SENIOR LOAN
AMENDED, RESTATED AND CONSOLIDATED
SENIOR SECURED PROMISSORY NOTE
$____________ New York, New York
As of December ___, 1997
FOR VALUE RECEIVED VMS NATIONAL PROPERTIES, an Illinois general
partnership, having an address at c/o MAERIL, Inc., One Insignia Financial
Plaza, Greenville, South Carolina 29602 (hereinafter referred to as "BORROWER"),
promises to pay to the order of MF VMS, L.L.C., a Delaware limited liability
company, having an address c/o BlackRock Capital Finance L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "LENDER"), or at such other
place as the holder hereof may from time to time designate in writing, the
principal sum of _____________________________________________________________
AND ________ DOLLARS ($____________) (the "NOTE FACE AMOUNT"), in lawful money
of the United States of America with interest thereon to be computed from the
date of this Amended, Restated and Consolidated Senior Secured Promissory Note
(this "NOTE") at the Applicable Interest Rate (hereinafter defined), and to be
paid as hereinafter provided.
A. PAYMENT TERMS
Borrower shall pay to Lender:
(i) a payment of interest only in the amount of __________________________
and ______ Dollars ($______) calculated at the Applicable Interest
Rate based on ________________________________________________________
AND _______ DOLLARS ($_____________) (the "AGREED VALUATION AMOUNT")
on January 1, 1998;
(ii) a constant payment of $__________ (the "MONTHLY PAYMENT") on February
1, 1998 and on the first day of each calendar month (the "MONTHLY
PAYMENT DATE") thereafter to and including January 1, 2008 (the
"MATURITY DATE"); and
(iii)the balance of the Note Face Amount then outstanding and all
interest thereon shall be due and payable on the Maturity Date.
Each of such payments shall be applied as follows:
(i) First, to the payment of interest computed on the Agreed Valuation
Amount at the Applicable Interest Rate; and
(ii) The balance applied toward the reduction of the Note Face Amount and
the Agreed Valuation Amount;
provided, however, so long as there shall not exist an Event of Default
(hereinafter defined) remaining uncured, and provided, further, that Borrower
simultaneously therewith prepays the then outstanding principal balance of the
Related Junior Note (hereinafter defined) in accordance with the terms thereof,
Borrower (and not any third party) may obtain a full and complete discharge of
this Note, by paying to Lender, on any Monthly Payment Date from and after
January 1, 2007 up to and including the Maturity Date, an amount equal to the
sum of: (i) the unpaid principal balance of the Agreed Valuation Amount; plus
(ii) all accrued and unpaid amounts resulting from application of the Applicable
Interest Rate to said unpaid principal balance of the Agreed Valuation Amount
(together with such additional amounts provided in, and all paid in accordance
with Article D hereof, collectively, the "REDUCED PAYOFF AMOUNT"). Upon
▇▇▇▇▇▇'s receipt of such payment and satisfaction of the foregoing conditions,
(a) this Note shall be discharged without further liability, and (b) the
Property (hereinafter defined) shall be released from the lien of the Security
Instrument (hereinafter defined).
The constant payment required hereunder is based on an amortization
schedule of three hundred (300) months (the "AMORTIZATION TERM"). The first
(1st) interest accrual period hereunder shall commence on and include the date
hereof and shall end on and include the last day of the present calendar month;
unless principal is advanced on the last day of a month, in which case the first
(1st) interest accrual period shall consist of only such last day. Each
interest accrual period thereafter shall commence on the first (1st) day of each
calendar month during the term of this Note and shall end on and include the
last day of such calendar month. All amounts due under this Note shall be
payable without setoff, counterclaim or any other deduction whatsoever.
This Note is made and delivered pursuant to (and in accordance with)
the Second Amended and Restated Plan of Reorganization of Borrower (the "PLAN")
in the Chapter 11 bankruptcy proceeding, In re VMS National Properties (Bank.
C.D. Cal., Case No. LA 91-65783-GM), as confirmed pursuant to an order dated
March 12, 1993 of the United States Bankruptcy Court for the Central District of
California (the "BANKRUPTCY COURT"), and as modified pursuant to a certain Order
Clarifying Plan Provisions and Approving Refinancing of Debtor's Secured
Obligations entered by the Bankruptcy Court on October 24, 1997 (the Plan, as
amended by such order, the "BANKRUPTCY DOCUMENTS").
B. INTEREST
The term "APPLICABLE INTEREST RATE" as used in this Note shall mean
eight and fifty one-hundredths (50/100) percent (8.50%) per annum. Interest on
the Agreed Valuation Amount shall be calculated in arrears on the basis of the
actual number of days elapsed and a three hundred sixty (360) day year. Until
the occurrence of an Event of Default, no interest shall accrue or be payable on
the excess of the unpaid principal balance of the Note Face Amount over the
unpaid balance of the Agreed Valuation Amount.
C. DEFAULT AND ACCELERATION
The whole of the Note Face Amount, together with all interest accrued
and unpaid thereon and all other sums due under the Security Instrument and this
Note (all such sums hereinafter collectively referred to as the "DEBT") shall
without notice become immediately due and payable at the option of Lender if (i)
the payments required under Sections L(2)(a), L(2)(c) and L(2)(d) hereof are not
paid within five (5) days after an applicable Monthly Payment Date, or (ii) any
other payment required in this Note is not paid within ten (10) days after
written notice from the Lender notifying Borrower that the same is due or on the
happening of any other default, after the expiration of any applicable notice
and grace periods, herein or under the terms of the Security Instrument
(hereinafter collectively an "EVENT OF DEFAULT"); provided, however, that no
Event of Default shall be deemed to have occurred if and to the extent that
Lender actually receives payment of the amounts required to be paid under
Sections L(2)(a), L(2)(c) and L(2)(d) hereof within five (5) days after the
applicable Monthly Payment Date as a payment of an Aggregate Operating Revenue
Shortfall Amount (hereinafter defined) under one (1) or more of the Other Senior
Notes (hereinafter defined); and provided, further, that there shall be no grace
period for failure to pay the Reduced Payoff Amount on the Maturity Date. All
of the terms, covenants and conditions contained in the Security Instrument and
the Other Security Documents (hereinafter defined) 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 it should become necessary to employ counsel to
collect the Debt or to protect, sell or foreclose the security hereof, ▇▇▇▇▇▇▇▇
also agrees to pay reasonable attorneys' fees for the services of such counsel
whether or not suit be brought.
D. PREPAYMENT
Borrower shall not have the right or privilege to prepay all or any
portion of the unpaid principal balance of this Note until January 1, 2007 (the
"LOCK OUT TERMINATION DATE"). Beginning on the Lock Out Termination Date,
provided no Event of Default exists, the principal balance of this Note may be
prepaid prior to the Maturity Date, in whole but not in part, upon: (i) not less
than 30 days and not more than 45 days prior written notice (the "PREPAYMENT
NOTICE") to Lender specifying the Monthly Payment Date on which prepayment is to
be made (the "PREPAYMENT DATE"); (ii) payment to Lender of the Reduced Payoff
Amount; (iii) payment of all accrued and unpaid interest on the outstanding
principal balance of the Reduced Payoff Amount to and including the Prepayment
Date, together with a payment of all interest which would have accrued on the
Reduced Payoff Amount to and including the first day of the calendar month
immediately following the Prepayment Date, if such prepayment occurs on a date
which is not the first day of a calendar month (the "SHORTFALL INTEREST
PAYMENT"); and (iv) payment of all other sums then due under this Note, the
Security Instrument and the Other Security Documents. If a Prepayment Notice is
given by Borrower to Lender pursuant to this Article D, any principal balance of
this Note and the other sums required under this Article D shall be due and
payable on the Prepayment Date. In the event of any permitted partial prepayment
of the principal balance of this Note pursuant to paragraph 3 or 6 of the
Security Instrument, the amount of principal prepaid shall be applied to the
principal last due under this Note and shall not release Borrower from the
obligation to pay the Monthly Payments next becoming due under this Note and the
Monthly Payment shall not be adjusted or recalculated as a result of such
partial prepayment.
If a Default Prepayment (defined herein) occurs, Borrower shall pay to
Lender (i) the entire Debt (calculated using the Note Face Amount), plus (ii)
the Prepayment Consideration (hereinafter defined). For the purposes of this
Note, the term "PREPAYMENT CONSIDERATION" shall mean an amount equal to the
greater of the following based upon the Agreed Valuation Amount: (A) one (1%)
percent of the Agreed Valuation Amount; and (B) the present value of a series of
payments each equal to the Payment Differential (hereinafter defined) and
payable on each Monthly Payment Date over the remaining original term of this
Note and on the Maturity Date discounted at the Reinvestment Yield (hereinafter
defined) for the number of months remaining from the date prepayment is received
(the "DEFAULT PREPAYMENT DATE") through and including the Maturity Date. The
term "REINVESTMENT YIELD" as used herein shall be equal to the lesser of (a) the
yield on the U.S. Treasury issue (primary issue) with a maturity date closest to
the Maturity Date, or (b) the yield on the U.S. Treasury issue (primary issue)
with a term equal to the remaining average life of the Debt, with each such
yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Default Prepayment Date
(or, if such bid price is not published on that date, the next preceding date on
which such bid price is so published). The term "PAYMENT DIFFERENTIAL" as used
herein shall be equal to (x) the Applicable Interest Rate minus the Reinvestment
Yield, divided by (y) 12 and multiplied by (z) the Agreed Valuation Amount (or
such other amount being prepaid in order to reinstate the Debt, provided such
amount does not exceed the Agreed Valuation Amount) on the Default Prepayment
Date, provided that the Payment Differential shall in no event be less than
zero. In no event, however, shall Lender be required to reinvest any prepayment
proceeds in U.S. Treasury obligations or otherwise. Lender shall notify
Borrower of the amount, and the basis of determination, of the required
Prepayment Consideration. For purposes of this Note, the term "DEFAULT
PREPAYMENT" shall mean a prepayment of any principal amount of this Note made
during the continuance of any Event of Default or after an acceleration of the
Maturity Date under any circumstances, including, without limitation, a
prepayment occurring in connection with reinstatement of the Security Instrument
provided by statute under foreclosure proceedings or exercise of a power of
sale, any statutory right of redemption exercised by Borrower or any other party
having a statutory right to redeem or prevent foreclosure, any sale in
foreclosure or under exercise of a power of sale or otherwise.
E. DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an Event of
Default or upon the failure of Borrower to pay the Debt in full on the Maturity
Date, Lender shall be entitled to receive and Borrower shall pay interest
("DEFAULT INTEREST") on the Note Face Amount at the rate (the "DEFAULT INTEREST
RATE") of (i) the greater of (a) two percent (2%) per annum over the Prime Rate
(hereinafter defined), as such Prime Rate shall change from time to time or (b)
five percent (5%) per annum over the Applicable Interest Rate then in effect or
(ii) the maximum rate of interest which Borrower may by law pay, whichever is
lower, to be computed from the occurrence of the Event of Default until the
actual receipt and collection of the Debt (calculated using the Note Face
Amount). 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. The term "PRIME RATE" as used in this Note
shall mean the daily "prime rate" published in The Wall Street Journal from the
date of the Event of Default, as such "prime rate" shall change from time to
time. In the event The Wall Street Journal ceases to publish the "prime rate"
then Lender shall select an equivalent publication which publishes such "prime
rate"; and in the event such prime rates are no longer generally published or
are limited, regulated or administered by a governmental or quasi-governmental
body, then Lender shall select a comparable interest rate index.
F. SECURITY
This Note is secured by (i) a certain Amended, Restated and
Consolidated Senior Mortgage and Security Agreement of even date herewith (the
"SECURITY INSTRUMENT") in an original principal amount equal to the Note Face
Amount, covering certain premises located in Pulaski County, State of Arkansas
and other property (collectively, the "PROPERTY"), as more particularly
described therein and intended to be duly recorded in said County, (ii) a
certain Amended, Restated and Consolidated Senior Assignment of Leases and Rents
of even date herewith executed by ▇▇▇▇▇▇▇▇ in favor of ▇▇▇▇▇▇ with respect to
the Property (the "ASSIGNMENT OF LEASES"), (iii) the Other Security Documents
(hereinafter defined), and (iv) the Other Senior Security Instruments
(hereinafter defined) and the Amended, Restated and Consolidated Senior
Assignments of Leases and Rents executed in connection therewith. The term
"OTHER SECURITY DOCUMENTS" as used in this Note means, collectively, this Note,
the Security Instrument, the Assignment of Leases and any and all other
documents securing, evidencing, or guaranteeing all or any portion of the loan
evidenced by this Note (the "LOAN"), or otherwise executed and/or delivered in
connection with this Note and the Loan.
As of the date of this Note, Lender is the owner and holder of those
certain promissory notes described on SCHEDULE A annexed hereto (collectively,
the "EXISTING NOTES"), which are secured by certain mortgages and deeds of trust
(collectively, the "EXISTING SECURITY INSTRUMENTS") encumbering the fifteen (15)
apartment building complexes (the "REMAINING COMPLEXES;" the Remaining Complexes
other than the Property, collectively, the "OTHER ENCUMBERED PROPERTY") listed
on said SCHEDULE A. Included among the Existing Notes are certain promissory
notes which relate specifically to certain of the Existing Security Instruments
which encumber the Property, as more particularly described on said SCHEDULE A
(collectively, the "RELATED EXISTING NOTES"). ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ hereby agree
to consolidate the indebtedness evidenced by the Existing Notes into one (1)
consolidated indebtedness in the amount of $182,101,926.00 (the "AGGREGATE
INDEBTEDNESS AMOUNT"). In connection with such consolidation, Lender and
Borrower hereby agree to sever the Aggregate Indebtedness Amount into thirty
(30) individual portions, which, from and after the date hereof, shall be
evidenced by (i) fifteen (15) amended, restated and consolidated senior secured
promissory notes (collectively, the "RESTATED SENIOR NOTES;" the Restated Senior
Notes other than this Note, collectively, the "OTHER SENIOR NOTES"), and (ii)
fifteen (15) amended, restated and consolidated junior secured promissory notes
(collectively, the "RESTATED JUNIOR NOTES"), as more particularly described on
SCHEDULE B annexed hereto. The Restated Senior Notes shall be secured by
certain amended, restated and consolidated senior mortgages and/or deeds of
trust (the "RESTATED SENIOR SECURITY INSTRUMENTS;" the Restated Senior Security
Instruments other than the Security Instrument, collectively, the "OTHER SENIOR
SECURITY INSTRUMENTS"), and the Restated Junior Notes shall be secured by
certain amended, restated and consolidated junior mortgages and/or deeds of
trust (the "RESTATED JUNIOR SECURITY INSTRUMENTS;" the Restated Junior Security
Instruments other than the Related Junior Security Instrument, collectively, the
"OTHER JUNIOR SECURITY INSTRUMENTS") encumbering the Remaining Complexes as
senior and junior (subordinated) liens in the amounts set forth on SCHEDULE C
annexed hereto. This Note is one (1) of the Restated Senior Notes, and together
with the Related Junior Note (hereinafter defined), is a modification and
restatement of and substitute for the indebtedness evidenced by the Related
Existing Notes, and this Note and the Related Junior Note are intended to be a
recast, restatement and replacement of the Related Existing Notes made as of the
date hereof. On the date hereof, Borrower and Lender are also entering into
that certain amended, restated and consolidated junior secured promissory note
(the "RELATED JUNIOR NOTE") with respect to the Property. The Related Junior
Note is one (1) of the Restated Junior Notes. The Related Junior Note shall be
secured by a certain amended, restated and consolidated junior mortgage or deed
of trust (the "RELATED JUNIOR SECURITY INSTRUMENT"), which is one (1) of the
Restated Junior Security Instruments. Borrower and ▇▇▇▇▇▇ intend for the
indebtedness evidenced by the Related Junior Note to be subordinate to the
indebtedness evidenced hereby, and intend for the lien of the Related Junior
Security Instrument to be subject and subordinate in all respects to the lien of
the Security Instrument.
Notwithstanding any provision in this Note, the Security Instrument,
the Other Senior Security Instruments or any other agreement, document or
instrument to the contrary, any default by Borrower under this Note shall not,
by itself, constitute a default or Event of Default under the Other Senior
Security Instruments or the Other Senior Notes, and Lender shall not be entitled
by such failure to foreclose the Other Senior Security Instruments or accelerate
the Other Senior Notes, it being the intent of the parties that this Note and
the Security Instrument, on the one hand, and the Other Senior Security
Instruments and the Other Senior Notes, on the other hand, shall not be "cross-
defaulted."
However, if the proceeds realized by Lender out of any enforcement of
this Note, whether by judicial or non-judicial foreclosure, power of sale or
other similar remedy, exceed the Note Face Amount and any additional amounts due
to Lender under the provisions of this Note, then unless otherwise required by
law, such excess proceeds may be retained by Lender, and, if so retained, shall
be applied in such proportion as Lender shall determine in Lender's sole
discretion to reduce the outstanding principal indebtedness of one (1) or more
of the Other Senior Notes.
G. SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance due
hereunder 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 principal balance due hereunder at a rate in excess of such
maximum rate, the Applicable Interest Rate shall be deemed to be immediately
reduced to such maximum rate and all previous 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.
H. LATE CHARGE
If any sum payable under this Note is not received by Lender within
five (5) days after the date on which it is due, without taking into account or
including within said five (5) day period any applicable notice or grace period,
Borrower shall pay to Lender upon demand an amount equal to the lesser of (i)
five percent (5%) of such unpaid sum or (ii) 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. Nothing contained herein is
intended to affect the rights of ▇▇▇▇▇▇ in and to any Default Interest due to
Lender pursuant to the provisions of paragraph E hereof entitled "Default
Interest".
I. MISCELLANEOUS
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.
If Borrower consists of more than one person or party, the obligations
and liabilities of each such person or party shall be joint and several. The
foregoing sentence, however, is not intended to affect the limited liability of
any limited partner or stockholder of Borrower afforded by applicable
partnership or corporate law. The terms and provisions hereof shall be binding
upon and inure to the benefit of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and their respective heirs,
executors, legal representative, successors, successors-in-title, and assigns,
whether by voluntary action of the parties or by operation of law.
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 and non-payment. 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 or 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 or the
Other Security Documents.
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver 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.
This Note shall be governed and construed in accordance with the laws
of the State of New York and the applicable laws of the United States of
America.
All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner specified in the Security
Instrument directed to the parties at their respective addresses as provided
therein.
▇▇▇▇▇▇▇▇ HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE OTHER
SECURITY DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY ▇▇▇▇▇▇▇▇, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. ▇▇▇▇▇▇ IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
J. EXCULPATION
Lender shall not enforce the liability and obligation of Borrower to
perform and observe the obligations contained in this Note or the Security
Instrument by any action or proceeding wherein a money judgment shall be sought
against Borrower or any general or limited partner or member of Borrower
(hereinafter collectively referred to as the "EXCULPATED PARTIES"), except that
Lender may bring a foreclosure action, action for specific performance or other
appropriate action or proceeding to enable Lender to enforce and realize upon
this Note, the Security Instrument, the Other Security Documents, and the
interest in the Property, the Rents (as defined in the Security Instrument) and
any other collateral given to Lender created by this Note, the Security
Instrument and the Other Security Documents; provided, however, that any
judgment in any such action or proceeding shall be enforceable against the
Exculpated Parties only to the extent of ▇▇▇▇▇▇▇▇'s interest in the Property, in
the Rents and in any other collateral given to Lender. ▇▇▇▇▇▇, by accepting
this Note and the Security Instrument, agrees that it shall not sue for, seek or
demand any deficiency judgment against the Exculpated Parties in any such action
or proceeding, under or by reason of or under or in connection with the Security
Instrument, the Other Security Documents or this Note. The provisions of this
paragraph shall not, however, (i) constitute a waiver, release or impairment of
any obligation evidenced or secured by the Security Instrument, the Other
Security Documents or this Note; (ii) impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial foreclosure and
sale under the Security Instrument; (iii) affect the validity or enforceability
of any guaranty made in connection with the Security Instrument, this Note, or
the Other Security Documents; (iv) impair the right of Lender to obtain the
appointment of a receiver upon the occurrence and continuance of an Event of
Default; (v) impair the enforcement of the Assignment of Leases and ▇▇▇▇▇ dated
the date hereof given by ▇▇▇▇▇▇▇▇ to Lender executed in connection herewith;
(vi) impair the right of Lender to bring suit with respect to fraud or
intentional misrepresentation by Borrower, the Exculpated Parties or any other
person or entity in connection with the Security Instrument, this Note or the
Other Security Documents; (vii) impair the right of Lender to obtain the Rents
received by any of the Exculpated Parties after the occurrence and continuance
of an Event of Default; (viii) impair the right of Lender to bring suit with
respect to the Exculpated Parties' misappropriation of tenant security deposits
or Rents collected in advance; (ix) impair the right of Lender to obtain
insurance proceeds or condemnation awards due to Lender under the Security
Instrument; (x) impair the right of Lender to enforce the provisions of sub-
paragraphs 36(g) through 36(k), inclusive and paragraphs 34 and 35 of the
Security Instrument against the Borrower (excluding the general and limited
partners or members of Borrower); or (xi) impair the right of Lender to recover
any part of the Debt from the Borrower (excluding the general and limited
partners or members of Borrower) following the breach of any covenant contained
in paragraphs 9 or 55 of the Security Instrument.
Nothing herein shall be deemed to be a waiver of any rights which
Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions
of the U.S. Bankruptcy Code of file a claim for the full amount of the
indebtedness secured by the Security Instrument or to require that all
collateral shall continue to secure all of the indebtedness owing to Lender in
accordance with this Note, the Security Instrument and other Documents executed
and delivered in connection with the Loan.
THIS NOTE, AND THE OTHER SECURITY DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN LENDER, BORROWER AND THE OTHER RESPECTIVE
PARTIES HERETO AND THERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS
BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
K. SALE OF NOTE AND SECURITIZATION
Borrower acknowledges that Lender may elect to sell this Note and the
Other Senior Notes or participation therein or cause this Note to be included in
a securitization (such sale and/or securitization, the "SECURITIZATION") of
rated single or multi-class securities (the "SECURITIES") secured by or
evidencing ownership interests in this Note, the Other Senior Notes, the
Security Instrument and the Other Senior Security Instruments.
L. APPLICATION OF GROSS RECEIPTS FROM THE PROPERTY
1. The following terms have the meanings set forth below
(capitalized terms not defined herein shall have the meaning provided in the
Security Instrument):
"AGGREGATE OPERATING REVENUE SHORTFALL AMOUNT" shall mean on any
Monthly Payment Date, the amount, if any, by which the aggregate amount of Gross
Receipts from the Other Encumbered Property is less than the sum of the Basic
Carrying Costs (hereinafter defined) required to be made by Borrower with
respect to the Other Encumbered Property (pursuant to the terms of the Other
Senior Notes) on such Monthly Payment Date.
"BASIC CARRYING COSTS" shall mean, on any Monthly Payment Date, the
aggregate amount of funds required to be paid by Borrower (or deposited by
Borrower into an escrow or reserve account) with respect to the following: (i)
the Taxes and Insurance Monthly Amount, (ii) the Monthly Payment under this
Note, and (iii) the Monthly Deposit (as defined in the CapEx Reserve Agreement),
required to be paid pursuant to the CapEx Reserve Agreement and such other
reserves as otherwise required under the Other Security Documents.
"CAPEX RESERVE AGREEMENT" shall mean that certain Multifamily
Replacement Reserve and Security Agreement dated as of the date hereof, between
Borrower and Lender, with respect to the Property.
"GROSS RECEIPTS" shall mean, for any period, all revenues and receipts
of every kind derived from or otherwise relating to the Property and all
departments and parts thereof during such period (from both cash and credit
transactions) from rental of rooms, stores, offices, exhibit or sales space of
every kind; license, lease and concession fees and rentals; income from vending
machines; health club membership fees; golf club membership dues; food and
beverage sales (not including in any of the foregoing gross receipts of
licensees, lessees and concessionaires); wholesale and retail sales of
merchandise, service charges, and proceeds, if any, from business interruption
or other loss of income insurance; excluding, however, (i) gratuities to
employees of the Property, (ii) federal, state or municipal sales or use taxes
or similar taxes collected directly from patrons or guests or included as part
of the sales price of any goods or services, (iii) any Net Award (as defined in
the Security Instrument) in connection with a taking or condemnation of all or
any portion of the Property (or any deed in lieu thereof), (iv) any amounts paid
as a result of a claim under any of the Policies (as defined in the Security
Instrument) required to be maintained by the Borrower pursuant to the Security
Instrument (other than from rental loss or business interruption insurance), (v)
charges or payments collected from patrons or guests for telephone, telegraph or
other communication systems or other pass-through services to the extent such
charges are remitted to the provider of such services, and (vi) security
deposits, until forfeited.
"MONTHLY OPERATING EXPENSE PAYMENT AMOUNT" shall mean, for any
Monthly Payment Date, the amount of Operating Expenses (subject to the terms of
Section 15(b) of the Security Instrument) for the calendar month immediately
preceding the Monthly Payment Date in question.
"OPERATING EXPENSES" shall mean, for any period, all expenditures by
or on behalf of Borrower as and to the extent required to be expensed or allowed
to be expensed and in fact expensed under generally accepted accounting
principles during such period in connection with the ownership, operation,
maintenance, repair or leasing of the Property, or have otherwise been approved
in writing by Lender, including (i) fees payable under any Management Agreement
in an amount not to exceed four percent (4%) of Rents (as defined below)
actually collected during any monthly period; Insurance Premiums; bank charges;
expenses for accounting, advertising, marketing, architectural services,
utilities, extermination, cleaning, trash removal, window washing, landscaping
and security; and reasonable and necessary legal expenses incurred in connection
with the operation of the Property or in connection with the legal operation of
Borrower and/or its constituent general partners; (ii) Taxes and Other Charges
(as such terms are defined in the Security Instrument), excluding fines,
penalties, interest or Taxes or Other Charges payable by reason of Maker's
failure to pay an imposition timely; (iii) wages, benefits, payroll taxes,
uniforms, insurance costs and all other related expenses for employees of
Borrower engaged in the repair, operation or maintenance of the Property; (iv)
the cost of routine interior and exterior maintenance, repairs and minor
alterations; (v) departmental expenses incurred at departments within the
Property; (vi) reasonable administrative and general expenses for all of
Borrower and its constituent general partners; (vii) the cost of inventories and
fixed asset supplies consumed in the operation of the Property; (viii) a
reasonable reserve for uncollectible accounts; (ix) reasonable costs and fees of
independent professionals, technical consultants, operational experts (including
quality assurance inspectors) or other third parties retained to perform
services required or permitted hereunder; (x) cost of attendance by employees at
training and manpower development programs; (xi) association dues; (xii) costs
of making reservations at or for the Property; (xiii) fees under any franchise
agreement; (xiv) computer processing charges; and (xv) operational equipment and
other lease payments as approved by Payee; provided that Operating Expenses will
not include debt service on this Note, capital expenditures, non-cash items such
as depreciation and amortization or any extraordinary one-time expenditures not
considered operating expenses under generally accepted accounting principles.
For the purposes of this definition of the term "Operating Expenses", the term
"Rents" shall mean the following items, collectively, collected during any
monthly period: (A) tenant rentals pursuant to tenant leases; (B) cleaning,
security and damage deposits forfeited by tenants; (C) net income from laundry
and vending machines; (D) parking income; (E) income from utility bill-backs to
tenants; (F) clubhouse income; (G) proceeds from rental interruption insurance;
and (H) any other sums and charges collected in connection with termination of
the tenant leases. It is expressly understood that rent for such purposes shall
not include: (i) tenant security deposits; (ii) the proceeds, if any, payable
to Borrower from the sale, refinancing or other disposal of all or any part of
the Property; (iii) the proceeds payable to Borrower by reason of any hazard
insurance policies, title insurance policies, or terms of a similar nature; (iv)
the proceeds of any taking by condemnation or eminent domain by a public or
quasi-public authority of all or any part of the Property; (v) any reversal of
any contingency for tax or insurance reserves; (vi) interest on security
deposits; or (vii) refunds of any taxes, water, sewer, electric charges or any
other extraordinary income.
"PERMITTED JUNIOR INDEBTEDNESS" shall mean the indebtedness evidenced
by the Restated Junior Notes and secured by the Restated Junior Security
Instruments, or any debt which refinances such junior indebtedness.
"TAXES AND INSURANCE MONTHLY AMOUNT" shall mean, on each Payment Date,
the aggregate amount of (i) one-twelfth (1/12) of the Taxes and Other Charges
(as such terms are defined in the Security Instrument) that Lender estimates
will be payable during the next twelve (12) months (the "TAX MONTHLY AMOUNT") in
order for Borrower to accumulate sufficient funds to pay all such Taxes and
Other Charges at least thirty (30) days prior to their respective due dates, and
(ii) one-twelfth (1/12) of the Insurance Premiums (the "INSURANCE PREMIUM
MONTHLY AMOUNT") that Lender estimates will be payable for the renewal of the
coverage afforded by the Policies upon the expiration thereof in order for
Borrower to accumulate sufficient funds to pay all such Insurance Premiums at
least thirty (30) days prior to the expiration of the Policies.
"UNSATISFIED DEFICIENCY JUDGMENTS" shall mean any amounts owing to
Lender relating to any deficiency owing to Lender as a result of any judicial or
non-judicial foreclosure of one (1) or more of the Other Senior Security
Instruments.
2. On each Monthly Payment Date, Borrower shall apply Gross Receipts
received since the immediately preceding Monthly Payment Date, in the following
amounts, for the following purposes, and in the following order of priority:
(a) in an amount equal to the Taxes and Insurance Monthly Amount
as follows:
(i) the Tax Monthly Amount, to be deposited by Borrower
into the Escrow Funds to be held and disbursed by
▇▇▇▇▇▇ in accordance with the last paragraph of this
Section L(2) and the Security Instrument, and
(ii) the Insurance Premium Monthly Amount, to be paid by
Borrower as its monthly premiums of all insurance
policies required to be maintained pursuant to the
terms of the Security Instrument; provided, however,
that if Borrower discontinues paying for its insurance
on a monthly basis, Borrower shall commence to pay the
Insurance Premium Monthly Amount to Lender, to be
deposited into the Escrow Funds to be held and
disbursed by Lender in accordance with the last
paragraph of this Section L(2);
(b) to the payment of the Monthly Operating Expense Payment
Amount with respect to the month in which such Monthly
Payment Date occurs;
(c) to the payment to Lender of:
(i) first, the Monthly Payment, then due and payable, and
(ii) second, any other Debt then due and payable;
(d) to the Reserve (as defined in the CapEx Reserve Agreement),
in the amount of the Monthly Deposit, together with such other reserves as
are required under the Other Security Documents;
(e) to the payment to Lender of the Aggregate Operating Revenue
Shortfall Amount, if any;
(f) to the payment to Lender of any Unsatisfied Deficiency
Judgments then outstanding; and
(g) the balance, to the holder of the Permitted Junior
Indebtedness in satisfaction of any amount payable in connection therewith.
Borrower hereby pledges to Lender and grants to Lender a security
interest in any and all monies now or hereafter collected for the Tax Monthly
Amount and Insurance Monthly Amount as additional security for the payment of
this Note and the other Restated Senior Notes (collectively the "ESCROW FUNDS").
Lender will apply the Tax Monthly Amount and Insurance Monthly Amount collected
in the Escrow Funds to payments of Taxes and Insurance Premiums required to be
made by Borrower pursuant to this Section and in accordance with the terms of
the Security Instrument. In making any payment out of the Escrow Fund, Lender
may do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount deposited into
the Escrow Fund shall exceed the amounts due for Taxes and Other Charges and
Insurance Premiums pursuant to this Section, Lender shall return any excess to
Borrower or credit such excess against future payments to be made to the Escrow
Fund. In allocating such excess, ▇▇▇▇▇▇ may deal with the person shown on the
records of ▇▇▇▇▇▇ to be the owner of the Property. If at any time Lender
determines that the funds on deposit in the Escrow Fund are not or will not be
sufficient to pay the items set forth in clauses 2(a)(i) and 2(a)(ii) above,
Lender shall notify Borrower of such determination and Borrower shall increase
its monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to delinquency of the
Taxes and Other Charges and/or expiration of the Policies, as the case may be.
The Escrow Fund shall not constitute a trust fund and may be commingled with
other monies held by Lender, provided that the Escrow Fund shall be held in an
interest bearing account. Lender shall have no responsibility or liability for
the amount of interest earned on the Escrow Fund. All interest earned on the
funds in the Escrow Fund shall be added to and become part of the Escrow Fund
and shall be for the benefit of Borrower, subject to ▇▇▇▇▇▇'s rights pursuant to
the terms of this Note. All earnings or interest on the Escrow Fund shall be
disbursed as provided in this section.
3. Borrower hereby acknowledges and agrees that in accordance with
Section 2(e) of this Article L, Gross Receipts from the Property shall be
available to pay Basic Carrying Costs in connection with the Other Encumbered
Property.
4. Notwithstanding any provision of this Note to the contrary, upon
the occurrence of an Event of Default, Lender (or its agent), to the extent
permitted under applicable law without adversely affecting the other rights and
remedies provided to Lender under this Note or the Other Security Documents, may
apply any funds then held by, or thereafter received by, Lender in accordance
with any of the Other Security Documents in such order as Lender in its sole
discretion shall determine, to (a) the payment of (i) principal and interest
payments on this Note, (ii) the other Debt, (iii) principal and interest on the
Other Senior Notes, and (iv) payment of any other indebtedness secured by the
Other Senior Security Instruments, until all such amounts are paid in full, and
(b) to preserve the Property or the Other Encumbered Property.
5. Nothing in this Article L shall limit, reduce or otherwise affect
Borrower's obligations to make payments of the Monthly Payment or payments of
the Taxes and Insurance Monthly Amount, or the Monthly Deposit or any other
payments (or deposits) of any other amounts due hereunder and under the Other
Security Documents, whether or not Gross Receipts are available in sufficient
amounts to fund such payments.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ have duly executed this Note
under seal as of the day and year first above written.
BORROWER:
VMS NATIONAL PROPERTIES,
an Illinois general partnership
By: VMS NATIONAL RESIDENTIAL PORTFOLIO I, an Illinois
limited partnership, its general partner
By: MAERIL, INC., a Delaware corporation, its
general partner
By:_____________________________
Name:
Title: Vice President
By: VMS NATIONAL RESIDENTIAL PORTFOLIO II, an Illinois
limited partnership, its general partner
By: MAERIL, INC., a Delaware corporation, its
general partner
By:_____________________________
Name:
Title: Vice President
LENDER:
MF VMS, L.L.C.,
a Delaware limited liability company
By: BlackRock Capital Finance L.P.,
its managing member
By: BlackRock Asset Investors,
its general partner
By:________________________
Name:
Title:
This instrument prepared by:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
