texas would operate its property, no recourse liability to
Maker shall arise under this subsection (iv). Notwithstanding the foregoing
to the contrary, (A) in no event shall any General Partner have any personal
liability for payment of the Additional Premium (as defined in the Deed of
Trust), (B) upon the acceptance in writing by Holder of (1) a cure by Maker
of a breach or violation of Section 5.4, 5.5 or 5.7 of the Deed of Trust, or
(2) the removal of any encumbrance described in Section 9.4(i) of the Deed of
Trust, which acceptance may be granted or withheld in Holder's sole discretion
exercised in good faith, the personal liability of Maker for the obligations
evidenced by this Note incurred as a result of any such breach or violation of
Section 5.4, 5.5 or 5.7 or any such encumbrance described in Section 9.4(i)
shall terminate, and (C) in no event shall George Krupp or Douglas Krupp be
personally liable for the obligations evidenced by this Note.
If Article 1.04 of the Texas Credit Code is applicable to this Note,
and applicable Federal law does not permit a higher interest rate, the
interest rate ceiling applicable to the loan evidenced by this Note shall be
the "indicated rate ceiling", as defined in Article 1.04 of the Texas Credit
Code.
If any provision hereof or of any other document securing or related
to the indebtedness evidenced hereby is, for any reason and to any extent,
invalid or unenforceable, then neither the remainder of the document in which
such provision is contained, nor the application of the provision to other
persons, entities, or
circumstances, nor any other document referred to herein, shall be affected
thereby, but instead shall be enforceable to the maximum extent permitted by
law.
Each provision of this Note shall be and remain in full force and
effect notwithstanding any negotiation or transfer hereof and any interest
herein to any other Holder or participant.
Regardless of the place of its execution, this Note shall be
construed and enforced in accordance with the laws of the State of Texas.
MAKER AND HOLDER KNOWINGLY, IRREVOCABLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, THE DEED OF TRUST,
OR ANY OTHER LOAN DOCUMENTS, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS NOTE, THE DEED OF TRUST, OR ANY OTHER LOAN DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR MAKER AND HOLDER TO ENTER INTO THE LOAN TRANSACTION EVIDENCED
BY THIS NOTE.
EXCEPT AS EXPRESSLY HEREIN PROVIDED, MAKER HEREBY EXPRESSLY
WAIVES ANY RIGHT IT MAY HAVE UNDER APPLICABLE LAW TO PREPAY THIS NOTE, IN
WHOLE OR IN PART, WITHOUT PREPAYMENT CHARGE, WHETHER VOLUNTARILY OR UPON
ACCELERATION OF THE MATURITY DATE OF THIS NOTE, AND AGREES THAT, IF FOR ANY
REASON A PREPAYMENT OF ALL OR ANY PART OF THIS NOTE IS MADE, WHETHER
VOLUNTARILY OR FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY
HOLDER FOR ANY REASON, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF ANY
PROHIBITED OR RESTRICTED TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION OF
THE PROPERTY OR ANY PART THEREOF SECURING THIS NOTE, THEN MAKER SHALL BE
OBLIGATED TO PAY (EXCEPT AS OTHERWISE PROVIDED IN THIS NOTE), CONCURRENTLY
WITH SUCH PREPAYMENT, EITHER (i) THE PREPAYMENT PREMIUM PROVIDED FOR IN THIS
NOTE, OR (ii) IN THE EVENT OF PREPAYMENT FOLLOWING ACCELERATION OF THE
MATURITY DATE HEREOF WHEN THIS NOTE IS CLOSED TO PREPAYMENT, THE PREPAYMENT
PREMIUM PROVIDED IN SECTION 1.23 OF THE DEED OF TRUST. MAKER HEREBY DECLARES
THAT HOLDER'S AGREEMENT TO MAKE THE LOAN EVIDENCED BY THIS NOTE AT THE
INTEREST RATE AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE
CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY MAKER, FOR THIS WAIVER AND
AGREEMENT.
IN WITNESS WHEREOF, Maker has duly executed this Note as of
the date first above written.
WINDSOR PARTNERS LIMITED PARTNERSHIP, a Texas limited partnership
By: ST Windsor Corporation, a Texas corporation, its General Partner //,
Name:
Title: