EXHIBIT
10.3
PROMISSORY NOTE
|
|
|
|
|
$4,400,000.00
|
|
October 25, 2000
|
|
|
|
Cary, North Carolina
|
|
|
|
GELAAC Loan No. 3982
|
FOR VALUE RECEIVED, the undersigned,
K-5 ASSOCIATES, LLC, a North Carolina limited liability company
(“Borrower”), promises to pay in lawful money of the
United States of America to the order of GE LIFE AND ANNUITY
ASSURANCE COMPANY, a Virginia corporation (“Lender”),
at P.O. Box 490, Seattle, Washington 98111-0490, ATTN: Real Estate
Department, or such other place either within or without the State
of Washington as Lender may designate in writing from time to time,
the principal sum of Four Million Four Hundred Thousand and No/100
Dollars ($4,400,000.00), with interest from the date hereof on the
unpaid principal balance at the rate set forth below.
Interest shall accrue on the unpaid
principal balance at a rate from the date hereof to the Maturity
Date at Seven and Eighty-Five Hundreths Percent (7.85%) per
annum.
Principal and interest shall be due
and payable as follows:
|
|
(a)
|
A payment of
all interest to accrue hereon from the Disbursement Date to and
including the last day of the month during which the Disbursement
Date occurs shall be due and payable on the Disbursement Date. For
purposes hereof, the “Disbursement Date” shall be the
date on which disbursement of loan proceeds occurs.
|
|
|
(b)
|
Monthly
payments of principal and interest in the sum of Forty-One Thousand
Six Hundred Sixty-Nine and No/100 Dollars ($41,669.00) each shall
be due and payable on the first day of each calendar month,
commencing on the first day of the second calendar month following
the Disbursement Date and continuing on the first day of each
calendar month thereafter to and including October 1, 2015.
These monthly payments are based upon the Fifteen (15) year
amortization period beginning on November 1, 2000.
|
|
|
(c)
|
The entire
indebtedness evidenced by this Note, if not sooner paid, shall be
due and payable on October 31, 2015, the Maturity
Date.
|
All payments on account of the
indebtedness evidenced by this Note shall be first applied to
interest, costs and prepayment fees (if any) and then to principal.
Interest shall be computed on the basis of a 360-day year
consisting of twelve 30-day months, except that interest for
a
portion of a month (such as may be required
under paragraph 3 (a) above) shall be computed on the basis of
a 365-day year (or a 366-day year during a leap year). For purposes
of this Note, the term “Loan Year” means each
successive period of twelve (12) months, with the first such
period beginning on November 1, 2000.
This Note may be prepaid in full or
in part, upon giving the holder of this Note (“Holder”)
thirty (30) days prior written notice, by paying, in addition
to the principal amount (and if prepaid in full, accrued interest
and all other sums due under the terms hereof) a prepayment fee
(“Prepayment Fee”), equal to the present value of the
series of Payment Differentials from the prepayment date to the
Maturity Date discounted using the Discount Factor and the Number
of Payments or Periods (monthly compounding) calculated as
follows:
|
|
(a)
|
If the interest
rate of this Note under paragraph 2 above (“Interest
Rate”) is less than the “Ask Yield” of the
non-callable United States Government Treasury Note with a maturity
closest to the mid-point between the fifth business day preceding
the prepayment date and the Maturity Date as published in The
Wall Street Journal on the fifth (5th) business day
preceding the prepayment date (the “Treasury Yield”)
(and if more than one such issue, then the issue with the coupon
rate closest to the interest rate then in effect on this Note) plus
one-half of one percent (0.50%) (the “Reinvestment
Yield”), the Prepayment Fee will be one percent (1%) of
the amount of principal prepaid.
|
|
|
(b)
|
If the Interest
Rate equals or exceeds the Reinvestment Yield, the Prepayment Fee
will be the greater of :
|
|
|
(i)
|
One percent
(1%) of the amount of principal prepaid, OR
|
|
|
(ii)
|
The present
value of the series of Payment Differentials from the prepayment
date to the Maturity Date. The present value will be calculated by
the Holder using a financial calculator or present value tables
selected by the Holder and the (i) Discount Factor,
(ii) Number of Payments or Periods, and (iii) Payment
Differential, as said terms are hereinafter defined:
|
|
|
a)
|
The Discount
Factor is equal to one-twelfth of the Reinvestment
Yield.
|
|
|
b)
|
The Number
of Payments or Periods is equal to the number of months left to
the Maturity Date (rounded up to the nearest whole
number).
|
|
|
c)
|
The Payment
Differential is the difference between the monthly payment
which amortizes the principal prepaid to zero over the Number of
Payments or Periods, calculated, first, at the Interest Rate (if
this Note is prepaid in full this is the monthly payment stated in
this Note) and, second, at the Reinvestment Yield.
|
- 2 -
No Prepayment Fee shall be due if
this Note is prepaid during the sixty (60) days prior to the
Maturity Date. Any partial prepayment shall be applied upon
payments due hereon in the inverse order of their respective due
dates.
If the publication The Wall
Street Journal is discontinued or publication of the yield of
United States Treasury notes in The Wall Street Journal is
discontinued, Holder shall, in its sole discretion, designate some
other daily financial or governmental publication of national
circulation.
Any and all prepayments of the
principal amount of this Note, whether voluntary or involuntary,
shall be subject to the terms of this provision 4, and include
receipt by the Lender of all or a part of the principal balance and
the outstanding interest due pursuant to this Note prior to the
date when same is due, irrespective of the source of such payment
and irrespective of whether same was paid by the Borrower
“voluntarily” or “involuntarily”. Without
limiting the generality of the foregoing, prepayment shall include
such payments from the Borrower, irrespective of whether before or
after default, acceleration of the entire principal balance by
virtue of default, and any payment of the principal balance and
outstanding interest after the institution of foreclosure
proceedings and upon sale in foreclosure.
In the event that such prepayment of
the principal amount of this Note is tendered, whether as a result
of foreclosure proceedings or otherwise, then Borrower shall pay
Lender in full at any time during the term of this Note, the
applicable Prepayment Fee referred to above.
Borrower acknowledges that the
Prepayment Fees set forth above have been agreed upon by Borrower
in order to provide Lender with partial compensation for the cost
of reinvesting the proceeds of this subject loan transaction and
for the loss of the contracted return on the subject loan. Borrower
acknowledges that said Prepayment Fee is reasonable and is not a
penalty.
|
5.
|
Restrictions
on Transfer and Encumbrance .
|
Borrower and Lender acknowledge and
agree that the Deed of Trust referred to in paragraph 9 below
contains the following paragraphs 4.1 and 4.2:
|
|
4.1
|
Restrictions
on Transfer or Encumbrance of the Property .
|
|
|
(a)
|
A
“Transfer” is: any sale (by contract or otherwise),
encumbrance, conveyance or other transfer of all or any interest in
the Property, or any change in the ownership of any stock interest
in a corporate Trustor, in the ownership of any membership interest
or in the manager of a limited liability company Trustor, in the
ownership of any general partnership interest in any general or
limited partnership Trustor, or in the ownership of any beneficial
interest in any other Trustor which is not a natural person or
persons (including without limitation a trust); or any change in
the ownership of any stock, membership, general partnership or
other beneficial interest in any corporation, limited liability
company, partnership, trust or other entity, organization or
association directly or indirectly owning an interest in Trustor,
or a change in the manager of a limited liability company. A change
in the ownership of a limited partnership interest in a limited
partnership shall not be deemed a
“Transfer.”
|
- 3 -
|
|
(b)
|
In the event of
a Transfer without Beneficiary’s prior written consent,
Beneficiary may at its sole option declare the Transfer an event of
default under this Deed of Trust and invoke any remedy or remedies
provided for in paragraph 8.1 hereof, or may at its sole option
consent to such Transfer. Beneficiary may condition its consent to
a Transfer upon the payment of a fee to Beneficiary, or an increase
in the rate of interest due under the Note, or the items in
paragraph 4.1(d) below, or any combination of the foregoing.
Neither of the foregoing options shall apply, however, in the case
of a Transfer under any will, trust or applicable law of descent
arising because of the death of an individual so long as
Beneficiary is given prompt notice of the Transfer and the
transferee. Beneficiary’s consent to a Transfer or its waiver
of an event of default by reason of a Transfer shall not constitute
a consent or waiver of any right, remedy or power accruing to
Beneficiary by reason of any subsequent Transfer.
|
|
|
(c)
|
Beneficiary
will give its written consent to Transfers of interests in Trustor
or of interests in an entity with an ownership interest in Trustor
to the existing owners of the Trustor as of the date of this Deed
of Trust, to the transferor’s spouse or lineal descendants or
to an estate planning trust whose trustees and beneficiaries are
the transferor or the transferor’s spouse or lineal
descendants, or to a trust, corporation, partnership or limited
liability company composed of such persons or subentitites composed
by such persons so long as one or all of Robert S. Kadis, Harold L.
Kadis, Daniel S. Kadis and Jonathon C. Kadis hold, directly or
indirectly, a controlling interest and manage the owner of the
Property, if Trustor gives Beneficiary prior written notice
accompanied by copies of the proposed Transfer documents and a
$1,000.00 transfer review fee.
|
|
|
(d)
|
For any
Transfer permitted under this Deed of Trust or requested by
Trustor, Beneficiary may condition its consent upon: the Property
having been and assurances that it shall continue to be well
maintained
|
|
