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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 4 TO SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934
and Rule 13e-3
(ss. 240.13e-3) Thereunder)
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KRUPP REALTY LIMITED PARTNERSHIP - V
(Name of the Issuer)
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Krupp Realty Limited Partnership - V
KR5 Acquisition, L.L.C.
KRF Company, L.L.C.
The Krupp Family Limited Partnership - 94
The Krupp Corporation
The Krupp Company Limited Partnership - II
Douglas Krupp
George Krupp
(Name of Person(s) Filing Statement)
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Limited Partnership Units
(Title of Class of Securities)
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501128-30-0
(CUSIP Number of Class of Securities)
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Scott D. Spelfogel, Esq.
The Berkshire Group
One Beacon Street
Boston, Massachusetts 02108
(617) 574-8385
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of Person(s) Filing Statement)
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With copies to:
James M. Dubin, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
This Statement is filed in connection with:
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a. [X] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting material or information
statement referred to in checking box (a) are preliminary copies: [ ]
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Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction Amount of filing fee
valuation
$37,457,400 $7,491.48*
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* Transaction valuation assumed the purchase of 31,214.5 units Krupp Realty
Limited Partnership - V at $1,200 in cash per Unit. Ultimately, only 31,168.5
Units were purchased. The amount of the filing fee, calculated in accordance
with Regulation 240.0-11 of the Securities Exchange Act of 1934, equals one
fiftieth of one percentum of such transaction value.
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $7,491.48
Form or Registration No: Schedule 13E-3
Filing Party: KR5 Acquisition, L.L.C.,
KRF Company, L.L.C.,
The Krupp Family Limited Partnership - 94
Date Filed: January 21, 2000
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4
INTRODUCTION
This Final Amendment to Rule 13e-3 Transaction Statement (this "Final
Amendment") is being jointly filed by each of (1) Krupp Realty Limited
Partnership - V, a Massachusetts limited partnership (the "Partnership"), (2)
KR5 Acquisition, L.L.C., a Delaware limited liability company ("KR5" or the
"Purchaser"), (3) KRF Company, L.L.C., a Delaware limited liability company and
KR5's sole member (the "Parent"), (4) The Krupp Family Limited Partnership - 94,
a Massachusetts limited partnership and the Parent's sole member (the "Family
Partnership"), (5) The Krupp Corporation, a Massachusetts corporation ("Krupp
Corp"), (6) The Krupp Company Limited Partnership - II, a Massachusetts limited
partnership (together with Krupp Corp, the "General Partners"), (7) Douglas
Krupp and (8) George Krupp (collectively, the Partnership, KR5, the Parent, the
Family Partnership, the General Partners, Douglas Krupp and George Krupp, the
"Filing Persons") pursuant to Section 13(e) of
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5
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Rule 13e-3 thereunder, to amend and supplement the definitive Rule 13e-3
Transaction Statement on Schedule 13E-3, jointly filed by the Filing Persons
with the Securities and Exchange Commission (the "SEC") on January 21, 2000, as
amended and supplemented by Amendment No. 1 thereto filed March 7, 2000,
Amendment No. 2 thereto filed March 20, 2000 and Amendment No. 3 thereto filed
March 23, 2000 (as so amended and supplemented, the "Transaction Statement").
This Final Amendment is being filed with the SEC pursuant to the
requirements of Rule 13e-3(d)(3) promulgated under the Exchange Act, to reflect
the consummation of the transactions contemplated by the Agreement and Plan of
Merger, dated as of April 27, 2000, by and between the Purchaser and the
Partnership (the "Merger Agreement"). Except as expressly set forth in this
Final Amendment, all
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6
information in the Transaction Statement remains unchanged. Unless otherwise
indicated herein, each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Definitive Proxy Statement filed by the
general partners of the Partnership with the SEC on March 23, 2000 (including
all annexes and exhibits thereto, the "Proxy Statement") or in the Merger
Agreement.
Item 6. Source and Amounts of Funds or Other Consideration
Item 6 is hereby amended and supplemented by adding the following
information:
On April 27, 2000, a subsidiary of the Partnership entered into a
loan agreement ("Loan Agreement 1") with Reilly Mortgage Capital Corporation
("Reilly") pursuant to which such subsidiary borrowed an aggregate amount of
$19,500,000.00 to finance the acquisition of the Partnership and to refinance
existing debt, including prepayment penalties of approximately $297,000.00, and
pay associated
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7
closing costs. Loan Agreement 1 was assigned to the Federal National Mortgage
Association, or "Fannie Mae." The foregoing description is qualified in its
entirety by reference to Loan Agreement 1, which is attached as Exhibit (a)(1)
hereto and is incorporated herein by reference in its entirety.
On April 27, 2000, a subsidiary of the Partnership entered into a loan
agreement ("Loan Agreement 2") with Reilly pursuant to which such subsidiary
borrowed an aggregate amount of $49,156,000.00 to finance the acquisition of the
Partnership and to refinance existing debt, including prepayment penalties of
approximately $1,214,000.00, and pay associated closing costs. Loan Agreement 2
was assigned to the Federal National Mortgage Association, or "Fannie Mae." The
foregoing description is qualified in its entirety by reference to Loan
Agreement 2, which is attached as Exhibit (a)(2) hereto and is incorporated
herein by reference in its entirety.
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Item 16. Additional Information
Item 16 is hereby amended and supplemented by adding the following
information:
The transactions contemplated by the Merger Agreement, including the
amendment to the Amended Agreement of Limited Partnership, dated July 27, 1983,
and the merger of the Partnership with and into the Purchaser (the "Merger"),
were approved by the unitholders of the Partnership on April 27, 2000. The
Merger became effective on such date upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware and Articles of Merger with
the Secretary of State of the State of Massachusetts. As a result of the Merger,
each Limited Partnership Unit, other than those held by the General Partners,
the Original Limited Partners and the Affiliate Limited Partners, in the
Partnership has been converted into the right to receive $1,200.00 in cash. As a
result of and following the Merger, no Limited Partnership Units are
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9
outstanding. Accordingly, the Partnership has filed a Certification and Notice
of Termination of Registration on Form 15 with the SEC.
Item 17. Material to be Filed as Exhibits
(a)(1) Loan Agreement, dated April 27, 2000, between Century III
Associates Limited Partnership, KR5 Acquisition, L.L.C. and Reilly Mortgage
Capital Corporation.
(a)(2) Loan Agreement, dated April 27, 2000, between Krupp Realty Park
Place-Chicago Limited Partnership, South Chicago Bank, n/k/a/ Advance Bank,
Trustee under the terms of a Trust Agreement dated September 28, 1976, known as
Trust No. 11-1780 and Reilly Mortgage Capital Corporation.
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SIGNATURE
After due inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: May 5, 2000
Krupp Realty Limited Partnership - V
By: The Krupp Corporation, a general
partner
By: /s/ Douglas Krupp
-----------------
Name: Douglas Krupp
Title: President and Co-
Chairman of the Board
of Directors
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KR5 Acquisition, L.L.C.
By: KRF Company, L.L.C., its sole
member
By: The Krupp Family Limited
Partnership - 94, its sole
member
By: /s/ Douglas Krupp
-----------------
Name: Douglas Krupp
Title: General Partner
KRF Company, L.L.C.
By: The Krupp Family Limited
Partnership - 94, its sole member
By: /s/ Douglas Krupp
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Name: Douglas Krupp
Title: General Partner
The Krupp Family Limited Partnership - 94
By: /s/ Douglas Krupp
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Name: Douglas Krupp
Title: General Partner
The Krupp Corporation
By: /s/ Douglas Krupp
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Name: Douglas Krupp
Title: President and Co-
Chairman of the Board
of Directors
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The Krupp Company Limited Partnership - II
By: /s/ Douglas Krupp
-----------------
Name: Douglas Krupp
Title: General Partner
/s/ Douglas Krupp
-----------------
Douglas Krupp
/s/ George Krupp
----------------
George Krupp
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13
Index to Exhibits
Exhibit No. Description
- ----------- -----------
(a)(1) Loan Agreement, dated April 27, 2000, between Century III
Associates Limited Partnership, KR5 Acquisition, L.L.C. and
Reilly Mortgage Capital Corporation.
(a)(2) Loan Agreement, dated April 27, 2000, between Krupp Realty
Park Place-Chicago Limited Partnership, South Chicago Bank,
n/k/a/ Advance Bank, Trustee under the terms of a Trust
Agreement dated September 28, 1976, known as Trust No. 11-1780
and Reilly Mortgage Capital Corporation.
PROMISSORY NOTE
US $19,500,000.00 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 KR5 Acquisition, L.L.C., a
Delaware limited liability company ("Borrower"), the principal sum of Nineteen
Million Five Hundred Thousand and No/100 Dollars (US $19,500,000.00), 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
CENTURY III ASSOCIATES LIMITED PARTNERSHIP, a
Maryland limited partnership
By: KRF GP Corporation, a Massachusetts
corporation, general partner
By: __________________________
David Quade
Vice President
04-3074016
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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Maryland - IDOT
<PAGE>
Pay to the order of Reilly Mortgage Capital
Corporation with full recourse.
KR5 ACQUISITION, 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
Fannie Mae Promissory Note - Guarantor Form 4533 10/98 Page 7
Maryland - IDOT
<PAGE>
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: ________________
Fannie Mae Promissory Note - Guarantor Form 4533 10/98 Page 8
Maryland - IDOT
<PAGE>
SCHEDULE A
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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<PAGE>
SCHEDULE B
Being the property shown on Plat entitled "Century III, Section I", as recorded
among the Plat Records of Baltimore County, Maryland in Liber OTG No. 35, folio
31, and more particularly described as follows:
Beginning for the same at a pin and cap now set at the beginning of that parcel
of land conveyed by a deed dated December 17, 1971 from The Ervin Co. to Century
III Associates and recorded among the Land Records of Baltimore County, Maryland
in Liber O.T.G. 5238, folio 823, running thence binding on the outline of said
parcel of land the thirteen following courses, viz:
(1) South 01(0)04' 35" West 1322.10 feet to an iron pipe heretofore set,
(2) North 88(0)55' 25" West 300.00 feet to a pin and cap now set,
(3) South 01(0)04' 35" West 193.39 feet to a pin and cap now set,
(4) North 84(0)05' 00" West 963.00 feet to an iron pipe heretofore set on the
easterly right-of-way line of Greenside Drive (70' wide), thence binding on
said drive
(5) North 05(0)53' 34" East 591.91 feet to a pin and cap now set,
(6) Northeasterly by a tangent curve to the left having a radius of 1070.00
feet and a length of 96.93 feet, said curve being subtended by a chord
bearing North 03(0) 17' 52" East 96.89 feet to a pin and cap now set at the
cutoff which leads to Sorley Road, thence along said cutoff
(7) North 44(0)17' 52" East 21.58 feet to a pin and cap now set on the
southeasterly side of Sorley Road (60' wide), thence binding on said road
(8) Northeasterly by a non-tangent curve to the left having a radius of 153.61
feet and a length of 30.77 feet, said curve being subtended by a chord
bearing North 82(0) 33' 18" East 30.71 feet to a pin and cap now set,
thence by a line tangent to said curve
(9) North 76(0)49' 02" East 550.54 feet to a pin and cap now set,
(10) Northeasterly by a tangent curve to the left having a radius of 240.00 feet
and a length of 266.77 feet, said curve being subtended by a chord bearing
North 44(0) 58' 25" East 253.25 feet to a pin and cap now set
(11) North 13(0)07' 48" East 274.64 feet to a pin and cap now set,
(12) Northeasterly by a tangent curve to the left having a radius of 315.00 feet
and a length of 118.10 feet, said curve being subtended by a chord bearing
North 02(0) 23' 22" East 117.41 feet to a cap and pin now set, thence
(13) North 87(0)40' 40" East 392.45 feet, to the place of beginning.
Containing 28.744 acres of land, more or less.
Fannie Mae Promissory Note - Guarantor Form 4533 10/98 Page B-1
Maryland - IDOT
<PAGE>
SCHEDULE C
ARM MODIFICATIONS TO PROMISSORY NOTE
The Promissory 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 8.058% 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 11.058%, or (z) less
than 5.058%. 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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<PAGE>
Required Monthly Payment shall be One Hundred Forty-Three Thousand Eight Hundred
Seventy-Three and 32/100 Dollars (US $143,873.32). 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: 1.7400 %.
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
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<PAGE>
3-month period thereafter until this Note is repaid in full.
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
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<PAGE>
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.
(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.
----------------------
INITIALS
Fannie Mae Promissory Note - Guarantor Form 4533 10/98 Page C-4
Maryland - IDOT
ADJUSTABLE RATE MULTIFAMILY NOTE
(3-Month LIBOR Index with Rate Caps)
US $49,156,000.00 As of April 27, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally
(if more than one) promises to pay to the order of REILLY MORTGAGE CAPITAL
CORPORATION, a Virginia corporation, the principal sum of Forty-Nine Million One
Hundred Fifty-Six Thousand and 00/100 Dollars (US $49,156,000.00), with interest
on the unpaid principal balance at the rates applicable from time to time set
forth in this Adjustable Rate Multifamily Note ("Note").
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, the Security
Instrument or any other Loan Document, 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, Key
Principal and other capitalized terms used but not defined in this Note shall
have the meanings given to such terms in the Security Instrument (as defined in
Paragraph 5).
2. Address for Payment. All payments due under this Note shall be
payable at 2000 Corporate Ridge, Suite 925, McLean, Virginia 22102, or such
other place as may be designated by written notice to Borrower 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 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 8.0580% 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 11.0580%, or (z) less
than 5.0580%. 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,
Fannie Mae Multifamily ARM Note Form 4122-ARM.3L 10/99
3 Month LIBOR with Rate Caps Page 1
<PAGE>
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 Required Monthly Payment shall be Three Hundred
Sixty-Two Thousand Six Hundred Seventy-Eight and 81/100 Dollars (US
$362,678.81). 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: 1.7400%.
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.
Fannie Mae Multifamily ARM Note Form 4122-ARM.3L 10/99
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<PAGE>
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.
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.
4. Application of Payments. If at any time Lender receives, from
Borrower 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. Borrower agrees that neither Lender's acceptance
of a payment from Borrower 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. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender concerning the collateral for the
Indebtedness.
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 and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Lender
within 10 days after the amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to 5 percent of
such amount. Borrower 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. Borrower 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 then current Adjustable Rate or the maximum interest rate which
may be collected from Borrower 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. Borrower also
Fannie Mae Multifamily ARM Note Form 4122-ARM.3L 10/99
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<PAGE>
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. Borrower 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. Borrower 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
Borrower'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, Borrower shall
have no personal liability under this Note, the Security Instrument or any other
Loan Document for the repayment of the Indebtedness or for the performance of
any other obligations of Borrower under the Loan Documents, 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 Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower'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 Borrower.
(b) Borrower 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 Borrower to pay to Lender upon demand after an Event
of Default, all Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence; (2) failure of Borrower to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Borrower 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
Borrower, Key Principal or any officer, director, partner, member or employee of
Borrower in connection with the application for or creation of the Indebtedness
or any request for any action or consent by 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 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 Borrower will not be personally liable (i) to the extent
that Borrower 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 Borrower has
paid all operating expenses and Debt Service Amounts for that calendar year).
(c) Borrower 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) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the
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<PAGE>
Security Instrument; or (2) a Transfer that is an Event of Default under Section
21 of the Security Instrument.
(d) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default, or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
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.
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(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.
(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.
11. Costs and Expenses. Borrower 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 to enforce 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, the Security Instrument, or any other Loan Document 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 Borrower's obligations under this Note shall not constitute an
election by Lender of 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 Borrower, Key Principal, and all
endorsers and guarantors of this Note and all other third party obligors.
14. Loan Charges. Borrower 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
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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 Borrower 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 Borrower
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 Borrower 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. Borrower represents that the Indebtedness is
being incurred by Borrower 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
jurisdiction in which the Land is located.
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 Borrower pursuant to this Note shall be given
in accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower and Key Principal each
agrees that any controversy arising under or in relation to this Note shall be
litigated exclusively in the jurisdiction in which the Land is located (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. Borrower
and Key Principal each 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. BORROWER, KEY PRINCIPAL 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 AS LENDER, KEY PRINCIPAL AND
BORROWER 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.
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ATTACHED SCHEDULES. The following Schedules are attached to this Note:
[X] Schedule A Prepayment Premium (required)
IN WITNESS WHEREOF, Borrower has signed and delivered this Note, or has
caused this Note to be signed and delivered by its duly authorized
representative, as a sealed instrument.
BORROWER:
KRUPP REALTY PARK PLACE - CHICAGO LIMITED
PARTNERSHIP, an Illinois limited partnership
By: KRF GP Corporation, a Massachusetts
corporation, general partner
By: __________________________
David Quade
Vice President
SOUTH CHICAGO BANK, N/K/A ADVANCE BANK,
TRUSTEE UNDER THE TERMS OF A TRUST AGREEMENT
DATED SEPTEMBER 28, 1976, KNOWN AS TRUST NO.
11-1780
By: ________________________(SEAL)
Name: _____________________
Title: ______________________
04-3044708
---------------------------------------------
Borrower's Social Security/Employer ID Number
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PAY TO THE ORDER OF ___________________
_________________, WITHOUT RECOURSE.
REILLY MORTGAGE CAPITAL CORPORATION, a
Virginia corporation
By: ____________________________________
Brenda R. Dutrow
Assistant Vice President
Fannie Mae Loan Number: _________________
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<PAGE>
ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO
PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY
Key Principal, who has an economic interest in Borrower or who will
otherwise obtain a material financial benefit from the Loan, hereby absolutely,
unconditionally and irrevocably agrees to pay to Lender, or its assigns, on
demand, all amounts for which Borrower is personally liable under Paragraph 9 of
the Multifamily Note to which this Acknowledgment is attached (the "Note"). The
obligations of Key Principal shall survive any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the Security Instrument. Lender may pursue its remedies
against Key Principal without first exhausting its remedies against the Borrower
or the Mortgaged Property. All capitalized terms used but not defined in this
Acknowledgment shall have the meanings given to such terms in the Security
Instrument. As used in this Acknowledgment, the term "Key Principal" (each if
more than one) shall mean only those individuals or entities that execute this
Acknowledgment.
The obligations of Key Principal shall be performed without demand by
Lender and shall be unconditional irrespective of the genuineness, validity, or
enforceability of the Note, or any other Loan Document, and without regard to
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Key Principal hereby waives the benefit of
all principles or provisions of law, which are or might be in conflict with the
terms of this Acknowledgment, and agrees that Key Principal's obligations shall
not be affected by any circumstances which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor. Key Principal hereby waives the
benefits of any right of discharge and all other rights under any and all
statutes or other laws relating to guarantors or sureties, to the fullest extent
permitted by law, diligence in collecting the Indebtedness, presentment, demand
for payment, protest, all notices with respect to the Note including this
Acknowledgment, which may be required by statute, rule of law or otherwise to
preserve Lender's rights against Key Principal under this Acknowledgment,
including notice of acceptance, notice of any amendment of the Loan Documents,
notice of the occurrence of any default or Event of Default, notice of intent to
accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
notice of protest, notice of the incurring by Borrower of any obligation or
indebtedness and all rights to require Lender to (a) proceed against Borrower,
(b) proceed against any general partner of Borrower, (c) proceed against or
exhaust any collateral held by Lender to secure the repayment of the
Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy it
may have against Borrower, or any general partner of Borrower.
At any time without notice to Key Principal, and without affecting the
liability of Key Principal hereunder, (a) the time for payment of the principal
of or interest on the Indebtedness may be extended or the Indebtedness may be
renewed in whole or in part; (b) the time for Borrower's performance of or
compliance with any covenant or agreement contained in the Note, or any other
Loan Document, whether presently existing or hereinafter entered into, may be
extended or such performance or compliance may be waived; (c) the maturity of
the Indebtedness may be accelerated as provided in the Note or any other Loan
Document; (d) the Note or any other Loan Document may be modified or amended by
Lender and Borrower in any respect, including an increase in the principal
amount; and (e) any security for the Indebtedness may be modified, exchanged,
surrendered or otherwise dealt with or additional security may be pledged or
mortgaged for the Indebtedness.
Key Principal acknowledges that Key Principal has received a copy of
the Note and all other Loan Documents. Neither this Acknowledgment nor any of
its provisions may be waived, modified, amended, discharged, or terminated
except by an agreement in writing signed by the
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party against which the enforcement of the waiver, modification, amendment,
discharge, or termination is sought, and then only to the extent set forth in
that agreement. Key Principal agrees to notify Lender (in the manner for giving
notices provided in Section 31 of the Security Instrument) of any change of Key
Principal's address within 10 Business Days after such change of address occurs.
Any notices to Key Principal shall be given in the manner provided in Section 31
of the Security Instrument. Key Principal agrees to be bound by Paragraphs 20
and 21 of the Note.
THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF,
THE NOTE. BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO
BECOME AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE.
IN WITNESS WHEREOF, Key Principal has signed and delivered this
Acknowledgment, or has caused this Acknowledgment to be signed and delivered by
its duly authorized representative, as a sealed instrument.
KEY PRINCIPAL:
KR5 ACQUISITION, 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
Address: c/o Berkshire Realty Group
One Beacon Street
Boston, Massachusetts 02108
Social Security/Employer ID No.:04-3493007
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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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