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EXHIBIT 10.1
PROMISSORY NOTE
$15,225,000.00 February 27, 1998
FOR VALUE RECEIVED, A.T.C., L.L.C., a Virginia limited liability
company, having its principal place of business at A.T.C., L.L.C. c/o Berman
Kappler, Inc., 1010 Wisconsin Avenue, N.W., Suite 250, Washington, D.C. 20007
(hereinafter referred to as "Borrower"), promises to pay to the order of GMAC
COMMERCIAL MORTGAGE CORPORATION, a California corporation, having its principal
place of business at 650 Dresher Road, Horsham, Pennsylvania 19055-8015
(hereinafter referred to as "Lender"), the principal sum of FIFTEEN MILLION TWO
HUNDRED TWENTY FIVE THOUSAND AND NO/100THS DOLLARS ($15,225,000.00), with
interest on the unpaid principal balance to be computed from the date of this
Promissory Note (this "Note") at the Applicable Interest Rate (hereinafter
defined), 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.
1. PAYMENT OF PRINCIPAL AND INTEREST.
A. The principal and interest under this Note shall be payable at the
office of Lender as set forth above, Attn: Mr. Barry Moore, or at such other
place as Lender may from time to time designate in writing, in equal consecutive
monthly installments of $106,454.33 each, on the first day of April, 1998, and
on the first day of each calendar month thereafter up to and including the first
day of March, 2008 (or if such day is not a Business Day (hereinafter defined)
the next Business Day thereafter); and the balance of said principal sum
together with accrued and unpaid interest and any other amounts due under this
Note, the Security Instrument and the Other Security Documents (each as
hereinafter defined) shall be due and payable on the 1st day of March, 2008 (the
"Maturity Date"). The term "Business Day" shall mean a day on which commercial
banks are not authorized or required by law to close in the State of New York.
B. Interest on the principal sum of this Note shall accrue in arrears
and be calculated on the basis of an actual three hundred sixty (360) day year
except that interest due and payable for a period less than a full month shall
be calculated by multiplying the actual number of days elapsed in such period by
a daily rate based on said 360 day year. 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 which are 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
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at said place of payment on a day on which Lender is open for business. On the
date of the closing of the loan evidenced by this Note, Borrower shall pay to
Lender an interest payment equal to the product of the number of days remaining
in the month from the date on which the loan is closed multiplied by the
interest per diem. Payments under this Note shall be applied first to the
payment of interest and other costs and charges due in connection with this Note
or the Debt (as hereinafter defined), as Lender may determine in its sole
discretion, and the balance applied toward the reduction of the principal sum in
inverse order of maturity (but such application shall not reduce the amount of
the fixed monthly installments required to be paid pursuant to Section 3.A.
above). All amounts due under this Note shall be payable without set off,
counterclaim or any other deduction whatsoever by the Borrower, unless
authorized by Lender or an unappealable judgment of a court of competent
jurisdiction.
C. The term "Applicable Interest Rate" as used in this Note shall mean
from the date of this Note through and including the Maturity Date, a rate of
7.390% per annum.
2. DEFAULT.
A. If any sum payable under this Note is not paid within five (5) days
on the date on which it is due, Borrower shall pay to Lender upon demand an
amount equal to the lesser of five percent (5%) of such unpaid sum or the
maximum amount permitted by applicable law to defray the expenses incurred by
Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment and such amount shall
be secured by the Security Instrument and the Other Security Documents.
B. The entire outstanding principal sum of this Note, together with all
interest accrued and unpaid thereon and all other sums due under the Security
Instrument, the Other Security Documents and this Note (all such sums
hereinafter collectively referred to as the "Debt"), or any portion thereof,
shall without notice become immediately due and payable at the option of Lender
if any payment required under this Note is not paid on the date when due or on
the happening of any other default, each after the expiration of any applicable
notice and grace periods, herein or under the terms of the Security Instrument
or the Other Security Documents (hereinafter each an "Event of Default"). Time
is of the essence in this Note, the Security Instrument and the Other Security
Documents. All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security Documents are hereby made part of this Note to
the same extent and with the same force as if they were fully set forth herein.
In the event that Lender employs counsel to collect the Debt or to protect or
foreclose the security hereof, Borrower also agrees to pay on demand all costs
of collection incurred by Lender, including reasonable attorneys' fees for the
services of counsel whether or not suit be brought.
C. Borrower does hereby agree that upon the occurrence of an Event of
Default which is not cured within any applicable grace or notice period, or upon
the failure of Borrower to pay the Debt in full on the Maturity Date, or upon
the failure of Borrower to pay the Debt on the date specified in any notice
given pursuant to Section 3.A.(i) hereof,
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Lender shall be entitled to receive and Borrower shall pay interest on the
entire unpaid principal sum at the Applicable Interest Rate plus five percent
(5%) (the "Default Rate"); provided, however, that in the event Lender permits
Borrower to cure such Event of Default, then the rate of interest on the unpaid
principal balance of this Note shall be the Applicable Interest Rate and shall
be computed from the date such Event of Default is cured. The Default Rate shall
be computed from the occurrence of the Event of Default until the actual receipt
and collection of the Debt or, if permitted by Lender, the date such Event of
Default is cured. This charge shall be added to the Debt, and shall be deemed
secured by the Security Instrument. This clause, however, shall not be construed
as an agreement or privilege to extend the date of the payment of the Debt, nor
as a waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default. In the event the Default Rate would
otherwise exceed the maximum rate permitted by applicable law, the Default Rate
shall be the maximum rate permitted by applicable law.
3. PREPAYMENT AND DEFEASANCE.
A. Except as otherwise set forth herein, prepayments of this
Note shall not be permitted. Provided no Event of Default exists, the principal
balance of this Note may be prepaid in whole but not in part (except as
otherwise specifically provided herein) at any time after the date which is
thirty (30) days prior to the scheduled Maturity Date (the "Defeasance
Expiration Date") provided (i) written irrevocable notice of such prepayment
specifying the intended date of 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, and (ii) such prepayment is received on a scheduled payment date
(or, if such prepayment is not received on a scheduled payment date, interest is
paid through the last day of such calendar month) and is accompanied by all
interest accrued hereunder and all other sums due hereunder or under the
Security Instrument and Other Security Documents. With regard to any prepayment
made hereunder, if the prior written notice required in (i) above has not been
received by Lender, the required prepayment amount 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 Maturity
Date. Notwithstanding anything to the contrary in this Note, the Security
Instrument or the Other Security Documents, the principal balance of the Note
shall be absolutely and unconditionally due and payable on the date specified in
any notice given pursuant to Section 3.A.(i) hereof.
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, in which event no 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 payments in inverse order of
maturity but such application shall not
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reduce the amount of the fixed monthly installments required to be paid pursuant
to Section 1.A. above.
C. (1) Provided no Event of Default exists, notwithstanding any
provision of this Note to the contrary, on or after April 1, 2001 (the "Optional
Defeasance Date"), and subject to a Rating Confirmation (hereinafter defined)
having been obtained therefor and subject to the terms and conditions set forth
in this Section 3.C., Borrower may defease all (but not less than all) of the
principal of this Note (hereinafter, a "Defeasance"). For purposes herein,
"Rating Confirmation," with respect to the matter in question, shall mean that
as a condition thereto the Rating Agencies (hereinafter defined) shall have
confirmed in writing that (i) such investment, replacement or action shall not
result, in and of itself, in a reduction, withdrawal or qualification of any
rating then assigned to any outstanding certificates issued with respect to a
Securitization (as defined in the Security Instrument) (collectively,
"Certificates") (if the Securitization has occurred), or (ii) such investment,
replacement or action would not result, in and of itself, in a reduction,
withdrawal or qualification of any rating for proposed Certificates then under
consideration by the Rating Agencies (if the Securitization has not yet
occurred); provided that if the Securitization has not taken (or as certified by
Lender, will not take) the form of a transaction rated by the Rating Agencies,
then "Rating Confirmation" shall instead mean that the matter in question shall
be subject to the prior approval of the Lender. For purposes herein "Rating
Agencies" shall mean each of Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. or any other nationally-recognized
statistical rating agency selected by Lender. No Defeasance shall be permitted
on or after the Defeasance Expiration Date. Each Defeasance shall be subject, in
each case, to the satisfaction of the following conditions precedent:
(a) Borrower shall provide not less than thirty (30) days' prior
written notice to Lender specifying a date (the "Defeasance Date")
on which the Defeasance Deposit (hereinafter defined) is to be made
and on which the Defeasance is to occur, as well as the anticipated
outstanding principal amount of this Note as of the Defeasance Date.
(b) Borrower shall pay to Lender all accrued and unpaid interest
on the principal balance of this Note to but not including the
Defeasance Date.
(c) Borrower shall pay to Lender all other sums, not including
scheduled interest or principal payments, then due under this Note,
the Security Instrument and the other documents executed in
connection therewith.
(d) No Event of Default shall exist on the Defeasance Date.
(e) Borrower shall pay to Lender the required Defeasance Deposit
for the Defeasance. For purposes herein, "Defeasance Deposit" shall
mean an amount equal to the sum of (i) the remaining principal
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amount of this Note, (ii) without duplication, all costs and
expenses (including the purchase price) incurred or to be incurred
in the purchase of U.S. Government Securities (hereinafter defined)
necessary to meet the Scheduled Defeasance Payments (hereinafter
defined) and (iii) any revenue, documentary stamp or intangible
taxes or any other tax or charge due in connection with the transfer
of this Note, or otherwise required to accomplish the agreements of
this Section 3.C. For purposes herein, "U.S. Government Securities"
shall mean securities evidencing an obligation to pay principal and
interest in a full and timely manner that are (y) direct obligations
of the United States of America for the payment of which its full
faith and credit is pledged, or (z) obligations of an entity
controlled or supervised by and acting as an agency or
instrumentality of and guaranteed as a full faith and credit
obligation by the United States of America, which in either case are
not callable or redeemable at the option of the issuer thereof
(including a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended) as
custodian with respect to any such securities or a specific payment
of principal of or interest on any such securities held by such
custodian for the account of the holder of such depository receipt;
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the securities or the specific payment of
principal of or interest on the securities evidenced by such
depository receipt).
(f) Borrower shall execute and deliver one or more security
agreements, in form and substance satisfactory to Lender in its sole
and absolute discretion, creating a first priority lien on the
Defeasance Deposit and the U.S. Government Securities purchased with
the Defeasance Deposit in accordance with the provisions of this
Section 3.C. (the "Defeasance Security Agreement").
(g) Borrower shall deliver to Lender an opinion of counsel for
Borrower in form satisfactory to Lender in its sole and absolute
discretion, stating, among other things, that Lender has a perfected
first priority security interest in the U.S. Government Securities
purchased with the Defeasance Deposit.
(h) If this Note and the Security Instrument is included in any
"real estate mortgage investment conduit" ("REMIC") within the
meaning of Section 860D of the Internal Revenue Code of 1986, as
amended and any successor statutes thereto, and applicable U.S.
Department of Treasury regulations issued pursuant thereto (the
"Code"), formed pursuant to a Securitization, Borrower shall also
deliver or cause to be delivered an opinion of counsel, in form and
substance satisfactory to Lender in its sole and absolute discretion
stating that, after a Defeasance, the Security Instrument will
continue to be a "qualified mortgage" within the meaning
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of Section 860G of the Code and the REMIC will not fail to maintain
its status as a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code as a result of such Defeasance.
(i) Borrower shall deliver to Lender an Officer's Certificate
certifying that the requirements set forth in this Section 3.C. have
been satisfied.
(j) Borrower shall deliver such other certificates, documents or
instruments as Lender may reasonably request.
(k) Borrower shall pay all reasonable costs and expenses of
Lender incurred in connection with the Defeasance, including any
costs and expenses associated with a release of the Security
Instrument as provided in this Section 3.C. hereof and reasonable
attorneys' fees and expenses.
(l) Borrower shall deliver to Lender a confirmation, in form and
substance satisfactory to Lender in its sole and absolute
discretion, by a "Big Four" independent certified public accounting
firm, that the Defeasance Deposit is sufficient to pay all Scheduled
Defeasance Payments and other amounts required to be paid by
Borrower hereunder in connection with the proposed Defeasance.
(m) Borrower shall deliver to Lender confirmation, in form and
substance satisfactory to Lender in its sole and absolute
discretion, that all conditions to defeasance have been met from any
applicable Rating Agency that has required as a condition to
defeasance that such conditions have been met.
(n) In the event an Event of Default arises after notice of
Defeasance is given but before Defeasance occurs, Borrower shall pay
a premium equal to one percent (1%) of the principal balance of this
Note.
(2) In connection with the Defeasance of this Note, Borrower hereby
appoints Lender as its agent and attorney-in-fact for the purpose of using the
Defeasance Deposit to purchase U.S. Government Securities (which purchases, if
made by Lender, shall be made on an arms-length basis at then prevailing market
rates) which provide payments on or prior to, but as close as possible to the
first day of each calendar month after the Defeasance Date, and in amounts equal
to the monthly installments due under this Note (the "Scheduled Defeasance
Payments"). Borrower, pursuant to the Defeasance Security Agreement or other
appropriate document, shall irrevocably authorize and direct that the payments
received from the U.S. Government Securities may be made directly to Lender and
applied to satisfy the obligations of Borrower under this Note. In connection
with the Defeasance of this Note, any portion of the Defeasance Deposit in
excess of the amount necessary to purchase the U.S. Government Securities
required by this Section 3.C. and (b) and satisfy Borrower's obligations under
this Section 3.C. shall be remitted to
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Borrower. Any amounts received in payment on the U.S. Government Securities in
excess of the amounts necessary to make monthly installment payments shall be
applied to reduce the outstanding principal amount of this Note.
(3) (a) If Borrower has elected Defeasance, and the requirements of this
Section 3.C. have been satisfied, the Property (as defined in the Security
Instrument) shall be released from the lien of the Security Instrument and the
U.S. Government Securities, pledged pursuant to the Defeasance Security
Agreement, shall be the sole source of collateral securing this Note.
(b) In connection with the release of the Security Instrument,
Borrower shall submit to Lender, not less than twenty (20) days prior to the
Defeasance Date, a release of lien for the Property (for execution by Lender) in
a form appropriate in the applicable state and otherwise satisfactory to Lender
in its reasonable discretion and all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all applicable laws, and (ii) will effect such releases in
accordance with the terms of the Security Instrument.
4. SECURITY. This Note is secured by the Security Instrument and the
Other Security Documents. The term "Security Instrument" as used in this Note
shall mean that certain Deed of Trust and Security Agreement dated the date
hereof, given by Borrower to Lender covering the fee estate of Borrower in
certain premises located in Stafford County, State of Virginia, and other
property, as more particularly described therein and intended to be duly
recorded in said County, as the same may be amended, supplemented, replaced or
otherwise modified from time to time. The term "Other Security Documents" as
used in this Note shall mean all and any of the documents other than this Note
or the Security Instrument now or hereafter executed by Borrower and/or others
and by or in favor of Lender, which wholly or partially secure or guarantee
payment of the Debt.
5. EXCULPATION. Notwithstanding anything to the contrary contained in
this Note, the liability of Borrower and of any general partner or member of
Borrower to pay the Debt and for the performance of the other agreements,
covenants and obligations contained herein and in the Security Instrument and
the other Security Documents shall be limited as set forth in Article 15 of the
Security Instrument.
6. GENERAL
A. This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the Debt or any portion
thereof at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Note, Borrower is at any time required or obligated to pay
interest on the Debt or any portion thereof at a rate in excess of such maximum
rate, the rate of interest under this Note shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and
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all prior interest payments in excess of the maximum rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder.
B. This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
C. Borrower and all others who may become liable for the payment of all
or any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest, notice of
non-payment and notice of intent to accelerate the maturity hereof (and of such
acceleration). No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Security Instrument and the Other
Security Documents made by agreement between Lender and any other person or
party shall release, modify, amend, waive, extend, change, discharge, terminate
or affect the liability of Borrower, and any other who may become liable for the
payment of all or any part of the Debt, under this Note, the Security Instrument
and the Other Security Documents. Lender may release any guarantor or indemnitor
of the Debt from liability, in every instance without the consent of the
Borrower hereunder, and without waiving any rights the Lender may have hereunder
or by virtue of the laws of the State in which the Property (as defined in the
Security Instrument) is located or any other state of the United States.
D. Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute,
deliver and perform its obligations pursuant to this Note, the Security
Instrument and the Other Security Documents and that this Note, the Security
Instrument and the Other Security Documents constitute valid and binding
obligations of Borrower.
E. Lender shall have the right to transfer, sell and assign this Note,
the Security Instrument and the Other Security Documents, and the obligations
hereunder.
F. Borrower shall not, without the prior written consent of Lender,
sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer, or
permit the transfer of, directly or indirectly, the Property or ownership
interests in Borrower, except as permitted in accordance with the Security
Instrument.
G. All notices or other written communications hereunder shall be given
and become effective as provided in the Security Instrument.
H. Borrower is and shall be obligated to pay principal, interest and any
and all other amounts which become payable hereunder or under the Other Security
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
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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.
I. This Note shall be interpreted, construed and enforced according to
the laws of the State where the Property is located. 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. This Note, the Security
Instrument and the Other Security 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.
J. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE,
THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS
OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.
K. If any term of this Note or any application thereof shall be invalid
or unenforceable, the remainder of this Note and any other application of the
term shall not be affected thereby.
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IN WITNESS WHEREOF, Borrower has duly executed this Note the day and
year first above written.
BORROWER:
A.T.C., L.L.C., a Virginia limited liability company
By: A.T. Center, Inc., a Virginia corporation
By: /s/ Thomas Kappler
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Thomas Kappler, President
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