PROMISSORY NOTE
US $6,103,000.00 As of April 27, 2000
FOR VALUE RECEIVED, the undersigned ("Guarantor") jointly and severally
(if more than one) promises to pay to the order of KRF3 Acquisition Company,
L.L.C., a Delaware limited liability company ("Borrower"), the principal sum of
Six Million One Hundred Three Thousand and No/100 Dollars (US $6,103,000.00),
with interest on the unpaid principal balance at the annual rate of See Schedule
C percent (____%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, or any other amounts due at any time under, this Note or any amount
for which Borrower is liable to DUS Lender under any Loan Document, which
Guarantor by its execution of this Note agrees to reimburse to Borrower,
including prepayment premiums, late charges, default interest, and advances to
protect the security of the Security Instrument under Section 12 of the Security
Instrument. Event of Default and other capitalized terms used but not defined in
this Note shall have the meanings given to such terms in the Indemnity
Multifamily Deed of Trust dated as of the date of this Note (the "Security
Instrument") given by Guarantor for the benefit of Reilly Mortgage Capital
Corporation ("DUS Lender," which term shall also include any subsequent holder
of the Multifamily Note dated as of the date of this Note executed by Borrower
(the "DUS Note") evidencing the loan from DUS Lender to Borrower (the "DUS
Loan")) to secure Guarantor's guaranty of the DUS Loan, which Borrower has
loaned to Guarantor pursuant to the terms of this Note.
2. Address for Payment. All payments due under this Note shall be
payable at c/o Berkshire Realty Group, One Beacon Street, Boston, Massachusetts
02108, or such other place as may be designated by written notice to Guarantor
from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Guarantor on
the first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of See Schedule C and ___/100 Dollars (US $ See Schedule C ), shall
be payable on the first day of each month beginning on See Schedule C , until
the entire unpaid principal balance evidenced by this Note is fully paid. Any
accrued interest remaining past due for 30 days or more shall be added to and
become part of the unpaid principal balance and shall bear interest at the rate
or rates specified in this Note, and any reference below to "accrued interest"
shall refer to accrued interest which has not become part of the unpaid
principal balance. Any remaining principal and interest shall be due and payable
on See Schedule C or on any earlier date on which the unpaid principal balance
of this Note becomes due and payable, by acceleration or otherwise (the
"Maturity Date"). The unpaid principal balance shall continue to bear interest
after the Maturity Date at the Default Rate set forth in this Note until and
including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and
interest that is received by Lender before the date it is due shall be deemed to
have been received on the due date solely for the purpose of calculating
interest due.
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4. Application of Payments. If at any time Lender receives, from
Guarantor or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender's discretion. Guarantor agrees that neither Lender's
acceptance of a payment from Guarantor in an amount that is less than all
amounts then due and payable nor Lender's application of such payment shall
constitute or be deemed to constitute either a waiver of the unpaid amounts or
an accord and satisfaction.
5. [Intentionally Omitted]
6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note shall at once become due and payable, at the option of Lender, without
any prior notice to Guarantor. Lender may exercise this option to accelerate
regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note is not
received by Lender within 10 days after the amount is due, Guarantor shall pay
to Lender, immediately and without demand by Lender, a late charge equal to 5
percent of such amount. Guarantor acknowledges that its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the loan evidenced by this Note (the "Loan"), and that it is
extremely difficult and impractical to determine those additional expenses.
Guarantor agrees that the late charge payable pursuant to this Paragraph
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional expenses Lender will incur
by reason of such late payment. The late charge is payable in addition to, and
not in lieu of, any interest payable at the Default Rate pursuant to Paragraph
8.
8. Default Rate. So long as any monthly installment or any other
payment due under this Note remains past due for 30 days or more, interest under
this Note shall accrue on the unpaid principal balance from the earlier of the
due date of the first unpaid monthly installment or other payment due, as
applicable, at a rate (the "Default Rate") equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Guarantor under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Guarantor also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment or payment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Guarantor also acknowledges that, during the time that any
monthly installment or other payment due under this Note is delinquent for more
than 30 days, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Guarantor agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Guarantor's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability. (a) Except as otherwise provided in
this Paragraph 9, Guarantor shall have no personal liability under this Note for
the repayment of the Indebtedness or for the performance of any other
obligations of Guarantor under this Note, and Lender's only recourse for the
satisfaction of the Indebtedness and the performance of such obligations shall
be Lender's exercise of its rights and remedies with respect to the real and
personal
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property described on Schedule B (the "Property"). This limitation on
Guarantor's liability shall not limit or impair Lender's enforcement of its
rights against any guarantor of the Indebtedness or any guarantor of any
obligations of Guarantor.
(b) Guarantor shall be personally liable to Lender for the repayment of
a portion of the Indebtedness equal to any loss or damage suffered by Lender as
a result of (1) failure of Guarantor to pay to DUS Lender upon demand after an
Event of Default, all Rents to which DUS Lender is entitled under Section 3(a)
of the Security Instrument and the amount of all security deposits collected by
Guarantor from tenants then in residence; (2) failure of Guarantor to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Guarantor to comply with Section 14(d) or (e) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports; (4) fraud or written material misrepresentation by
Guarantor, or any officer, director, partner, member or employee of Guarantor in
connection with the application for or creation of the DUS Loan or any request
for any action or consent by DUS Lender; or (5) failure to apply Rents, first,
to the payment of reasonable operating expenses (other than Property management
fees that are not currently payable pursuant to the terms of an Assignment of
Management Agreement or any other agreement with DUS Lender executed in
connection with the Loan) and then to amounts ("Debt Service Amounts") payable
under this Note, the Security Instrument or any other Loan Document (except that
Guarantor will not be personally liable (i) to the extent that Guarantor lacks
the legal right to direct the disbursement of such sums because of a bankruptcy,
receivership or similar judicial proceeding, or (ii) with respect to Rents that
are distributed in any calendar year if Guarantor has paid all operating
expenses and Debt Service Amounts for that calendar year).
(c) Guarantor shall become personally liable to Lender for the
repayment of all of the Indebtedness upon the occurrence of any of the following
Events of Default: (1) Guarantor's acquisition of any property or operation of
any business not permitted by Section 33 of the Security Instrument; or (2) a
Transfer that is an Event of Default under Section 21 of the Security
Instrument.
(d) To the extent that Guarantor has personal liability under this
Paragraph 9, Lender may exercise its rights against Guarantor personally without
regard to whether Lender has exercised any rights against the Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note or applicable law. For purposes
of this Paragraph 9, the term "Property" shall not include any funds that (1)
have been applied by Guarantor as required or permitted by the Security
Instrument prior to the occurrence of an Event of Default, or (2) Guarantor was
unable to apply as required or permitted by the Security Instrument because of a
bankruptcy, receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Guarantor may voluntarily prepay all (but not less than
all) of the unpaid principal balance of this Note on the last Business
Day of a calendar month if Guarantor has given Lender at least 30 days
prior notice of its intention to make such prepayment. Such prepayment
shall be made by paying (A) the amount of principal being prepaid, (B)
all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes, including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar
day of the month shall be deemed to have been received on the last
calendar day of such month. For purposes of this Note, a "Business Day"
means any day other than a Saturday, Sunday or any other day on which
Lender is not open for business.
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(2) Upon Lender's exercise of any right of acceleration under
this Note, Guarantor shall pay to Lender, in addition to the entire
unpaid principal balance of this Note outstanding at the time of the
acceleration, (A) all accrued interest and all other sums due Lender
under this Note, and (B) the prepayment premium calculated pursuant to
Schedule A.
(3) Any application by Lender of any collateral or other
security to the repayment of any portion of the unpaid principal
balance of this Note prior to the Maturity Date and in the absence of
acceleration shall be deemed to be a partial prepayment by Guarantor,
requiring the payment to Lender by Guarantor of a prepayment premium.
The amount of any such partial prepayment shall be computed so as to
provide to Lender a prepayment premium computed pursuant to Schedule A
without Guarantor having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than 90
days before the Maturity Date, or (B) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any required prepayment of less than the unpaid principal balance
of this Note shall not extend or postpone the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender agrees
otherwise in writing.
(e) Guarantor recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Guarantor, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Guarantor agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Guarantor therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Guarantor further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the loan
evidenced by this Note, and acknowledges that the terms of this Note are in
other respects more favorable to Guarantor as a result of the Guarantor's
voluntary agreement to the prepayment premium provisions.
11. Costs and Expenses. Guarantor shall pay on demand all expenses and
costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or DUS Lender's enforcement of the provisions of any of the
other Loan Documents, including those incurred in post-judgment collection
efforts and in any bankruptcy proceeding (including any action for relief from
the automatic stay of any bankruptcy proceeding) or judicial or non-judicial
foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of that or any other right or remedy. The
acceptance by Lender of any payment after the due date of such payment, or in an
amount which is less than the required payment, shall not be a waiver of
Lender's right to require prompt payment when due of all other payments or to
exercise any right or remedy with respect to any failure to make prompt payment.
Enforcement by Lender of any security for Guarantor's obligations under this
Note shall not constitute an election by Lender of
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remedies so as to preclude the exercise of any other right or remedy available
to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice
of acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Guarantor and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. Guarantor agrees to pay an effective rate of interest
equal to the sum of the interest rate provided for in this Note and any
additional rate of interest resulting from any other charges of interest or in
the nature of interest paid or to be paid in connection with the loan evidenced
by this Note and any other fees or amounts to be paid by Borrower pursuant to
any of the other Loan Documents. Neither this Note nor any of the other Loan
Documents shall be construed to create a contract for the use, forbearance or
detention of money requiring payment of interest at a rate greater than the
maximum interest rate permitted to be charged under applicable law. If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Guarantor in connection with the Loan is interpreted so that any
interest or other charge provided for in any Loan Document, whether considered
separately or together with other charges provided for in any other Loan
Document, violates that law, and Guarantor is entitled to the benefit of that
law, that interest or charge is hereby reduced to the extent necessary to
eliminate that violation. The amounts, if any, previously paid to Lender in
excess of the permitted amounts shall be applied by Lender to reduce the unpaid
principal balance of this Note. For the purpose of determining whether any
applicable law limiting the amount of interest or other charges permitted to be
collected from Guarantor has been violated, all Indebtedness that constitutes
interest, as well as all other charges made in connection with the Indebtedness
that constitute interest, shall be deemed to be allocated and spread ratably
over the stated term of the Note. Unless otherwise required by applicable law,
such allocation and spreading shall be effected in such a manner that the rate
of interest so computed is uniform throughout the stated term of the Note.
15. Commercial Purpose. Guarantor represents that the Indebtedness is
being incurred by Guarantor solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the State
of Maryland.
18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or
permitted to be given by Lender to Guarantor pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Guarantor agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the State of Maryland (the "Property Jurisdiction"). The state
and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Guarantor irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. GUARANTOR AND LENDER EACH (A) AGREES NOT
TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR
THE RELATIONSHIP BETWEEN THE PARTIES
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AS LENDER AND GUARANTOR THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH
RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
[X] Schedule A Prepayment Premium (required)
[X] Schedule B Property Description
[X] Schedule C Modification - ARM
IN WITNESS WHEREOF, Guarantor has signed and delivered this Note under
seal or has caused this Note to be signed and delivered by its duly authorized
representative under seal.
GUARANTOR
DOH, INC., a Maryland corporation
By: __________________________
David Quade
Vice President
06-1269273
Guarantor's Social Security/Employer ID Number
Guarantor's Address: Lender's Address:
c/o Berkshire Realty Group c/o Berkshire Realty Group
One Beacon Street One Beacon Street
Boston, Massachusetts 02108 Boston, Massachusetts 02108
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Pay to the order of Reilly Mortgage Capital
Corporation with full recourse.
KRF3 ACQUISITION COMPANY, L.L.C., a Delaware
limited liability company
By: KRF Company, L.L.C., a Delaware limited
liability company, Managing Member
By: _______________________
David Quade
Executive Vice President
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Pay to the order of Fannie Mae, without recourse.
REILLY MORTGAGE CAPITAL CORPORATION, a Virginia
corporation
By: _______________________
Brenda R. Dutrow
Assistant Vice President
Fannie Mae Loan Number: ________________
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SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If Borrower makes a prepayment of this Note or Lender accelerates
the unpaid principal balance of this Note prior to 90 days before
the Maturity Date, the prepayment premium shall be equal to 1% of
the unpaid principal balance of the Note.
---------------
Initials
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SCHEDULE B
PARCEL I
BEING known and designated as Parcel `E', as shown on a plat entitled "COLUMBIA
VILLAGE OAKLAND MILLS, TALBOT SPRINGS, SECTION 4, AREA 1, Sheet 6 of 9" which
plat is recorded among the Land Records of Howard County, Maryland in Plat Book
17, folio 51.
PARCEL II
BEING known and designated as Parcel "E", as shown on a plat entitled "COLUMBIA
VILLAGE OF OAKLAND MILLS, SECTION 2, AREA 3, Sheet 4 of 4" which plat is
recorded among the Land Records of Howard County, Maryland in Plat Book No. 17,
folio 91.
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SCHEDULE C
ARM MODIFICATIONS TO PROMISSORY NOTE
The Multifamily Note to which this Schedule C is attached is modified
as follows:
1. The following is added to the end of the initial paragraph of the Note:
This Note is an Adjustable Rate Promissory Note and the interest on the
unpaid principal balance shall be paid at the rates applicable from time to time
as set forth in Paragraph 3 below.
2. Paragraph 3 is deleted in its entirety and replaced with the following:
3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on
the first day of the month, interest for the period beginning on the date of
disbursement (the "Disbursement Date") and ending on and including the last day
of the month in which such disbursement is made shall be payable simultaneously
with the execution of this Note. Interest under this Note shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
(b) Interest shall accrue on the unpaid principal balance of this Note
at the Adjustable Rate (defined below). The Adjustable Rate shall change on each
Rate Change Date (defined below) until the loan is repaid in full.
(c) The initial Adjustable Rate shall be 7.9080% per annum until the
first Rate Change Date. From and after each Rate Change Date until the next Rate
Change Date, the Adjustable Rate shall be the sum of (i) the Current Index
(defined below), and (ii) the Margin (defined below), subject to the limitations
that the Adjustable Rate shall not be (x) more than 1 percentage point (1%)
higher or lower than the Adjustable Rate in effect for the 3-month period
immediately preceding the Rate Change Date, (y) more than 10.9080%, or (z) less
than 4.9080%. Accrued interest on this Note shall be paid in arrears as provided
in subsection (e) below.
(d) Consecutive monthly installments of principal and interest, each
in the amount of the Required Monthly Payment (defined below), shall be payable
on the first day of each month beginning June 1, 2000, until the entire unpaid
principal balance evidenced by this Note is fully paid. Any accrued interest
remaining past due for 30 days or more shall be added to and become part of the
unpaid principal balance and shall bear interest at the rate or rates specified
in this Note, and any reference below to "accrued interest" shall refer to
accrued interest which has not become part of the unpaid principal balance. Any
remaining principal and interest, if not sooner paid, shall be due and payable
on the Maturity Date. The initial Required Monthly Payment shall be the amount
required to pay the unpaid principal balance of this Note in equal monthly
installments, including accrued interest at the Adjustable Rate over the
Original Amortization Period (defined below) beginning on the first day of the
second month after the Disbursement Date. The initial
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Required Monthly Payment shall be Forty-Four Thousand Three Hundred Ninety and
86/100 Dollars (US $44,390.86). Thereafter, to the extent that the Adjustable
Rate has changed, the Required Monthly Payment shall change on each Payment
Change Date, and shall be in such amount as shall cause the unpaid principal
balance of the Note to be amortized over the Remaining Amortization Period
(defined below).
(e) Before each Payment Change Date, Lender shall re-calculate the
Adjustable Rate and shall notify Borrower (in the manner specified in the
Security Instrument (defined below) for giving notices) of any change in the
Adjustable Rate and the Required Monthly Payment.
(f) If Lender at any time determines, in its sole but reasonable
discretion, that it has miscalculated the amount of the Required Monthly Payment
(whether because of a miscalculation of the Adjustable Rate or otherwise), then
Lender shall give notice to Borrower of the corrected amount of the Required
Monthly Payment (and the corrected Adjustable Rate, if applicable) and (i) if
the corrected amount of the Required Monthly Payment represents an increase,
then Borrower shall, within 30 calendar days thereafter, pay to Lender any sums
that Borrower would have otherwise been obligated under this Note to pay to
Lender had the amount of the Required Monthly Payment not been miscalculated, or
(ii) if the corrected amount of the Required Monthly Payment represents a
decrease thereof and Borrower is not otherwise in breach or default under any of
the terms and provisions of the Note, the Security Instrument or any other loan
document evidencing or securing the Note, then Borrower shall thereafter be paid
the sums that Borrower would not have otherwise been obligated to pay to Lender
had the amount of the Required Monthly Payment not been miscalculated.
(g) For purposes of this Section, the following definitions shall
apply:
Current Index: The published Index that is effective on the 45th day
before the applicable Rate Change Date.
Index: The average of interbank offered rates for 3-month U.S.
Dollar-denominated deposits in the London market based on quotations of major
banks, as reported by Telerate through electronic transmission. If the Index is
no longer available, or is no longer posted through electronic transmission,
Lender will choose a new index that is based upon comparable information and
provide notice thereof to Borrower.
Loan Year: The period beginning on the Disbursement Date and ending on
the day before the fourth Rate Change Date and each successive 12-month period
thereafter.
Margin: 1.5900%.
Maturity Date: May 1, 2005, or any earlier date on which the unpaid
principal balance of this Note becomes due and payable by acceleration or
otherwise.
Original Amortization Period: 360 months.
Payment Change Date: The first day of the month which is three months
following the first day of the second calendar month after the Disbursement Date
and each successive 3-month period thereafter until this Note is repaid in full.
Rate Change Date: The first day of the month which is three months
following the first day of the first calendar month after the Disbursement Date
and each successive 3-month period thereafter until this Note is repaid in full.
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Remaining Amortization Period: As of the applicable Payment Change
Date, the Original Amortization Period minus the number of scheduled monthly
payments that have elapsed since the date of this Note.
3. Paragraph 10 is deleted in its entirety and replaced with the
following:
10. Lockout; Voluntary and Involuntary Prepayments.
(a) Borrower may not voluntarily prepay all or any portion of the
indebtedness evidenced hereby during the first Loan Year (the "Lockout Period").
(b) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) At any time after the expiration of the Lockout Period,
Borrower may voluntarily prepay all (but not less than all) of the
unpaid principal balance of this Note on the last Business Day of a
calendar month if Borrower has given Lender at least 30 days prior
notice of its intention to make such prepayment. Such prepayment shall
be made by paying (A) the amount of principal being prepaid, (B) all
accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes, including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar
day of the month shall be deemed to have been received on the last
calendar day of such month. For purposes of this Note, a "Business Day"
means any day other than a Saturday, Sunday or any other day on which
Lender is not open for business.
(2) Upon Lender's exercise of any right of acceleration under
this Note, Borrower shall pay to Lender, in addition to the entire
unpaid principal balance of this Note outstanding at the time of the
acceleration, (A) all accrued interest and all other sums due Lender
under this Note and the other Loan Documents, and (B) the prepayment
premium calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other
security to the repayment of any portion of the unpaid principal
balance of this Note prior to the Maturity Date and in the absence of
acceleration shall be deemed to be a partial prepayment by Borrower,
requiring the payment to Lender by Borrower of a prepayment premium.
The amount of any such partial prepayment shall be computed so as to
provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(c) Notwithstanding the provisions of Paragraph 10(b), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than 90
days before the Maturity Date, or (B) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.
(d) Schedule A is hereby incorporated by reference into this Note.
(e) Any required prepayment of less than the unpaid principal balance
of this Note shall not extend or postpone the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender agrees
otherwise in writing.
Fannie Mae Promissory Note - Guarantor Form 4533 10/98 Page C-3
Maryland - IDOT
(f) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(g) Borrower further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the loan
evidenced by this Note, and acknowledges that the terms of this Note are in
other respects more favorable to Borrower as a result of the Borrower's
voluntary agreement to the prepayment premium provisions.
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INITIALS
Fannie Mae Promissory Note - Guarantor Form 4533 10/98 Page C-4
Maryland - IDOT