PROMISSORY NOTE
$6,800,000.00 Place of Delivery: Tampa, Florida
Effective Date: December 21, 1995
FOR VALUE RECEIVED, the undersigned, MIAMI GARDENS ASSOCIATES, a New Jersey
general partnership (hereinafter called the "Maker"), promises to pay to the
order of LIFE INVESTORS INSURANCE COMPANY OF AMERICA, an Iowa corporation
(hereinafter referred to as "Payee"), the principal sum of SIX MILLION EIGHT
HUNDRED THOUSAND AND NO/100 DOLLARS ($6,800,000.00), together with interest on
the principal balance of this obligation from time to time remaining unpaid at
the rate of Seven and Ninety-Four One-Hundredths Percent (7.94%) per annum.
The principal and interest of this Note shall be paid in regular amortized
(based on a twenty-five (25) year amortization schedule with interest paid in
arrears) monthly installments of principal and interest in the amount of FIFTY-
TWO THOUSAND TWO HUNDRED THIRTEEN AND 51/100 DOLLARS ($52,213.51) each.
The monthly installments in the amount aforesaid shall commence on the
first day of February, 1996, and shall continue to be made on the first day of
each successive calendar month thereafter until the Maturity Date (as
hereinafter defined) of this Note. In addition, a single payment of interest
accruing on the principal amount hereof from the date of delivery hereof through
and including December 31, 1995, shall be due on the date of delivery hereof.
All payments shall be made until the principal and interest are fully paid,
except that the entire remaining unpaid principal balance and any accrued
interest, if not sooner paid, shall be due and payable in full on December 21,
2002 (the "Maturity Date"). All payments shall be applied first to interest
accruing at the rate then in effect under this Note, and then to principal. All
payments are to be paid at the office of Payee at 4333 Edgewood Road, N.E.,
Cedar Rapids, Iowa 52499, or at such other place as the holder of this Note
shall from time to time designate in writing to Maker. All interest will be
calculated based upon a 360 day year.
In the event that any monthly installment of principal and interest, or any
part thereof, is not actually received by the holder of this Note on or before
the tenth (10th) day of the month when due, such failure shall constitute an
Event of Default hereunder, and in addition, Maker agrees to pay a "late charge"
in an amount equal to five percent (5%) of the portion of such unpaid
installment that remains unpaid.
Maker shall have the right to prepay the indebtedness evidenced by this
Note, in whole or in part, at any time or times upon not less than thirty (30)
days' prior written notice to the holder of this Note; provided, however, an
amount equal to the Prepayment Charge (as hereinafter defined) shall be due
together with such prepayment to compensate the holder of this Note for its
reinvestment costs and, if the prepayment is made at a time when reinvestment
rates are lower than the yield on this Note, for its loss in yield. The
Prepayment Charge will be due and payable together with, and as consideration to
the holder of this Note for, the prepayment. The "Prepayment Charge" shall be
equal to the greater of (a) one percent (1%) of the amount of principal prepaid
or (b) an amount calculated at the time of prepayment using a formula designed
to compensate the holder of this Note for the loss of its performing loan (the
"Yield Protection Payment"). The Yield Protection Payment shall be calculated
as follows:
(i) It shall be assumed that the principal amount prepaid is
reinvested in a hypothetical, interest-only note having the same maturity
as this Note and which requires the monthly payment of all accrued interest
and bears interest at a rate equal to the yield on an assumed reinvestment
of the principal amount prepaid in U.S. Treasury securities with maturities
as close as practicable to the Maturity Date of this Note.
(ii) The income stream lost through the prepayment shall be modeled
by projecting monthly payments on the principal amount prepaid, at the
interest rate and amortization schedule of this Note, through the Maturity
Date of this Note.
(iii) If the monthly payment amount calculated under clause (ii)
exceeds the amount calculated under clause (i), the present value of the
difference between the two assumed payment streams shall be determined,
using the yield of the assumed reinvestment as the discount rate.
The Prepayment Charge, as so calculated, shall be paid together with the entire
outstanding principal balance (or such portion thereof being prepaid) and all
accrued and unpaid interest, advances, and charges on or under this Note or any
of the Security Instruments (as hereinafter defined) through the date of the
prepayment. Notwithstanding anything to the contrary contained herein, Maker
shall have the right to prepay the indebtedness evidenced by this Note in full
without payment of the Prepayment Charge upon not less than thirty (30) days'
prior written notice to the holder of this Note at any time on or after
September 21, 2002 (the "Unrestricted Prepayment Date").
If at any time during the term of this Note and prior to the Unrestricted
Prepayment Date, the unpaid principal balance of this Note is accelerated
because of the occurrence of an Event of Default under this Note or under any of
the Security Instruments (as hereinafter defined), or if any other involuntary
prepayment of all or any portion of the principal indebtedness hereunder occurs
(including, without limitation, any prepayment due to the order of any court)
then, notwithstanding any provision of this Note to the contrary, there shall be
due and payable from Maker to the holder of this Note in such event, in addition
to all accrued and unpaid interest, advances, and other charges due hereunder or
under the Security Instruments (as hereinafter defined), a sum equal to the
Prepayment Charge. The foregoing sum shall constitute agreed liquidated damages
to compensate the holder of this Note for such holder's reinvestment costs, and
failure to receive the stated interest rate for the full term of this Note.
Notwithstanding the foregoing provisions with respect to prepayment, there shall
be no Prepayment Charge payable by Maker in the event of a prepayment at any
time resulting from the application by the holder of this Note of the proceeds
of any insurance or condemnation to the payment of this Note, as provided in the
Security Instruments (as hereinafter defined).
Time is of the essence of this Note. It shall be an "Event of Default"
under this Note if the holder of this Note does not actually receive any
installment of principal and interest or other sum or charge due hereunder for a
period of ten (10) days after the same becomes due or if any Event of Default
occurs under any of the Security Instruments (as hereinafter defined), and
thereafter the holder of this Note may, at its option, declare the entire unpaid
principal balance of this Note, together with all accrued and unpaid interest
and other sums and charges under this Note, immediately due and payable.
Failure to exercise this option shall not constitute a waiver of the right to
exercise it at any other time when an Event of Default shall exist or continue.
Maker and all sureties and guarantors severally waive notice of default,
demand for payment, diligence in filing suit, protest, presentment, and notice
of dishonor and agree that time for payment of any installment may be extended
from time to time without notice at the option of the holder of this Note.
This Note is secured by a "Mortgage" of even effective date herewith on
real property situate in Dade County, Florida (the "Mortgage"), by a
"Security Agreement" of even effective date herewith covering certain personal
property (the "Security Agreement"), and by an "Assignment of Leases, Rents and
Contracts" of even effective date herewith (the "Assignment"). The Mortgage,
the Security Agreement and the Assignment hereinafter are collectively referred
to as the "Security Instruments" and all property now or hereafter encumbered by
any one or more of the Security Instruments (including, without limitation, all
additions, accessions, and replacements thereof hereinafter is collectively
referred to as the "Security." Any Event of Default (as defined
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in the respective Security Instruments) under any of the Security Instruments
shall constitute an immediate Event of Default under this Note.
From and after the occurrence of an Event of Default or the Maturity Date,
whichever first occurs, the entire unpaid principal balance of this obligation
will bear interest (the "Default Rate") at the lesser of eighteen percent
(18.00%) per annum or the maximum rate of interest permitted by applicable law.
If, following the occurrence of any Event of Default under this Note or any
of the Security Instruments, the holder of this Note employs one or more
attorneys and/or legal assistants to enforce collection of this obligation, in
whole or in part, or to pursue its remedies under any of the Security
Instruments or otherwise available at law or in equity, then Maker will pay a
reasonable fee for all such attorneys' and legal assistants' services and costs,
regardless of whether suit is instituted and, if suit or other action or
proceeding is instituted to enforce payment of all or any portion of this
obligation, for all administrative, trial, and appellate proceedings, if any.
Maker also agrees to pay (i) all other costs of collection incurred, and (ii)
all costs and reasonable attorneys' and legal assistants' fees and costs
otherwise incurred by the holder of this Note for all administrative, trial,
bankruptcy, insolvency, and appellate proceedings in connection with the
enforcement or protection of this obligation, and in connection with the
enforcement or collection of any judgment.
Notwithstanding any provision of this Note, or any of the Security
Instruments, or any combination, to the contrary, the parties intend that no
provision of this Note or the Security Instruments be interpreted, construed,
applied, or enforced so as to permit or require the payment or collection of
interest in excess of the highest rate of interest (the "Maximum Permitted
Rate") permitted to be paid or collected by applicable law with respect to this
transaction. If, however, any such provision is so interpreted, construed,
applied, or enforced, then the parties intend: (i) that such provision
automatically shall be deemed reformed NUNC PRO TUNC so as to require payment
only of interest at the Maximum Permitted Rate; and (ii) if interest payments in
excess of such Maximum Permitted Rate have been received, then the amount of
such excess shall be deemed credited NUNC PRO TUNC in reduction of the then
outstanding principal amount of this obligation, together with interest at such
Maximum Permitted Rate. In connection with all calculations to determine the
Maximum Permitted Rate, the parties intend: first, that all charges be excluded
to the extent they are properly excludable under applicable usury laws, as they
from time to time are determined to apply to this obligation; and second, that
all charges be "spread" that may be "spread" in the manner, if any, provided by
applicable law.
This Note will be interpreted, construed, applied, and enforced according
to and governed by the laws of the State of Florida, without regard to any
choice of law principle requiring the application of the law of another
jurisdiction and regardless of where executed or delivered, where payable or
paid, where any cause of action accrues in connection with this obligation,
where any action or other proceeding involving this Note is instituted or
pending, or whether the laws of the State of Florida otherwise would apply the
laws of another jurisdiction. The provisions of this Note bind, and are for the
benefit of, the respective heirs, personal representatives, successors, and
assigns of Payee and Maker, jointly and severally.
If this Note is signed by more than one party, then all obligations herein
contained are the joint and several obligations of each signer hereof.
Upon the occurrence of an Event of Default the holder of this Note shall
have the unconditional right, without demand, notice, or other action, to
declare the entire unpaid principal balance of this Note, together with all
interest accrued thereon and all other charges and sums due thereunder, at once
due and payable, and to foreclose any lien or security interest securing the
payment hereof, either under any power of sale contained in such instrument, by
court proceedings, or by any other remedy provided by law, or to
3
pursue any other remedy provided in this Note, any of the Security Instruments,
or by applicable law.
Notwithstanding any provision contained in this Note to the contrary,
except as otherwise hereinafter provided with respect to the Recourse
Obligations (as hereinafter defined), the holder of this Note shall have no
recourse to any property of Maker other than the Security in the event that
Maker fails to pay all or any portion of the indebtedness evidenced by this Note
or secured or imposed by any of the Security Instruments or fails to perform any
of Maker's obligations under this Note or any of the Security Instruments
(collectively, the "Indebtedness"). Maker (jointly and severally, if more than
one) shall have full personal liability for, and shall defend, indemnify, and
hold Payee and all subsequent holders of this Note harmless from, any and all
losses, liabilities (including strict liability), damages, fines, penalties,
injuries, expenses (including reasonable attorneys' fees and costs, whether
incurred prior to or at trial or on appeal or in connection with any bankruptcy,
creditors' rights, or other proceedings or collecting upon or enforcing any
judgment), costs, and claims (together with interest thereon at the Default Rate
until paid) of any and every kind whatsoever paid, incurred, or suffered by, or
asserted against, Payee or any such subsequent holder, and caused by any of the
following "Recourse Obligations":
a. Waste to any of the Security (but excluding ordinary wear and
tear, unless Maker falls to exercise ordinary care in maintaining the
Security).
b. Fraud or written material misrepresentation by Maker or any of
its partners, or any affiliate, partner, officer, director, shareholder,
agent, or employee of any of them.
c. The failure to pay any tax, assessment, ground rent, or
lienable imposition or charge (including any interest and penalties
thereon) as required under any of the Security Instruments.
d. The application of any or all tenant security deposits or
prepaid rents or other charges (including any interest earned or due
thereon) under the leases of any portion of the Security (collectively, the
"Deposits") in a manner not specifically authorized by the Security
Instruments, or the failure to remit the Deposits to the holder of this
Note as required by the Security Instruments or by applicable law.
e. The application in any manner not specifically authorized by
this Note and the Security Instruments of any condemnation or insurance
proceeds from or with respect to the Security collected by or on behalf of
Maker, or the unavailability to the holder of this Note of condemnation
proceeds because a lease of all or any portion of the Security grants a
tenant the right (or the tenant otherwise is entitled) to receive a portion
of the award for the estate taken (excluding moving expenses, business
damages, and damages for the loss of the tenant's leasehold fixtures to the
extent that the same are separately awarded to the tenant).
f. The failure to pay to the holder of this Note all Net Revenues
(as hereinafter defined) derived from the Security while there exists any
uncured Event of Default arising from Maker's failure to pay any sum due
under this Note or any of the Security Instruments (a "Monetary Default").
As utilized herein, the term "Gross Revenues" means all revenues, receipts,
proceeds, and income derived from the Security from any source whatsoever
and received by or for the account of Maker while an uncured Monetary
Default exists, including, but not limited to, all rent and other charges
from tenants or other occupants of the Security, revenue from the operation
of the Maker's business or businesses upon the Security, insurance proceeds
for loss of business revenue, receipts from a sale or refinancing of the
Security, and any other revenues, receipts, or income derived from the
operation of, or generated by, the Security, including, without limitation,
casualty
4
insurance and condemnation proceeds. As utilized herein, the term
"Operating Expenses" means all reasonable and customary costs and expenses
actually incurred by Maker in cash in the usual and ordinary course of
operating, maintaining, and managing the Security while an uncured Monetary
Default exists (but expressly excluding (i) capital expenditures and
extraordinary repairs or expenses, (ii) depreciation and amortization,
(iii) distributions and payments to Maker, any of Maker's partners, or any
of their respective general or limited partners, shareholders, officers,
directors, agents or employees, or any affiliate, subsidiary, or other
entity that is controlled by any of them, other than management fees paid
to any such person or entity not in excess of three percent (3.00%) of
collected Gross Revenues, (iv) noncash expenditures, and (v) management
fees in excess of four percent (4%) of Gross Revenues). As utilized
herein, the term "Net Revenues" means Gross Revenues less Operating
Expenses.
g. The breach or untruth of any representation, warranty,
covenant, or agreement in any way relating to any environmental matter in
any of the Security Instruments or any other document executed in
connection with the loan evidenced by this Note, including, without
limitation, Article II, Paragraph 29, of the Mortgage, or the failure to
perform under any related indemnification, including, without limitation,
all obligations, covenants, agreements, representations, warranties, and
indemnifications on the part of Maker arising under that certain
"Environmental Indemnification Agreement" dated of even effective date
herewith executed by Maker in favor of Payee (the "Environmental
Agreement").
h. The destruction or removal of any Tangible Property (as
defined in the Security Agreement) from the Security in violation of
Paragraph 3 of the Security Agreement.
i. The termination, amendment, or entering into of any lease of
all or any portion of the Security to the extent prohibited by any of the
Security Instruments.
j. The willful or grossly negligent violation of any law,
ordinance, rule, regulation, or other legal requirement applicable to (i)
Maker, (ii) all or any portion of the Security or its use, occupancy,
operation, maintenance, improvement, or repair, (iii) this Note, any of the
Security Instruments or any other document executed in connection
therewith, or (iv) the loan evidenced by this Note.
k. The breach of any of the provisions of the Mortgage or any of
the other Security Instruments prohibiting transfer or further encumbrance
of the Security, including, without limitation, those contained in Article
III, Paragraph 4.h, of the Mortgage, Article IV, Paragraph 8, of the
Mortgage, and Paragraph 2 of the Security Agreement. Maker expressly
agrees and acknowledges that, notwithstanding anything to the contrary
contained in this Note, the Mortgage, or any of the other Security
Instruments, in the event of a breach of any such provision of the Mortgage
or any of the other Security Instruments Maker shall be fully and
personally liable for all principal, interest, prepayment charges,
liquidated damages for involuntary prepayment, and all other charges and
sums due under this Note or any of the Security Instruments to the same
extent as though this Note and the Security Instruments contained no
limitation on recourse against or liability of Maker.
Upon the occurrence of any Event of Default, the sole remedy of the holder
of this Note for the recovery of the Indebtedness (other than the aforesaid
Recourse Obligations) will be to realize upon the benefit of the Security
provided by the Security Instruments and to pursue its remedies under the
Environmental Agreement and that certain "Indemnification Agreement" of even
effective date herewith (the "Carveout Indemnification") made by John F.
Malhame, Gabriel Hakim, Bradley E. McNutt, Garden Square Associates, L.P., a
Delaware limited partnership, doing business in Florida as
5
Garden Square Associates of Delaware, Ltd., GSG Partners III, L.P., a Delaware
limited partnership, doing business in Florida as GSG Partners III, Ltd., and
BMC Garden Square Investment, Inc., a Florida corporation (collectively, the
"Carveout Indemnitors"), in favor of Payee. Upon the occurrence of any such
Event of Default, except with respect to the Recourse Obligations and the
Environmental Agreement, and the Carveout Indemnification, neither Maker nor any
of the Carveout Indemnitors, or any of their respective assets other than the
Security, will be liable for the Indebtedness. Notwithstanding the foregoing,
no covenant or agreement contained in this Note or any of the Security
Instruments will constitute a release or impairment of any or all of the
Indebtedness, except to the extent expressly provided herein, or of the benefit
of the Security provided by the Security Instruments, or preclude the holder of
this Note from exercising any right, privilege, or remedy provided by, or
otherwise available with respect to, this Note, any of the Security Instruments,
the Environmental Agreement, or the Carveout Indemnification, including without
limitation, institution of appropriate proceedings to realize upon the Security
provided by the Security Instruments. The Recourse Obligations shall be the
personal obligations of the Maker and Carveout Indemnitors, jointly and
severally, and the holder of this Note may pursue the Maker and/or any one or
more of the Carveout Indemnitors, or any combination of them, for personal
liability on the Recourse Obligations, and may obtain a deficiency judgment for
the Recourse Obligations in connection with any action to foreclose the Mortgage
and/or any or all of the other Security Instruments.
Maker agrees that a separate action or actions may be brought and
prosecuted against Maker with respect to the Recourse Obligations whether or not
an action is brought to foreclose or otherwise enforce any of the Security
Instruments. The enforcement of Maker's obligations with respect to the
Recourse Obligations shall not be deemed to constitute an action for recovery of
any portion of the Indebtedness other than the Recourse Obligations nor for the
recovery of a deficiency judgment against Maker following foreclosure of the
Security Instruments. Maker's obligations with respect to the Recourse
Obligations shall survive (i) the repayment of this Note, (ii) any assumption of
the Indebtedness by a successor to Maker, whether or not the assumption was
approved or disapproved by the holder of this Note and whether or not Maker was
otherwise released from liability under this Note and the Security Instruments
(it is expressly understood and agreed, however, that Miami Gardens Associates
shall have no liability for any omissions, events, and/or obligations that are
conclusively determined to have arisen, occurred, or accrued solely and in their
entirety after the time of any conveyance of the Security that is consented to
in writing by the holder of this Note in accordance with the provisions of
Article IV, Paragraph 8, of the Mortgage and that were not caused, in whole or
in part, directly or indirectly, by any act or omission of Miami Gardens
Associates, or any of its partners, affiliates, agents or employees), (iii) the
conveyance of title to the Security to the holder of this Note or any of its
successors or assigns, (iv) the foreclosure of the Security Instruments and the
vesting of title to the Security in the purchaser at the foreclosure sale, (v)
the sale or conveyance of all or any portion of the Security by Maker, and (vi)
the release of any portion of the Security from the lien and security interest
created by any of the Security Instruments.
6
IN WITNESS WHEREOF, Maker has executed and delivered this Note effective as
of the date first stated above.
SIGNATURES WITNESSED BY: MIAMI GARDENS ASSOCIATES, a New Jersey
general partnership
By: GARDEN SQUARE ASSOCIATES, L.P., a
Delaware limited partnership, doing
business in Florida as Garden Square
Associates of Delaware, Ltd., as general
partner of Miami Gardens Associates
By: ENGLEWOOD GARDENS, INC., a Florida
corporation, sole general partner
/s/ A.F. Buzzetti
- -----------------------------
Witness By: /s/ John F. Malhame
---------------------
A.F. Buzzetti John F. Malhame, President
- -----------------------------
Printed Name of Witness
(CORPORATE SEAL)
/s/ Marie Cicirello
- -----------------------------
Witness
Marie Cicirello
- -----------------------------
Printed Name of Witness
As to Englewood Gardens, Inc.
By: GSG PARTNERS III, L.P., a Delaware
limited partnership, doing business in
Florida as GSC Partners III, Ltd., as
general partner of Miami Garden
Associates
By: GSG INVESTORS III, INC., a Delaware
corporation, sole general partner
- ----------------------------
Witness
By: /s/ George Hakim
- ---------------------------- ------------------------
Printed Name of Witness George Hakim, President
(CORPORATE SEAL)
- ----------------------------
Witness
- ----------------------------
Printed Name of Witness
As to GSG Investors III, Inc.
By: BMC GARDEN SQUARE INVESTMENT,
INC., a Florida corporation, as
general partner of Miami Garden
Associates
- --------------------------- By: /s/ Bradley E. McNutt
Witness ------------------------
Bradley E. McNutt, President
- ---------------------------
Printed Name of Witness
(CORPORATE SEAL)
- ---------------------------
Witness
- ---------------------------
Printed Name of Witness
As to BMC Garden Square Investment, Inc. "Maker"
7
STATE OF NEW JERSEY )
)
COUNTY OF BERGEN )
THE FOREGOING INSTRUMENT was acknowledged before me this 12th day of
December, 1995, by JOHN F. MALHAME, as President of Englewood Gardens, Inc., a
Florida corporation, which is the sole General Partner of Garden Square
Associates, L.P., a Delaware limited partnership, doing business in Florida as
Garden Square Associates of Delaware, Ltd., which is acting in its capacity as a
General Partner of Miami Gardens Associates, a New Jersey general partnership,
on behalf of the corporation, limited partnership, and the general partnership.
He is either personally known to me or has produced ___________________________
as identification.
/s/ Laurel Merse
------------------------------------------
Notary Public, State of __________________
Name Printed:_____________________________
Commission No.:___________________________
(Affix Seal) My Commission Expires:____________________
LAUREL MERSE
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Feb. 17, 1998
STATE OF NEW JERSEY )
)
COUNTY OF BERGEN )
THE FOREGOING INSTRUMENT was acknowledged before me this 18th day of
December, 1995, by GEORGE HAKIM, as President of GSG Investors III, Inc., a
Delaware corporation, which is the sole General Partner of GSG Partners III,
L.P., a Delaware limited partnership, doing business in Florida as GSG Partners
III, Ltd., which is acting in its capacity as a General Partner of Miami Gardens
Associates, a New Jersey general partnership, on behalf of said corporation,
limited partnership and general partnership. He is either personally known to
me or has produced __________________________________________as identification.
/s/ Laurel Merse
------------------------------------------
Notary Public, State of __________________
Name Printed:_____________________________
Commission No.:___________________________
(Affix Seal) My Commission Expires:____________________
LAUREL MERSE
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Feb. 17, 1998
8
STATE OF FLORIDA )
)
COUNTY OF PALM BEACH )
THE FOREGOING INSTRUMENT was acknowledged before me this _19th_ day of
December, 1995, by BRADLEY E. MCNUTT, as President of BMC Garden Square
Investment, Inc., a Florida corporation, which is acting in its capacity as a
General Partner of Miami Gardens Associates, a New Jersey general
partnership, on behalf of said corporation and general partnership. He is
either PERSONALLY KNOWN TO ME or has produced _________________________ as
identification.
[SEAL] /s/Sherrel A. Garrett
---------------------------------------
Notary Public, State of Florida
(Affix Seal) ---------------
Name Printed: Sherrel A. Garrett
------------------------
Commission No.:
------------------------
My Commission Exires:
------------------------
FLORIDA DOCUMENTARY STAMPS IN THE AMOUNT OF $23,800.00 ARE AFFIXED TO THE
MORTGAGE OF EVEN EFFECTIVE DATE HEREWITH MADE BY MAKER IN FAVOR OF PAYEE AND
CANCELLED.