Exhibit 10.8
$3,650,000.00
PROMISSORY NOTE
From
TRED LIGHTLY LIMITED LIABILITY COMPANY,
A Maryland Limited Liability Company,
Borrower
To The Order Of
PROVIDENT BANK OF MARYLAND,
A Maryland Banking Corporation,
Lender
Dated As Of September 15th, 1995
Baltimore, Maryland $3,650,000.00
September 15, 1995
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned TRED LIGHTLY LIMITED LIABILITY
COMPANY, a Maryland limited liability company ("BORROWER"), promises to pay
to the order of PROVIDENT BANK OF MARYLAND, a Maryland banking corporation
("LENDER"), at the LENDER'S offices at 114 East Lexington Street, Baltimore,
Maryland 21201, or at such other places as the holder of this Promissory Note
may from time to time designate, the principal sum of Three Million Six
Hundred Fifty Thousand Dollars ($3,650,000.00), together with interest
thereon at the rate or rates hereafter specified and any and all other sums
which may be owing to the holder of this Promissory Note by the BORROWER
pursuant to this Promissory Note. The following terms shall apply to this
Promissory Note.
1. Interest Rate. For the period beginning on the date hereof and
continuing until the date upon which all principal sums hereunder have been
repaid in full by the BORROWER, and subject generally to the terms of Section
8.2 hereof, the outstanding principal balance of this Promissory Note shall
bear interest at the annual rates hereafter described in this Section.
1.1 Interest Based on Libor Rate. Subject to the terms of Section
1.2 below, the interest rate shall be adjusted on the first day of each three
(3) month period hereafter described (each of which is defined herein as an
"INTEREST PERIOD").
(a) The first INTEREST PERIOD shall begin on the date of funding under
this Promissory Note and run through the day before the first day
of the next INTEREST PERIOD.
(b) Each INTEREST PERIOD after the first INTEREST PERIOD shall begin on
the day that is three (3) month(s) after the first day of the
preceding INTEREST PERIOD and shall run through the day before the
first day of the next INTEREST PERIOD; provided that: (i) any
INTEREST PERIOD which begins on the last day of a calendar month
(or on a day for which there is no numerically corresponding day in
the calendar month in which the INTEREST PERIOD ends) shall,
subject to clause (ii) below, run through the day before the last
day of the calendar month in which the INTEREST PERIOD ends; and
(ii) no INTEREST PERIOD shall extend beyond the final maturity date
of this Promissory Note.
For the first INTEREST PERIOD, the interest rate shall be the fixed annual
rate of eight and 375/1000ths percent (8.375%). The interest rate shall be
adjusted on the first day of each subsequent
INTEREST PERIOD to equal the rate obtained by adding two hundred fifty (250)
basis points to the "LIBOR RATE" (as hereafter defined). As used herein, the
term "LIBOR RATE" means, for each INTEREST PERIOD, the weighted average
(rounded upwards, if necessary, to the nearest one-hundredth of one percent
[0.01%]) of the Eurodollar London Interbank Offered Rates (at approximately
11:00 a.m. London time, on the date which is [i] two days prior to the first
day of the INTEREST PERIOD if the first day of the INTEREST PERIOD is a
"BUSINESS DAY" (hereafter defined), or [ii] two days prior to the last
BUSINESS DAY before the first day of the INTEREST PERIOD if the first day of
the INTEREST PERIOD is not a BUSINESS DAY) for a period equal in duration to
the INTEREST PERIOD, as reported by Bloomberg Business News or any other
source selected by the LENDER in the LENDER's sole discretion, as such rate
is adjusted in accordance with the LENDER's standard practices for reserves
and other requirements. As used herein, the term "BUSINESS DAY" means any
day other than a Saturday, a Sunday or a day on which commercial banks in
Baltimore, Maryland, are required or authorized to be closed.
1.2. Interest Based on Prime Rate. After the date hereof, the
BORROWER may elect, on one (1) occasion only, to convert the interest rate
payable on this Promissory Note from the rate described in Section 1.1 to
that fluctuating annual rate of interest at all times equal to the rate
obtained by adding one-half of one percentage point (1/2%) to the "PRIME
RATE" of the LENDER. As used herein, the term "PRIME RATE" shall mean the
floating rate of interest announced by the LENDER from time to time as its
prime commercial lending rate of interest, it being understood that such
announced rate bears no inference, implication, representation, or warranty
that such announced rate is charged to any particular customer of customers
of the LENDER. Changes in the interest rate shall be made immediately to
reflect any and all fluctuations in the PRIME RATE. Once elected, the rate
described in this Section 1.2 shall remain in effect until this Promissory
Note has been repaid in full. Such election, if made, must be made effective
as of the first day after the conclusion of the then current INTEREST PERIOD.
Written notice of the rate election must be delivered to the LENDER in
writing not later than two (2) BUSINESS DAYS prior to the effective date of
such election.
2. Calculation Of Interest. Interest shall be calculated on the basis
of a three hundred sixty (360) days per year factor applied to the actual
days on which there exists an unpaid balance hereunder.
3. Repayment. The BORROWER shall make a payment of accrued and unpaid
interest only on September 1, 1995, for interest accrued between the date of
funding and such date. Thereafter, on the first calendar day of each of the
next fifty-nine (59) succeeding months, the BORROWER shall pay monthly
principal installments of Six Thousand Eight Hundred Seventy Dollars ($6,870.00)
each. Payments of all accrued and unpaid interest and any late charges
2
shall be due on the scheduled payment date for each principal installment
hereunder. On September 1, 2000, all sums due hereunder that remain unpaid,
including principal, interest, charges and fees, shall be paid in full.
4. Late Payment Charge. If any payment due hereunder, including any
final installment, is not received by the holder within fifteen (15) calendar
days after its due date (other than a balloon payment of principal due upon
the maturity date of this Promissory Note), the BORROWER shall pay a late
payment charge equal to five percent (5%) of the amount then due. The late
payment charge shall be due whether or not the holder declares this
Promissory Note in default or accelerates and demands immediate payment of
the sums due hereunder. The existence of the right by the holder to receive a
late payment charge shall not constitute a grace period or provide any right
in the BORROWER to make a payment other than on its due date.
5. Application Of Payments. All payments made hereunder shall be
applied first to late payment charges or other sums owed to the holder, next
to accrued interest, and then to principal, or in such other order or
proportion as the holder, in the holder's sole discretion, may elect from
time to time.
6. Voluntary Prepayment. The BORROWER may prepay the unpaid balance of
this Promissory Note from time to time in whole or in part, without premium
or additional interest. All prepayments under the LOAN shall be applied to
the outstanding principal balance in the inverse order of scheduled
maturities.
7. Mandatory Prepayment/Deposit of Additional Collateral. In the event
that, at any time and from time to time during the term of this Promissory
Note, the LENDER shall determine, in its sole and absolute discretion, that
the outstanding principal balance due under this Promissory Note equals or
exceeds:
(a) seventy-five percent (75%) of the value of the "REAL PROPERTY"
(as defined in Section 11 hereof) at such time, or
(b) eighty-five percent (85%) of the BORROWER'S "adjusted basis"
(hereafter defined) with respect to the "ASSIGNED LOANS" (as
defined in Section 11 hereof) from time to time,
then, within ten (10) calendar days after demand by the LENDER, the BORROWER
shall be obligated to either furnish additional collateral acceptable to the
LENDER in the LENDER'S sole and absolute discretion, or make a partial
repayment of principal hereunder, in either case sufficient to restore ratios
which are not in excess of the respective seventy-five percent (75%) and
eighty-five (85%) ratios described in this Section. As used in this Section,
the term "adjusted basis" is defined as the initial purchase price paid
3
\
by the BORROWER to acquire the ASSIGNED LOANS from the SELLER, less the
cumulative amortization paid on the ASSIGNED LOANS since the date of the
BORROWER'S acquisition of the ASSIGNED LOANS, plus one hundred percent (100%)
of the value of actual capital improvements made to the REAL PROPERTY from
time to time using additional loan advances made by the BORROWER to "TA" (as
defined in Section 11 hereof) under the ASSIGNED LOANS.
8. Rights Upon Default. Upon a default in the payment of any sum due
hereunder which remains uncured for five (5) calendar days after written
notice from the LENDER, or a default in the performance of any of the
covenants, conditions or terms of the "PLEDGE AGREEMENT" (hereafter defined),
or any other agreement or document executed by or on behalf of the BORROWER
for the benefit of the LENDER or any holder (collectively with the PLEDGE
AGREEMENT, "LOAN DOCUMENTS"), and the expiration of any applicable cure
period, in addition to all other rights or remedies available cure period, in
addition to all other rights or remedies available to the holder under the
LOAN DOCUMENTS or under applicable law, the holder of this Promissory Note
shall have the following rights:
8.1. Acceleration. The holder of this Promissory Note, in the
holder's sole discretion and without notice or demand, may declare the entire
unpaid principal balance plus accrued interest and all other sums due
hereunder immediately due and payable. Reference is made to the LOAN
DOCUMENTS for further and additional rights on the part of the holder to
declare the entire unpaid principal balance plus accrued interest and all
other sums due hereunder immediately due and payable.
8.2. Default Interest Rate. The holder of this Promissory Note, in
the holder's sole discretion and without notice or demand, may raise the rate
of interest accruing on the unpaid principal balance by two (2) percentage
points above the rate of interest otherwise applicable, independent of
whether the holder elects to accelerate the unpaid principal balance as a
result of such default, unless prior to the imposition of the default rate of
interest, the BORROWER cures such event to the satisfaction of the holder
hereof. If the default rate of interest is imposed by the holder, the default
rate shall remain in effect unless the default is cured to the holder's
satisfaction and the holder in writing agrees to reinstate the regular
interest rate. Any individual waiver of the holder's right to impose the
default rate of interest shall not be considered a waiver of this section or
any future right of the holder to impose the default rate of interest
pursuant to this Section.
8.3. Confession of Judgment. The BORROWER authorizes any attorney
admitted to practice before any court of record in the United States to
appear on behalf of the BORROWER in any court in one or more proceedings, or
before any clerk thereof or prothonotary or other court official, and to
confess judgment against the BORROWER in favor of the holder of this
Promissory Note, without prior notice or opportunity of the BORROWER for prior
4
hearing, in the full amount due on this Promissory Note (including principal,
accrued interest and any and all charges, fees and costs) plus attorneys'
fees equal to ten percent (10%) of the amount due, plus court costs
(provided, however, that the maximum amount of attorneys' fees which the
LENDER shall be entitled to collect in full satisfaction of the attorneys'
fees judgment shall not exceed the lesser of (i) the face amount of the
attorneys' fees awarded in the confessed judgment, or (ii) the actual
attorneys' fees paid by the LENDER to its attorneys at their customary and
standard hourly rates for all services rendered to the LENDER in connection
with obtaining, enforcing, and collecting the confessed judgment and in
proceedings and matters related thereto, including any bankruptcy
proceedings, together with the reasonable out-of-pocket fees and expenses
incurred by such attorneys and reimbursed to them by the LENDER). The LENDER
shall furnish the BORROWER with five (5) calendar days' prior written notice
of its intention to proceed under this Section, but the BORROWER shall
otherwise not be entitled to prior notice or any opportunity for prior
hearing. The BORROWER agrees and consents that venue and jurisdiction shall
be proper in the Circuit Court of any County of the State of Maryland or of
Baltimore City, Maryland, or in the United States District Court for the
District of Maryland. The BORROWER waives the benefit of any and every
statute, ordinance, or rule of court which may be lawfully waived conferring
upon the BORROWER any right or privilege of exemption, homestead rights, stay
of execution, or supplementary proceedings, or other relief from the
enforcement or immediate enforcement of a judgment or related proceedings on
a judgment. The authority and power to appear for and enter judgment against
the BORROWER shall not be exhausted by one or more exercises thereof, or by
any imperfect exercise thereof, and shall not be extinguished by any judgment
entered pursuant thereto; such authority and power may be exercised on one or
more occasions from time to time, in the same or different jurisdictions, as
often as the holder shall deem necessary, convenient, or proper.
9. Interest Rate After Judgment. If judgment is entered against the
BORROWER on this Promissory Note, the amount of the judgment entered (which
may include principal, interest, fees, and costs) shall bear interest at the
higher of the maximum interest rate imposed upon judgments by applicable law
or the above described default interest rate, to be determined on the date of
the entry of the judgment.
10. Expenses of Collection And Attorneys' Fees. Should this Promissory
Note be referred to an attorney for collection, whether or not judgment has
been confessed or suit has been filed, the BORROWER shall pay all of the
holder's reasonable costs, fees and expenses, including reasonable attorneys'
fees, resulting from such referral.
11. Security. This Promissory Note is secured, inter alia, by a
certain Pledge and Security Agreement of even date herewith ("PLEDGE
AGREEMENT") from the BORROWER to the LENDER, whereby the
5
BORROWER has assigned to the LENDER two (2) certain mortgage loans hereafter
described (the "ASSIGNED LOANS") and all loan documents executed in connection
therewith, including the right to receive and retain all principal, interest,
insurance proceeds and other sums of any kind payable under or with respect
to the ASSIGNED LOANS, and to exercise all rights and remedies provided to
the holder of the ASSIGNED LOANS. The ASSIGNED LOANS are respectively
evidenced by the following:
(a) a certain Amended and Restated First Deed of Trust Note
dated August 4, 1992 (effective as of July 1, 1992), in the
original face amount of Four Million Four Hundred Thousand
Dollars ($4,400,000.00), from TA Associates Limited
Partnership, a Maryland limited partnership formerly known as
Marlboro Road Limited Partnership ("TA"), to the order of
Maryland National Bank, a national banking association, as
amended and as assigned on this date to the BORROWER; and
(b) a certain Amended and Restated Second Deed of Trust Note dated
August 4, 1992 (effective as of July 1, 1992), in the original
face amount of Five Million Six Hundred Thousand Dollars
($5,600,000.00), from TA to the order of Maryland National
Bank, a national banking association, as amended and as
assigned on this date to the BORROWER.
The ASSIGNED LOANS are secured by first and second liens on a certain
13.091-acre (more or less) parcel of land improved with a 129,784 square foot
one-story strip shopping center and a separate free-standing building,
located at the intersection of Route 322 and Marlboro Road in Easton,
Maryland, and known generally as the "Tred Avon Shopping Center" (the "REAL
PROPERTY").
12. Waiver of Protest. The BORROWER, and all parties to this
Promissory Note, whether maker, indorser, or guarantor, waive presentment,
notice of dishonor and protest.
13. Extensions of Maturity. All parties to this Promissory Note,
whether maker, indorser, or guarantor, agree that the maturity of this
Promissory Note, or any payment due hereunder, may be extended at any time or
from time to time without releasing, discharging, or affecting the liability
of such party.
14. Manner and Method of Payment. All payments called for in this
Promissory Note shall be made in lawful money of the United States of
America. If made by check, draft, or other payment instrument, such check,
draft, or other payment instrument shall represent immediately available
funds. In the holder's discretion, any payment made by a check, draft, or
other payment instrument shall not be considered to have been made until such
time as the funds represented thereby have been collected by the holder.
Should any payment date fall on a non-BUSINESS DAY, the BORROWER shall make
the payment on the next succeeding BUSINESS DAY.
6
15. Notices. Any notice or demand required or permitted by or in
connection with this Promissory Note shall be given in the manner specified
in the PLEDGE AGREEMENT for the giving of notices under the PLEDGE AGREEMENT.
Notwithstanding anything to the contrary, all notices and demands for
payment from the holder actually received in writing by the BORROWER shall be
considered to be effective upon the receipt thereof by the BORROWER
regardless of the procedure or method utilized to accomplish delivery therof
to the BORROWER.
16. Assignability. This Promissory Note may be assigned by the
LENDER or any holder at any time or from time to time.
17. Joint And Several Liability. If more than one person or
entity is executing this Promissory Note as a BORROWER, all liabilities
under this Promissory Note shall be joint and several with respect to each of
such persons or entities.
18. Binding Nature. This Promissory Note shall inure to the
benefit of and be enforceable by the LENDER and the LENDER's successors and
assigns and any other person to whom the LENDER or any holder may grant an
interest in the BORROWER'S obligations hereunder, and shall be binding and
enforceable against the BORROWER and the BORROWER'S successors and assigns.
19. Invalidity Of Any Part. If any provision or part of any
provision of this Promissory Note shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Promissory
Note and this Promissory Note shall be construed as if such invalid, illegal
or unenforceable provision or part thereof had never been contained herein,
but only to the extent of its invalidity, illegality, or unenforceability.
20. Choice Of Law. The laws of the State of Maryland (excluding,
however, conflict of law principles) shall govern and be applied to
determine all issues relating to this Promissory Note and the rights and
obligations of the parties hereto, including the validity, construction,
interpretation, and enforceability of this Promissory Note and its various
provisions and the consequences and legal effect of all transactions and
events which resulted in the issuance of this Promissory Note or which
occurred or were to occur as a direct or indirect result of this Promissory
Note having been executed.
21. Consent To Jurisdiction; Agreement As To Venue. The BORROWER
irrevocably consents to the non-exclusive jurisdiction of the courts of the
State of Maryland and of the United States District Court for the District of
Maryland, if a basis for federal jurisdiction exists. The BORROWER agrees
that venue shall be proper in any circuit court of the State of Maryland
selected by the LENDER or in the United States District Court for the
District of Maryland if a basis for federal jurisdiction exists and waives
7
any right to object to the maintenance of a suit in any of the state or
federal courts of the State of Maryland on the basis of improper venue or of
inconvenience of forum.
22. Unconditional Obligations. The BORROWER's obligations under this
Promissory Note shall be the absolute and unconditional duty and obligation
of the BORROWER and shall be independent of any rights of set-off, recoupment
or counterclaim which the BORROWER might otherwise have against the holder
of this Promissory Note, and the BORROWER shall pay absolutely the payments
of principal, interest, fees and expenses required hereunder, free of any
deductions and without abatement, diminution or set-off.
23. Seal and Effective Date. This Promissory Note is an instrument
executed under seal and is to be considered effective and enforceable as of
the date set forth on the first page hereof, independent of the date of
actual execution and delivery.
24. Tense; Gender; Defined Terms; Section Headings. As used herein, the
singular includes the plural and the plural includes the singular. A
reference to any gender also applies to any other gender. Defined terms are
entirely capitalized throughout. The section headings are for convenience
only and are not part of this Promissory Note.
25. Waiver of Jury Trial. The BORROWER (by execution of this Promissory
Note) and the LENDER (by acceptance of this Promissory Note) agree that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by or against the BORROWER or the LENDER, or any successor or
assign of the BORROWER or the LENDER, on or with respect to this Promissory
Note or any of the other LOAN DOCUMENTS, or which in any way relates,
directly or indirectly to the obligations of the BORROWER to the LENDER under
this Promissory Note or any of the other LOAN DOCUMENTS, or the dealings of
the parties with respect thereto, shall be tried only by a court and not by a
jury. THE BORROWER AND THE LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL
BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. The BORROWER and the LENDER
acknowledge and agree that this provision is a specific and material aspect
of the agreement between the parties and that the LENDER would not enter into
the transaction with the BORROWER if this provision were not part of their
agreement.
(Signature Page Follows.)
IN WITNESS WHEREOF, the BORROWER has duly executed this Promissory Note
under seal as of the date first above written.
WITNESS/ATTEST: BORROWER:
TRED LIGHTLY LIMITED LIABILITY COMPANY,
a Maryland limited liability company
By: Constellation Properties, Inc.,
a Maryland corporation,
Managing Member
By: /s/ Roger A. Waesche, Jr. (seal)
-----------------------------------
Name: ROGER A. WAESCHE, JR
-----------------------------------
Title: Vice President
-----------------------------------
ACKNOWLEDGMENT
STATE OF MARYLAND, COUNTY OF Howard , TO WIT:
----------
I HEREBY CERTIFY that on this 15 day of September, 1995, before me,
------
the undersigned Notary Public of the State of Maryland, in and for the County
of Howard , personally appeared Roger A. Waesche, Jr. , and
---------- --------------------------
acknowledged himself to be the Vice President of Constellation Properties,
------------------
Inc., a Maryland corporation, which is the Managing Member of TRED LIGHTLY
LIMITED LIABILITY COMPANY, a Maryland limited liability company, and that he,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained in the capacity therein described, as his act and deed.
IN WITNESS MY Hand and Notarial Seal.
/s/ M. G. Power
-------------------------------------
NOTARY PUBLIC
My Commission Expires:
6/1/98
- ----------------------