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EXHIBIT 10.2
PROMISSORY NOTE
$42,500,000.00 Seattle, Washington
April 18, 2002
FOR VALUE RECEIVED, 1700 SEVENTH L.P. ("Maker"), a Washington limited
partnership, having an office at 1904 Third Avenue, Suite 200, Seattle,
Washington 98101-1183, promises to pay to NEW YORK LIFE INSURANCE COMPANY
("Holder"), a New York mutual insurance company, having its principal office
at 51 Madison Avenue, New York, New York 10010-1603, or order, without
offset, at its principal office in New York, New York, or at such other place
as may be designated in writing by Holder, the principal sum of Forty-Two
Million Five Hundred Thousand and No/100 Dollars ($42,500,000.00), lawful
money of the United States of America, together with interest thereon at the
rate ("Interest Rate") of seven and sixty-eight hundredths percent (7.68%)
per annum, payable in monthly payments ("Payments") of Three Hundred Sixty-
Three Thousand Six Hundred Seventy-Seven and No/100 Dollars ($363,677.00),
commencing on the tenth (10th) day of June, 2002 and payable on the tenth
(10th) day of each and every month thereafter until and including May 10,
2020 ("Maturity Date"). In addition, on the Maturity Date, Maker shall pay
to Holder the entire unpaid principal balance of this Note, together with all
interest then accrued thereon pursuant to this Note and all other Obligations
(as hereinafter defined) then unpaid pursuant to the Loan Instruments (as
hereinafter defined). Holder shall apply each Payment, when received, first
to the Obligations, other than principal and interest, which are then due and
payable, but only if so elected by Holder in its sole and absolute
discretion, and then to the payment of accrued interest on the outstanding
principal balance hereof and the remainder to the reduction of such principal
balance. Interest from the date hereof through and including May 9, 2002, is
due and payable on the date of this Note and shall be computed on the basis
of the actual number of days in such period over a 360 day year.
This Note is secured by, among other things, (a) a Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing
("Mortgage"), dated as of the date hereof, granted by Maker to Holder and
LIICA (as defined below) and encumbering premises and other property
("Secured Property") more particularly described in the Mortgage; and (b) an
Assignment of Leases, Rents, Income and Cash Collateral, dated as of the date
hereof, from Maker to Holder and LIICA. Obligations, Loan Instruments and
all other capitalized terms used in this Note and not expressly defined
herein shall have the meanings assigned to such terms in the Mortgage. The
terms and provisions of the Loan Instruments, other than this Note, are
hereby fully incorporated into this Note by reference. The Loan Instruments
also secure a Promissory Note of even date herewith made by Maker to the
order of Life Investors Insurance Company of America, an Iowa corporation
("LIICA"), in the original principal amount of $42,500,000.00 (the "Related
Note").
From and after the earlier to occur of an Event of Default or the
Maturity Date, the aggregate amount of the Obligations shall automatically
bear interest at an annual rate ("Increased Rate") equal to sixteen percent
(16%) per annum, unless compliance with applicable
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law requires a lesser interest rate, in which event the aggregate amount of
the Obligations shall bear interest at the maximum rate permitted by law.
Any default in the making of any Payment or in the making of any payment
due pursuant to Section 1.04 of the Mortgage or in the making of any other
deposit or reserve due pursuant to any Loan Instrument on the date the same
is due will result in loss and additional expense to Holder in servicing the
Obligations, handling such delinquent payments and meeting its other
financial obligations. Accordingly, upon the occurrence of any such default,
Maker shall pay, without regard to any grace periods, a late charge ("Late
Charge") of five percent (5%) of each such overdue Payment. Maker agrees
that (a) the exact amount of such loss and additional expense is extremely
difficult, if not impossible to determine, (b) the Late Charge is a
reasonable estimate of such loss and expense and therefore does not
constitute a penalty and (c) in addition to, and not in lieu of, the exercise
of any other remedies to which Holder may be entitled, Holder may collect
from Maker all Late Charges for the purpose of defraying such loss and
expense, unless applicable law requires a lesser such charge, in which event
Holder may collect from Maker a Late Charge at the maximum rate permitted by
applicable law.
Maker may not prepay the Obligations prior to May 10, 2010 ("Closed
Period"). On May 10, 2010, or on the tenth (10th) day of any month
thereafter, Maker may prepay the outstanding principal balance of this Note
(in whole but not in part), together with accrued interest thereon to the
date of prepayment and any other outstanding Obligations, provided that Maker
gives Holder not less than ninety (90) and not more than one hundred twenty
(120) days prior written notice of Maker's intention to make such prepayment,
and provided further that, in addition to paying the entire outstanding
principal balance of this Note, all accrued interest thereon and any other
outstanding Obligations, Maker pays to Holder the Make-Whole Amount.
Further, Maker may not prepay this Note without prepaying the Related Note in
full in accordance therewith. Any prepayment notice given by Maker shall be
deemed null and void if the prepayment covered by such notice is not made
within thirty (30) days of the date specified in Maker's prepayment notice as
the designated date for prepayment.
"Make-Whole Amount" with respect to any prepayment that occurs after the
Closed Period means an amount equal to the greater of (a) one percent (1%) of
the then entire outstanding principal balance of this Note or (b) the present
value as of the date of prepayment of the remaining scheduled payments of
principal and interest (including any balloon payment), determined by
discounting such payments at the Monthly Equivalent Treasury Security Rate
(as hereinafter defined), less the amount of principal being prepaid,
provided such difference shall not be less than zero. "Monthly Equivalent
Treasury Security Rate" means the rate which, when compounded monthly,
results in a yield that is equivalent to the yield on the Equivalent U.S.
Treasury Security, which is compounded semi-annually. "Equivalent U.S.
Treasury Security" means the U.S. treasury bill, note or bond, having a
maturity date closest in maturity to the Maturity Date, as reported in The
Wall Street Journal (or, if The Wall Street Journal is no longer published,
another daily financial publication of national circulation selected by
Holder) on the third (3rd) business day preceding the date of prepayment.
Maker waives any right of prepayment except as expressly provided herein and
as may be provided in the other Loan Instruments. If Maker prepays all
Obligations not more than ninety (90) days prior to the
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Maturity Date and after not less than twenty (20) days prior written notice
to Holder, Maker shall not be required to pay the Make-Whole Amount.
If the outstanding principal balance of this Note or any portion thereof
shall become due and payable or shall be paid as a result of (a) an Event of
Default (which Event of Default shall be conclusively deemed to be a willful
default made for the purpose of avoiding payment of the Make-Whole Amount),
(b) the exercise by Maker or any other person of any right of redemption or
the taking by Maker or any other person of any other action to prevent a
foreclosure of the Secured Property, or (c) a casualty or condemnation with
respect to the Secured Property, then Maker shall pay to Holder the Make-
Whole Amount computed, to the extent not prohibited by applicable law, as if
Maker had elected to prepay this Note, as provided in the preceding
paragraph, on the date of such Event of Default, exercise, action, casualty
or condemnation, as applicable. If such Event of Default, exercise, action,
casualty or condemnation occurs during the Closed Period, then, to the extent
not prohibited by applicable law, the Make-Whole Amount shall be equal to the
greater of (a) ten percent (10%) of the principal balance of this Note then
unpaid or (b) the Make-Whole Amount, as calculated in the manner set forth in
the immediately preceding paragraph. Notwithstanding the foregoing, no Make-
Whole Amount shall be due as a result of the application of casualty or
condemnation proceeds to the principal hereof.
From and after the existence of an Event of Default, Holder, at its
option, may declare all Obligations to be immediately due and payable, then
or thereafter, as Holder may elect, regardless of the stated Maturity Date of
this Note.
If Holder collects all or any part of the Obligations by an action, at
law or in equity, or in any bankruptcy, receivership or other court
proceeding (whether at the trial or appellate level), or if this Note is
placed in the hands of attorney(s) for collection, Maker shall pay, in
addition to the principal and interest due or deemed to be due, whether by
acceleration or otherwise, and in addition to the Make-Whole Amount (a) all
costs, including, without limitation, reasonable attorneys' fees and
expenses, of collecting or attempting to collect all amounts due pursuant to
this Note and all other Obligations, of enforcing or attempting to enforce
Holder's rights and remedies pursuant to the Loan Instruments and of
protecting the collateral securing this Note, (b) all Late Charges due
pursuant to this Note and (c) interest, at the Increased Rate, computed on
the amount of the Obligations.
The failure by Holder to exercise any right, power, privilege, remedy or
option as to maturity, foreclosure or otherwise, provided in any Loan
Instrument or otherwise available at law or in equity (each a "Remedy" and
collectively, "Remedies") before or after any Event of Default, in any one or
more instances, or the acceptance by Holder of any partial payment or partial
performance, shall not constitute a waiver of any default or any Remedy, each
of which shall remain continuously in force, until waived in writing by
Holder. Holder, at its option, may rescind, in writing, any acceleration of
this Note, but the tender and acceptance of partial payment or partial
performance alone shall not rescind or in any other way affect any
acceleration of this Note or the exercise by Holder of any of its Remedies.
Maker and Holder intend to comply strictly with all usury laws now or
hereafter in force in the jurisdiction ("State") in which the Secured
Property is located, and all interest payable
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pursuant to this Note or any other Loan Instrument shall be reduced to the
maximum amount which is not in excess of the maximum non-usurious rate of
interest applicable to this Note or any other Loan Instrument ("Legal Rate")
allowed under the usury laws of the State, as now or hereafter construed by
the courts having jurisdiction over such matters. If the aggregate of all
interest (whether designated as interest, Late Charges, Make-Whole Amount or
otherwise) contracted for, chargeable or receivable pursuant to this Note or
any other Loan Instrument, whether upon regular payment or acceleration or
otherwise, exceeds the Legal Rate, it shall conclusively be deemed a mutual
mistake. Such excess shall be canceled automatically, and, if theretofore
paid, shall, at the option of Holder, either be rebated to Maker or credited
in reduction of the outstanding principal balance of this Note, or, if this
Note has been repaid, such excess shall be rebated to Maker. In the event of
a conflict between the provision of this paragraph and the provisions of any
other portion of this Note or any other Loan Instrument, the provisions of
this paragraph shall control.
Maker waives all requirements for presentment, protest, notice of
protest, notice of dishonor, demand for payment and diligence in collection
of this Note or the Loan Instruments, and any and all other notices and
matters of a like nature, except for those expressly required by the
Mortgage. Without notice to Maker and without discharging Maker's liability
hereunder, Maker consents to any extension of time (whether one or more) of
payment of this Note, release of all or any part of the security for the
payment of this Note or release of any Person liable for payment of this
Note.
This Note may be changed only by an agreement, in writing, signed by
Maker and Holder. Maker waives and renounces all homestead exemption rights
as to the Obligations or any renewal or extension thereof. No failure or
delay on the part of Holder in exercising any Remedy pursuant to this Note or
any Loan Instrument, and no course of dealing between Maker and Holder, shall
operate as a waiver of any Remedy, nor shall any single or partial exercise
of any Remedy preclude any other or further exercise thereof or the exercise
of any other Remedy. All Remedies expressly provided for in the Loan
Instruments are cumulative, and are not exclusive of any rights, powers,
privileges or remedies which Holder would otherwise have at law or equity.
No notice to or demand on Maker in any case shall entitle Maker to any other
or further notice or demand in similar or other circumstances, nor shall any
such notice or demand constitute a waiver of the right of Holder to take any
other or further action in any circumstances without notice or demand.
The obligations of each Maker and each general partner of Maker shall be
joint and several. The unenforceability or invalidity of any provision of
this Note as to any Person or circumstance shall not render that provision
unenforceable or invalid as to any other Person or circumstance, and all
provisions hereof, in all other respects, shall remain valid and enforceable.
If any payment required hereunder or under any other Loan Instrument
becomes due on a Saturday, Sunday, or legal holiday in the state in which the
Premises are located, then such payment shall be due and payable on the
immediately preceding business day.
"Maker" and "Holder" shall be deemed to include the respective heirs,
administrators, legal representatives, successors and assigns of Maker and
Holder.
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Time is of the essence with respect to each and every provision hereof.
This Note shall be governed by, and construed and enforced in accordance
with the laws of the State, other than such laws with respect to conflicts of
laws.
In the event of any inconsistencies between the terms of this Note and
the terms of any other Loan Instruments, the terms of this Note shall
prevail.
NOTICE IS HEREBY GIVEN THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, MODIFY LOAN TERMS, OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, maker has executed this Note as of the date first
above written.
1700 SEVENTH L.P., a Washington limited
partnership
By Clise Venture One LLC, a
Washington limited liability
company, its General Partner
By Clise Properties, Inc., a
Washington corporation, its
Member
By: /s/ A.M. Clise
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Name: A.M. Clise
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Its: President/CEO
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