PROMISSORY
NOTE
$2,470,000
October 12, 2018
HC Government Realty
Holdings, L.P.,
a Delaware limited partnership, ("Borrower"), FOR VALUE RECEIVED,
promises to pay to the order of BAKER HILL HOLDING LLC,
a New York Limited Liability Company, or its permitted assigns
("Lender"), the principal sum of TWO MILLION FOUR HUNDRED SEVENTY
THOUSAND AND 00/100 DOLLARS ($2,470,000) with interest on the
outstanding principal amount at the rates set forth
herein.
SECTION 1. - DEFINITION.
"Borrower"
shall mean HC Government Realty Holdings, L.P., a Delaware limited
partnership.
"Business
Day" shall mean any day other than a Saturday,
Sunday or day which shall be in the State of New York a legal
holiday or day on which banking institutions are required or
authorized to close.
"Default
Interest Rate" shall mean a rate of interest per annum equal
to the lesser of either
(a)
THREE percent (3%) above the Interest Rate, or (b) the maximum rate
of interest which may be collected from Borrower under applicable
law.
"Deferred
Interest Rate" shall mean a rate of interest equal to eight
percent (8%) per annum. "Deferred Interest Amount" shall
have the meaning ascribed to it in Section 2.1 hereof. "General Partner" shall mean HC
Government Realty Trust, Inc., a Maryland corporation.
"Initial Interest Payment
Date" shall be November
1, 2018.
"Interest
Rate" shall mean a rate of interest equal to fourteen
percent (14%) per annum, inclusive of the Deferred Interest
Rate.
"Late
Charge"
shall mean the lesser of (a) five percent (5%) of any unpaid
amount, or (b) the maximum late charge permitted to be charged
under applicable law.
"Lender"
shall mean Baker Hill Holding LLC, a New York limited liability
company. "Make-Whole Payment"
shall have the meaning set forth in Section 2.6.
"Maturity
Date" shall mean October
31, 2020.
''Note"
shall mean this Promissory Note of Borrower in the original
principal amount of TWO MILLION FOUR HUNDRED SEVENTY THOUSAND AND
00/100 DOLLARS ($2,470,000.00) payable to Lender.
"Payment
Date"
shall mean the first day of each
calendar month, commencing on the Initial Interest Payment Date
(or, if any such date is not a Business Day, then the next Business
Day immediately following such date).
"Person."
Any individual, partnership, limited liability company,
corporation, trust, unincorporated organization or association, and
any governmental agency or political subdivision
thereof.
SECTION 2 - STATED MATURITY; INTEREST AND
PRINCIPAL PAYMENTS.
Payment of Interest. Interest
on the principal balance of this Note outstanding shall accrue from
the date hereof until paid in full whether before or after maturity
at the "Interest Rate" as defined above and be payable monthly in
arrears commencing on the Initial Interest Payment Date and on each
Payment Date through the Maturity Date; provided, however, at
the Borrower's option, payment of the "Deferred Interest Rate" (as
defined above) on the principal balance of this Note outstanding
(the "Deferred
Interest Amount")
may be deferred from time to time
until the Maturity Date. Any Deferred Interest Amount shall accrue
and be compounded at the end of the applicable quarter for the
month in which the election was made on an annual basis and then be
subject to interest at the "Interest Rate."
For the avoidance of doubt, the foregoing provision can be
illustrated by the following hypothetical:
Assume: (i) the principal amount is $1,000,000; (ii) the Interest
Rate is ten percent (10.0%) per annum; (iii) the Deferred Interest
Rate is five percent (5.0%) per annum; (iv) on an Interest Payment
Date the Borrower elects to defer for all three months in a given
quarter fifty percent (50.0%) of its Interest Payment for the
quarter in question. The Interest Amount for the quarter is
$24,999.99 ($1,000,000 x 10% = $100,000 per year+ 360 x
30
= $8,333.33 x 3); $12,500.01 is
the Deferred Interest Amount, which is deemed added
to
principal at the end of the quarter applicable to the months the
election was made, making the new principal amount of the Note
$1,012,500.01, which thereafter bears interest at the Interest
Rate.
Payment on Maturity Date.
Notwithstanding anything herein to the contrary, all outstanding
principal and accrued but unpaid interest under this Note shall be
immediately due and payable in full at the Maturity Date. Upon
payment in full of the principal and accrued interest hereunder,
this Note shall be surrendered to Borrower for
cancellation.
Computation of Interest.
Interest under this Note shall be calculated based on actual days
elapsed and a three hundred sixty (360) day
year.
Method of Payment. Each payment
due hereunder shall not be deemed received by Lender until received
on a Business Day in Federal funds in lawful money of the United
States of America immediately available to Lender prior to 2:00
p.m. local time at 54 Phipps Lane, Planview, New York 11803. Any
payment received on a Business Day after the time established by
the preceding sentence, shall be deemed to have been received on
the immediately following Business Day for all
purposes.
Application of Payments. Payments under this Note shall be applied first to
the payment of accrued but unpaid interest, and then to any
Deferred Interest Amount and then to reduction of the outstanding
principal balance. No principal amount repaid may be reborrowed.
All amounts due under this Note shall be payable without setoff or
any other deduction whatsoever.
Prepayment; Make-Whole Payment. Borrower may prepay in whole or in part the
outstanding principal balance of this Note. Any such prepayment
shall be accompanied by all accrued but unpaid interest due Lender
at the time of the prepayment, plus a make whole premium (the
"Make-Whole
Payment") that is 14.0% of the Pro Rata Portion. "Pro Rata
Portion" is the number obtained by multiplying (i) a sum equal to
the original principal amount of this Note (ii) by the remaining
number of whole calendar months until October 31, 2019, divided by
twelve. No Make-Whole Payment shall be due and payable if
prepayment is made after October 31, 2019.
Interest Rate Limitation. Nothing
contained in this Note shall be construed or so operate as to
require the Borrower to pay interest at a greater rate than is now
lawful or in such case to contract for, or to make any payment, or
to do any act contrary to applicable law. Should any interest or
other charges paid by the Borrower, or parties liable for the
payment of this Note, in connection with the indebtedness evidenced
by this Note result in the computation or earning of interest in
excess of the maximum legal rate of interest that is legally
permitted under applicable law, then any and all such excess shall
be, and the same hereby is, waived by the Lender, and any and all
such excess shall be automatically credited against and in
reduction of the balance due under this Note, and the portion of
said excess that exceeds the balance due under this Note shall be
paid by the Lender to the Borrower.
SECTION 3 - DEFAULT
Section 3.1 Events of
Default. The occurrence of any
of the following shall constitute an "Event of
Default":
Borrower shall fail to pay when and as required to be paid herein
and pursuant to the Note, any amount of principal of or interest on
the Loan and the continuance of such failure for ten (10)
Days;
Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee,
liquidator or similar official of itself or of all or a substantial
part of its property, (ii) be generally not paying its debts as
such debts become due, (iii) make a general assignment for the
benefit of its creditors, (iv) commence a voluntary case under the
Bankruptcy Code (as now or hereafter in effect), (v) take any
action or commence any case or
SECTION 4 - DEFAULT;
REMEDIES.
Acceleration.
Upon the occurrence and during the continuance of any Event of
Default, Lender may notify Borrower in writing of such Event of
Default, after which time the Borrower shall have thirty (30) days
(ten (10) days in the instance of a payment default) to cure such
Event of Default. If
an Event of Default
continues after such 30-day period (or 10-day period in the
instance of a payment default), the Lender may, by written notice
to Borrower, declare immediately due and payable the entire
principal amount outstanding hereunder together with all accrued
and unpaid interest due hereunder.
Default Interest Rate, Late Charges.
After an Event of Default and until the Default is cured, the
Default Interest Rate shall apply, in place of the then-applicable
Interest Rate, to all amounts outstanding under the Loan. Such
Default Interest shall be compounded on the quarterly anniversary
of such Event of Default until the Event of Default is cured or the
Note is paid in full.
If any monthly installment due
hereunder is not received by Lender on or before the fifth (5th)
day following each Payment Date or if any other amount payable
under this Note or any other Loan Document is not received by
Lender within five (5) days after the date such amount is due,
counting from and including the date such amount is due, Borrower
shall pay to Lender, immediately and without demand by Lender, the Late Charge on such
outstanding monthly installment or other amount due. Borrower
acknowledges that its failure to make timely payments will cause
Lender to incur additional expenses in servicing and processing the
Loan, and that it is extremely difficult and impractical to
determine those additional expenses. Borrower agrees that any such
Late Charges payable pursuant to this Section 3.2(b)
represents a fair and reasonable
estimate, taking into account all circumstances existing on the
first Payment Date, of the additional expenses Lender will incur by
reason of such late payment. Any such Late Charge is payable in
addition to, and not in lieu of, any interest payable at the
Default Rate pursuant to Section
3.2(a).
Remedies. The remedies of
Lender as provided herein, or at law or in equity shall be
cumulative and concurrent, and may be pursued singly, successively,
or together at the sole discretion of Lender, and may be exercised
as often as occasion therefor shall occur. The failure at any time
to exercise any right or remedy shall not constitute a waiver of
the right to exercise the right or remedy at any other
time.
SECTION 5 - WAIVER.
Presentment for payment, demand, notice of dishonor, protest, and
notice of protest, stay of execution and all other defenses to
payment generally are hereby waived by Borrower.
SECTION 6 - GOVERNING LAW:
SUBMISSION TO JURISDI CTION: WAIVER OF JURY TRIAL; SEVERABILITY;
USURY, ETC.
Governing Law. This Note shall be governed by, and construed in
accordance with, the substantive law of the State of New York
without regard to the application of choice of law principles. Any
and all actions, proceedings, etc. shall be venued in the County of
Nassau, State of New York.
SUBMISSION TO JURISDICTION/SERVICE OF PROCESS. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
OR FOR NASSAU COUNTY NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION
OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS NOTE, THE
SUBJECT MATTER HEREOF, ANY OTHER LOAN DOCUMENT AND THE SUBJECT
MATTER THEREOF. BORROWER TO THE EXTENT PERMITTED BY APPLICABLE LAW
(A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BYWAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING
BROUGHT IN THE ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
NOTE OR THE SUBJECT MATTER HEREOF MAY NOT BE
ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE
ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY A LENDER IN STATE
COURT TO FEDERAL COURT, OR TO REMAND AN ACTION INSTITUTED IN
FEDERAL COURT TO STATE COURT AND (C) HEREBY WAIVES THE RIGHT TO
ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR
COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE
ARISE FROM THE SAME SUBJECT MATTER. BORROWER HEREBY CONSENTS TO
SERVICE OF PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO
BE GIVEN TO IT PURSUANT TO SECTION 7
HEREOF. BORROWER AGREES THAT ITS
SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY
MAIL IS MADE FOR THE EXPRESS BENEFIT OF LENDER. FINAL JUDGMENT
AGAINST BORROWER IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY
SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE
COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF BORROWER THEREIN DESCRIBED,
OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION
WAIVER BY JURY TRIAL. BORROWER
HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT THAT BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE, OR ANY
OTHER STATEMENTS OR ACTIONS OF THE LENDER.
Severability. If any provision
of this Note is held to be invalid or unenforceable by a court of
competent jurisdiction, the other provisions of this Note shall
remain in full force and effect.
SECTION 7 - NOTICES.
All notices, demands and other communications ("notice")
under or concerning this Note shall be in writing. Each notice
shall be addressed to the intended recipient at its address set
forth below and shall be deemed given on the earliest to occur of
(1) the date when the notice is delivered to the addressee; or (2)
the third (3rd) Business Day after the notice is deposited in the
United States mail with postage prepaid, registered mail, return
receipt requested. The Borrower or the Lender may change the
address by notice to the other in accordance with this Section
7.
SECTION 8- EXCULPATION.
Notwithstanding anything to the contrary contained in this Note, no
present or future general partner, officer or limited partner of
the Borrower or present or future shareholder, director, officer or
advisor of the General Partner or any of their members,
shareholders, partners, directors or officers shall have any
personal liability, directly or indirectly, under or in connection
with this Note, or any amendment, made at any time, and Lender
hereby forever and irrevocably waives and releases any and all such
personal liability. This limitation of liability provided in
this
paragraph is in addition to, and not in limitation of, any
limitation of liability applicable to such parties provided by law
or by any other contract, agreement or instrument.
SECTION 9 - MISCELLANEOUS.
Costs. If, and as often as,
this Note is referred to an attorney for the collection of any sum
payable hereunder, or to defend or enforce any of Lender's rights
hereunder, or to commence an action, cross-claim, third-party claim
or counterclaim by Lender against Borrower relating to this Note,
Borrower agrees to pay to Lender all costs incurred in connection
therewith including reasonable attorneys' fees (including such fees
incurred in appellate, bankruptcy or insolvency proceedings), with
or without the institution of any action or proceeding, and in
addition all costs, disbursements and allowances provided by
law.
Modification. Neither this Note
nor any of the terms hereof may be terminated, amended,
supplemented, waived or modified orally, but only by an instrument
in writing executed by the party against which enforcement of the
termination, amendment, supplement, waiver or modification is
sought.
Successors. As used herein, the
terms "Borrower" and "Lender" shall be deemed to include their
respective permitted successors and assigns whether by voluntary
action of the parties or by operation of law. All of the rights,
privileges and obligations hereof shall inure to the benefit of and
bind such permitted successors and assigns. This Note may not be
assigned without the written consent of both Borrower and
Lender.
Business Purpose. The
undersigned represents and agrees that this Note evidences
indebtedness arising from the regular conduct of Borrower's
business (which is carried on for the purpose of profit), and that
the indebtedness evidenced hereby constitutes a business loan and
is not usurious under the laws of the State of New
York.
No Waiver. No failure or delay
by Lender in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. Without limiting the foregoing, no
disbursement by Lender after a default by Borrower hereunder shall
constitute a waiver of any of the Lender's remedies established or
referred to hereunder or shall obligate Lender to make any further
disbursement. No waiver, consent or approval of any kind by Lender
shall be effective unless (and it shall be effective only to the
extent) expressly set out in a writing signed and delivered by
Lender. No notice to or demand on Borrower in any case shall
entitle Borrower to any other notice or demand in similar or other
circumstances, nor shall such notice or demand constitute a waiver
of the rights of Lender to any other or further actions. In its
sole discretion, Lender may, at any time and from time to time,
waive any one or more of the requirements contained herein, but
such waiver in any instance or under any particular circumstances
shall not be considered a waiver of such requirement or
requirements in any other instance or under any other
circumstance.
Indebtedness. Borrower shall
not incur, and shall not consent to any subsidiary or affiliate
Borrower incurring, any debt in a material amount that is senior to
Lender without written
consent of Lender, provided, however,
the foregoing shall not apply to
primary mortgages on new property acquisitions.
Tax Treatment. The Borrower and
Lender will each treat this Note and amounts borrowed thereunder as
debt and the relationship between the Borrower and Lender are that
of debtor and creditor, in each case for all U.S. federal, state
and local tax purposes and will report consistently with such
intent.
[The remainder of this page is intentionally left blank; Signatures
appear on the following page]
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Note as of the date first set forth above.
BORROWER:
HC Government Realty Holdings, L.P.
By: /s/ Edwin M. Stanton
Name:
Edwin Stanton
Title:
Chief Executive Officer
STATE OF FLORIDA
CITY OF SARASOTA
On the 12th day of October, 2018, before me, the undersigned, Edwin Stanton, who is
personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same
in his capacity, and that by his signature on the instrument, the
limited partnership named therein became bound.
_______________________________
Notary Public
My commission expires on
Signature Page to Promissory Note
HC Government Realty Holdings, L.P. and Baker Hill Holding
LLC
Address for Notices:
HC Government Realty Holdings, L.P. 1819 Main Street, Suite
212
Sarasota, FL 34236
Baker Hill Holding LLC 54 Phipps Lane
Plainview, NY 11803