Exhibit 10.54
SECURED PROMISSORY NOTE
752834
$6,200,000.00 March 16, 2001
1. FOR VALUE RECEIVED, NEW BRIGHTON BUSINESS CENTER LLC, a Delaware limited
liability company, as "Borrower" ("Borrower" to be construed as "Borrowers" if
the context so requires), hereby promises to pay to the order of PRINCIPAL LIFE
INSURANCE COMPANY, an Iowa corporation (as "Lender"), having a principal place
of business and post office address at c/o Principal Capital Management, LLC,
801 Grand Avenue, Des Moines, Iowa 50392-1450, or at such other place as Lender
may designate, the principal sum of Six Million Two Hundred Thousand and 00/100
Dollars ($6,200,000.00) (the "Loan Amount") or so much thereof as shall from
time to time have been advanced, together with interest on the unpaid balance of
said sum from March 16, 2001 (the "Closing Date"), at the rate of Seven and
Twenty-three one hundredths percent (7.23%) per annum.
A payment of interest from the Closing Date to and including March 31,
2001 shall be paid on the Closing Date calculated by multiplying the actual
number of days elapsed in the period for which interest is being calculated by a
daily rate based on the foregoing annual interest rate and a 360-day year.
Thereafter, interest shall be computed on the unpaid balance on the basis of a
360-day year composed of twelve 30-day months. Beginning on May 1, 2001,
principal and interest shall be due and payable in installments of Forty Eight
Thousand Nine Hundred Twenty-eight Dollars and 21/100 ($48,928.21), with an
installment in a like amount due and payable on the same day of each month
thereafter continuing to and including April 1, 2006. Lender shall have the
right to declare this Note to be due and payable in full on the Call Date or to
adjust the per annum interest rate on the Rate Adjustment Date to an interest
rate established by Lender ("Adjusted Interest Rate") as herein provided. In the
event Lender elects to declare this Note to be due and payable, this Note shall
become due and payable, in full, without a Make Whole Premium on April 1, 2006
("Call Date"). In the event Lender elects to adjust the interest rate, then on
March 1, 2006 ("Rate Adjustment Date") the per annum interest rate shall be
adjusted to the Adjusted Interest Rate and commencing on April 1, 2006, monthly
installments of principal and interest shall be due and payable in an amount
determined by amortizing the then principal balance of this Note over a 15-year
term at the Adjusted Interest Rate, and a like amount shall be due and payable
on the same day of each month thereafter, until said principal and interest
shall be paid, except that all remaining principal and interest shall be due and
payable on April 1, 2011 or such earlier date resulting from acceleration of the
Indebtedness by Lender ("Maturity Date"). Each installment shall be credited
first upon interest then accrued and the remainder upon principal, and interest
shall cease to accrue upon principal so credited. All principal and interest
shall be paid in lawful money of the United States of America, by automated
clearing house transfer through such bank or financial institution as shall be
approved in writing by Lender, shall be made to an account designated by Lender,
and shall be initiated by Lender or shall be made in such other manner as Lender
may direct from time to time.
Lender shall notify Borrower in writing ("Lender's Election Notice") on
or before February 1, 2006 of Lender's election to adjust the interest rate or
of Lender's intention to declare this Note to be due and payable in full. In the
event Lender elects to adjust the interest rate, Lender's Election Notice will
contain the number of basis points ("Spread") and the United States Treasury
Issue ("Treasury Issue") that Lender anticipates it will use to establish the
Adjusted Interest Rate. The Spread shall be determined by Lender in its sole
discretion based on Lender's evaluation of: (i) the then current financial
performance and projected risk of the Premises, which shall encompass various
factors, including but not limited to contract debt service coverage,
loan-to-value ratio, economic debt service coverage, occupancy, frequency of
tenant rollover, financial strength and stability of tenants; (ii) the then
current financial status of Borrower, which shall include but not be limited to
creditworthiness, financial strength, percentage of liabilities to liquid
assets, and annual net income; and (iii) the remaining term and current
outstanding balance of the Note.
At any time and from time to time before the Adjusted Interest Rate is
established, provided at least seven (7) days have elapsed since the previous
Lender's Election Notice, Lender may establish a new Spread which Lender
anticipates it will use to establish the Adjusted Interest Rate and notify
Borrower of the same. Within thirty (30) days of the initial Lender's Election
Notice, the Adjusted Interest Rate must be established by mutual written
agreement of Lender and Borrower. The Adjusted Interest Rate may only be
established by mutual written agreement of Lender and Borrower and simultaneous
payment by Borrower of Fifteen Thousand and 00/100 Dollars ($15,000.00) ("Rate
Adjustment Fee"). In the event: (i) Lender notifies Borrower of its intention to
declare this Note to be due and payable in full, (ii) Lender and Borrower are
unable for any reason to mutually agree in writing on the Adjusted Interest Rate
within thirty days after the initial Lender's Election Notice; or (iii) Borrower
fails to pay the Rate Adjustment Fee to Lender when due, this Note shall become
due and payable in full, on the Call Date, without a Make Whole Premium, and all
principal, interest accrued or to accrue to the date of prepayment at the rate
in effect at the time of the initial Lender's Election Notice, and all other
Indebtedness shall become immediately due and payable in full. Notwithstanding
any other provision herein, Lender shall not be obligated to adjust the interest
rate if any default exists under this Note or the Loan Documents.
In the event Borrower accepts the Adjusted Interest Rate, Borrower is
required to provide Lender the following:
(i) a new ALTA standard loan title policy for the Loan or an
endorsement updating said title policy in the full amount of the Loan in
form and by an issuer satisfactory to Lender at the time of the rate
adjustment unless (x) the outstanding balance of the Loan at the time of
the Call Date is less than $20,000,000.00, (y) no liens or encumbrances
exist against the Premises except as previously approved by Lender in the
Mortgage, and (z) no mortgages or deeds of trust exist against the Premises
except for the Mortgage. Borrower further agrees that the policy shall
insure Lender's Mortgage, at the Adjusted Interest Rate to be a first and
prior lien subject only to those exceptions which were previously approved
by Lender and provide coverage against mechanic's liens;
(ii) an amendment to the Note in form and substance satisfactory to
Lender executed by Borrower evidencing the Adjusted Interest Rate and a
representation that the Premises is free and clear of any liens,
privileges, mortgages or encumbrances except as expressly permitted in the
Mortgage;
(iii) a usury opinion or endorsement to the title policy acceptable to
Lender if Lender reasonably believes that the Adjusted Interest Rate is or
may be usurious; and
(iv) a title search acceptable to Lender and reimbursement for
Lender's costs incurred in obtaining the same.
2. No privilege is reserved by Borrower to prepay any principal of this Note
prior to the Maturity Date, except on or after the date hereof, privilege is
reserved, after giving thirty (30) days' prior written notice to Lender, to
prepay in full, but not in part, all principal and interest to the date of
payment, along with all sums, amounts, advances, or charges due under any
instrument or agreement by which this Note is secured, upon the payment of a
"Make Whole Premium." The Make Whole Premium shall be the greater of one percent
(1%) of the principal amount to be prepaid or a premium calculated as provided
in subparagraphs (a) through (c) below:
(a) Determine the "Reinvestment Yield." The Reinvestment Yield will be
equal to the yield on the applicable* U.S. Treasury Issue ("Primary
Issue")** published one week prior to the date of prepayment and converted
to an equivalent monthly compounded nominal yield.
**In the event there is no market activity involving the Primary Issue at
the time of prepayment, Lender shall choose a comparable Treasury Bond,
Note or Bill ("Secondary Issue") which Lender reasonably deems to be
similar to the Primary Issue's characteristics (i.e., rate, remaining time
to maturity, yield).
(b) Calculate the "Present Value of the Mortgage." The Present Value
of the Mortgage is the present value of the payments to be made in
accordance with this Note (all installment payments and any remaining
payment due on the Call Date, or if the Call Date has already passed, on
the Maturity Date) discounted at the Reinvestment Yield for the number of
months remaining from the date of prepayment to the Call Date, or if the
Call Date has already passed, to the Maturity Date.
(c) Subtract the amount of the prepaid proceeds from the Present Value
of the Mortgage as of the date of prepayment. Any resulting positive
differential shall be the premium.
As set forth above, the U.S. Treasury Issue applicable for each
prepayment period is as follows:
Prepayment Period U.S. Treasury Issue
To March 1, 2006 *
March 1, 2006 to March 1, 2011 *
*At this time there is not a U.S. Treasury Issue for this prepayment
period. At the time of prepayment, Lender shall select in its sole and
absolute discretion a U.S. Treasury Issue with similar remaining time
to the end of the applicable prepayment period.
3. Borrower agrees that if Lender accelerates the whole or any part of the
principal sum evidenced hereby, or applies any proceeds pursuant to the
provisions of the Loan Documents, Borrower waives any right to prepay said
principal sum in whole or in part without premium and agrees to pay, as yield
maintenance protection and not as a penalty, the Make Whole Premium.
4. If any payment of principal, interest, Make Whole Premium, or other
Indebtedness is not made when due, damages will be incurred by Lender, including
additional expense in handling overdue payments, the amount of which is
difficult and impractical to ascertain. Borrower therefore agrees to pay, upon
demand, the sum of four cents ($.04) for each one dollar ($1.00) of each said
payment which becomes overdue ("Late Charge") as a reasonable estimate of the
amount of said damages, subject, however, to the limitations contained in
paragraph 6 hereof.
5. If any Event of Default has occurred and is continuing under the Loan
Documents, the entire principal balance of the Loan, interest then accrued, and
Make Whole Premium, and all other Indebtedness whether or not otherwise then
due, shall at the option of Lender, become immediately due and payable without
demand or notice, and whether or not Lender has exercised said option, interest
shall accrue on the entire principal balance, interest then accrued, Make Whole
Premium and any other Indebtedness then due, at a rate equal to the Default Rate
until fully paid.
6. Notwithstanding anything herein or in any of the other Loan Documents to the
contrary, no provision contained herein or therein which purports to obligate
Borrower to pay any amount of interest or any fees, costs or expenses which are
in excess of the maximum permitted by applicable law, shall be effective to the
extent it calls for the payment of any interest or other amount in excess of
such maximum. All agreements between Borrower and Lender, whether now existing
or hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of demand for payment or acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged or
received by Lender exceed the maximum amount permissible under applicable law.
If, from any circumstance whatsoever, interest would otherwise be payable to
Lender in excess of the maximum lawful amount, the interest payable to Lender
shall be reduced to the maximum amount permitted under applicable law; and if
from any circumstance Lender shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall, at the option of Lender, be refunded to
Borrower or be applied to the reduction of the principal hereof and not to the
payment of interest or, if such excessive interest exceeds the unpaid balance of
principal hereof such excess shall be refunded to Borrower. This paragraph shall
control all agreements between Borrower and Lender.
7. Borrower and any endorsers or guarantors waive presentment, protest and
demand, notice of protest, demand and dishonor and nonpayment, and agree the
Maturity Date of this Note or any installment may be extended without affecting
any liability hereunder, and further promise to pay all reasonable costs and
expenses, including but not limited to, attorney's fees incurred by Lender in
connection with any default or in any proceeding to interpret and/or enforce any
provision of the Loan Documents. No release of Borrower from liability hereunder
shall release any other maker, endorser or guarantor hereof.
8. This Note is secured by the Loan Documents creating among other things legal
and valid encumbrances on and an assignment of all of Borrower's interest in any
Leases of the Premises located in the county of Ramsey, state of Minnesota.
Capitalized terms used herein and not otherwise defined shall have those
meanings given to them in the Loan Documents. In no event shall such documents
be construed inconsistently with the terms of this Note, and in the event of any
discrepancy between any such documents and this Note, the terms hereof shall
govern. The proceeds of this Note are to be used for business, commercial,
investment or other similar purposes, and no portion thereof will be used for
any personal, family or household use. This Note shall be governed by and
construed in accordance with the laws of the State where the Premises is
located, without regard to its conflict of law principles.
9. Notwithstanding any provision to the contrary in this Note or the Loan
Documents and except as otherwise provided for below, the liability of Borrower
and any general partner of Borrower under the Loan Documents shall be limited to
the interest of Borrower and any general partner of Borrower in the Premises and
the Rents. In the event of foreclosure of the liens evidenced by the Loan
Documents, no judgment for any deficiency upon the Indebtedness evidenced by the
Loan Documents shall be sought or obtained by Lender against Borrower or any
general partner of Borrower. Nothing herein shall in any manner limit or impair
(i) the lien or enforcement of the Loan Documents pursuant to the terms thereof
or (ii) the obligations of any indemnitor or guarantor, if any.
Notwithstanding any provision hereinabove to the contrary, Borrower and
any general partner of Borrower shall be personally liable to Lender for:
(a) any loss or damage to Lender arising from (i) the sale or
forfeiture of the Premises resulting from Borrower's failure
to pay any of the taxes, assessments or charges specified in
the Loan Documents or (ii) Borrower's failure to insure the
Premises in compliance with the provisions of the Loan
Documents;
(b) any event or circumstance for which Borrower indemnifies
Lender under the Environmental Indemnity;
(c) nonpayment of taxes, assessments, insurance premiums and
utilities for the Premises and any penalty or late charge
associated with nonpayment thereof;
(d) failure to manage, operate, and maintain the Premises in a
commercially reasonable manner for similar property types in
the surrounding geographic area;
(e) any sums expended by Lender in fulfilling the obligations of
Borrower as lessor under any Lease of the Premises prior to a
sale of the Premises pursuant to foreclosure or power of sale,
a bona fide sale (permitted by the terms of paragraph 2(f) of
the Mortgage or consented to in writing by Lender) to an
unrelated third party or upon conveyance to Lender of the
Premises by a deed acceptable to Lender in form and content
(each of which shall be referred to as a "Sale" for purposes
of this paragraph) or expended by Lender after a Sale of the
Premises for obligations of Borrower which arose prior to a
Sale of the Premises;
Borrower's personal liability for items specified in (c), (d)
and (e) above shall be limited to the amount of rents, issues,
proceeds and profits from the Premises ("Rents and Profits")
received by Borrower for the twenty-four (24) months preceding
an Event of Default and thereafter; but less any such Rents
and Profits applied to (A) payment of principal, interest and
other charges when due under the Loan Documents, or (B)
payment of expenses for the operation, maintenance, taxes,
assessments, utility charges and insurance of the Premises
including sufficient reserves for the same or replacements or
renewals thereof ("Operation Expense(s)") provided that (x)
Borrower has furnished Lender with evidence satisfactory to
Lender of the Operation Expenses and payment thereof, and (y)
any payments to parties related to Borrower shall be
considered an Operation Expense only to the extent that the
amount expended for the Operation Expense does not exceed the
market rate for such Operation Expense.
(f) any rents or other income regardless of type or source of payment
or other considerations in lieu thereof (including, but not limited to,
common area maintenance charges, lease termination payments, refunds of any
type, prepayment of rents, settlements of litigation, or settlements of
past due rents) from the Premises which Borrower has received or will
receive after an Event of Default under the Loan Documents which are not
applied to (A) payment of principal, interest and other charges when due
under the Loan Documents or (B) payment of Operation Expenses provided that
(x) Borrower has furnished Lender with evidence satisfactory to Lender of
the Operation Expenses and payment thereof, and (y) any payments to parties
related to Borrower shall be considered an Operation Expense only to the
extent that the amount expended for the Operation Expense does not exceed
the market rate for such Operation Expense;
(g) any security deposits of tenants, together with any interest
on such security deposits required by law or the leases, not
turned over to Lender upon conveyance of the Premises to
Lender pursuant to foreclosure or power of sale or by a deed
acceptable to Lender in form and content;
(h) misapplication or misappropriation of tax reserve accounts,
tenant improvement reserve accounts, security deposits,
prepaid rents or other similar sums paid to or held by
Borrower or any other entity or person in connection with the
operation of the Premises;
(i) any insurance or condemnation proceeds or other similar funds or
payments applied by Borrower in a manner other than as expressly provided
in the Loan Documents; and
(j) any loss or damage to Lender arising from any fraud or willful
misrepresentation by or on behalf of Borrower, Interest Owner
or any guarantor regarding the Premises, the making or
delivery of any of the Loan Documents or in any materials or
information provided by or on behalf of Borrower, Interest
Owner or any guarantor in connection with the Loan.
Notwithstanding anything contained in paragraphs 9(a)(i) and
9(c) hereinabove as it relates solely to taxes, assessments
and insurance premiums, to the extent Lender is impounding for
taxes, assessments and insurance premiums in accordance with
the Loan Documents and Borrower has fully complied with all
terms and conditions of the Loan Documents relating to
impounding for the same, then Borrower shall not be personally
liable for Lender's failure to apply any of said impound
amounts held by Lender in accordance with the Loan Documents.
Notwithstanding anything to the contrary in the Loan Documents, the
limitation on liability contained in the first paragraph of this paragraph 9
SHALL BECOME NULL AND VOID and shall be of no further force and effect in the
event:
(w) of any breach or violation of paragraph 2(f) (due on sale or
encumbrance) of the Mortgage, other than (i) the filing of a
nonmaterial mechanic's lien affecting the Premises or a
mechanic's lien affecting the Premises for which Borrower has
complied with the provisions of paragraph 1(e) of the
Mortgage, or (ii) the granting of any utility or other
nonmaterial easement or servitude burdening the Premises, or
(iii) any transfer or encumbrance of a nonmaterial economic
interest in the Premises not otherwise set forth in (i) or
(ii); or
(x) of any filing by Borrower of a petition in bankruptcy or
insolvency or a petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Bankruptcy laws of the
United States or under any other applicable federal, state or
other statute or law.
10. If more than one, all obligations and agreements of Borrower and of any
general partners of Borrower are joint and several.
11. This Note may not be changed or terminated orally, but only by an agreement
in writing and signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought. All of the rights, privileges and
obligations hereunder shall inure to the benefit of the heirs, successors and
assigns of Lender and shall bind the heirs and permitted successors and assigns
of Borrower.
12. If any provision of this Note shall, for any reason, be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof, but this Note shall be construed as if such invalid or
unenforceable provision had never been contained herein.
13. This Note may be executed in counterparts, each of which shall be deemed an
original; and such counterparts when taken together shall constitute but one
agreement.
(Signatures on next page)
NEW BRIGHTON BUSINESS CENTER LLC, a Delaware
limited liability company
By ______________________________
Name:
Title: