EXHIBIT 10.13
SECURED PROMISSORY NOTE
SECURED PROMISSORY NOTE
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D-750906
$39,450,000.00 January 19, 1996
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, COMMERCIAL NET LEASE REALTY, INC.,
a Maryland corporation, hereby promises to pay to the order of PRINCIPAL
MUTUAL LIFE INSURANCE COMPANY, an Iowa corporation, at the Home Office of
Principal Mutual Life Insurance Company at 711 High Street, Des Moines, Iowa
50392, or at such other place as the holder of this Note may designate, the
principal sum of Thirty-Nine Million Four Hundred Fifty Thousand and No/100
Dollars ($39,450,000.00) or so much thereof as shall from time to time have
been advanced, together with interest on the unpaid balance of said sum from
the date of disbursement at the rate of seven and four hundred thirty-five one
thousandths percent (7.435%) per annum, computed on the basis of a 360 day
year composed of twelve 30-day months, in installments as follows:
Beginning on February 15, 1996, principal and interest
shall be due and payable in installments of Three
Hundred Forty-One Thousand Two Hundred Four and
88/100th Dollars ($341,204.88) with an installment in
a like amount due and payable on the same day of each
month thereafter except that all remaining principal
and interest shall be due and payable on February 15,
2006 ("Maturity Date"). All such payments shall be
made by wire transfer of immediately available funds
to the registered holder hereof at Norwest Bank, Iowa,
N.A., 7th and Walnut Streets, Des Moines, Iowa 50304,
for credit to Principal Mutual Life Insurance Company,
General Account No. 014752, RE: D-750906 with
reference to the undersigned. If on the date of the
first installment, interest is accrued for more or
less than one installment period, the amount of said
installment shall be increased or decreased by the
amount that the interest accrued exceeds or is less
than the interest for one installment period based on
the actual number of days elapsed to the date of said
installment. All principal and interest shall be paid
in lawful money of the United States of America.
No privilege is reserved by the undersigned to prepay any principal of
this Note prior to the Maturity Date, except as expressly set forth in
that certain Loan Agreement dated this date (the "Loan Agreement") made
by and between the undersigned and Principal Mutual Life Insurance
Company, and except that anytime after the date hereof, so long as no
default or Event of Default exists under this Note or any instrument by
which it is secured, privilege is reserved, after giving sixty (60)
days' prior written notice to the holder of this Note, 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." From the date hereof up to and
including February 15, 2000, the "Make Whole Premium" shall be the
greater of (a) one percent (1%) of the principal amount to be prepaid,
or (b) the excess, if any, of:
(i) the aggregate present value as of the date of payment or
prepayment noticed as set forth above (hereinafter, the "Payment Date")
of each dollar of principal being paid or prepaid (taking into account
the application of such prepayment as set forth herein) and the amount
of interest (exclusive of interest accrued to the Payment Date) that
would have been payable in respect of such dollar of principal being
paid or prepaid if such payment or prepayment had not been made,
determined by discounting such amounts monthly at a rate which is equal
to the "Treasury Rate" from the due date of this Note, plus fifty (50)
basis points, over
(ii) 100% of the principal amount being paid or prepaid.
From February 16, 2000 through the Maturity Date the Make Whole Premium
shall be the amount, if any, calculated in the immediately preceding
paragraph without regard to the 1% minimum.
The "Treasury Rate" will be equal to the arithmetic mean of the yields
to maturity converted to a monthly equivalent of United States Treasury
obligations with a constant maturity (as compiled by and published in
the United States Federal Reserve Bulletin [H.R. 15] (hereinafter "H.R.
15") or its successor publication for each of the two weeks immediately
preceding the Payment Date) most nearly equal to the remaining "Weighted
Average Life to Maturity" of this Note as of the Payment Date. If the
yields referred to in the preceding sentence shall not have been so
published, the yields corresponding to the Payment Date shall be
calculated on the basis of the arithmetic mean of the arithmetic means
of the secondary market ask rates, as of approximately 3:30 P.M., New
York City time, on the last business days of each of the two weeks
preceding the Payment Date, for the actively traded U.S. Treasury
security or securities with a maturity or maturities most closely
corresponding to the "Weighted Average Life to Maturity", as reported by
three primary United States Government securities dealers in New York
City of national standing selected in good faith by the holder of this
Note. If no maturity exactly corresponding to such remaining "Weighted
Average Life to Maturity" should appear therein, yields for the next
longer and the next shorter published maturities shall be calculated
pursuant to the foregoing sentence and the Treasury Rate shall be
interpolated from such yields on a straight-line basis (rounding to the
nearest month).
The "Weighted Average Life to Maturity" with respect to this Note means,
at the Payment Date, the number of years obtained by dividing the
"Remaining Dollar-years" of this Note by the outstanding principal
amount hereof. "Remaining Dollar-years" means the sum of the product
obtained by multiplying (A) the amount of each then remaining required
principal repayment (including repayment of any principal at the due
date of this Note) by (B) the number of years (rounded to the nearest
one-twelfth) which will elapse between the Payment Date and the date
such required payment is due.
The undersigned agrees that if the holder of this Note accelerates the
whole or any part of the principal sum evidenced hereby, or applies any
proceeds as if such application had been made as a result of such
acceleration, pursuant to the provisions of those certain mortgages and/or
deeds of trust of even date herewith between the undersigned and Principal
Mutual Life Insurance Company (collectively, the "Mortgage"), the undersigned
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" defined herein.
Time is of the essence with respect to the payment of this Note.
If any payment of principal, interest or premium is not made when due,
damages will be incurred by the holder of this Note, including additional
expense in handling overdue payments, the amount of which is difficult and
impractical to ascertain. The undersigned 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 as a reasonable estimate of the amount of said
damages, subject, however, to the limitations contained in the second
immediately succeeding paragraph.
If any payment of principal, interest or premium is not made for a
period exceeding ten (10) days after due, or if any Event of Default has
occurred or is continuing under any instrument by which this Note is, or may
hereafter be, secured, the entire principal balance, interest then accrued,
and premium, whether or not otherwise then due, shall at the option of the
holder of this Note, become immediately due and payable without demand or
notice, and whether or not the holder of this Note has exercised said option,
interest shall accrue on the entire principal balance, interest then accrued,
and any premium then due, at a rate equal to the lesser of (i) four percent
(4%) per annum above the then applicable rate of interest payable under this
Note or (ii) the maximum rate allowed by applicable law until fully paid or if
the holder of this Note has not exercised said option, for the duration of
such Event of Default.
Notwithstanding anything herein or in any of the Loan Documents
(hereinafter defined) to the contrary, no provision contained herein or
therein which purports to obligate the undersigned 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. Any such
excess shall, if inadvertently collected, be credited as a reduction of
principal, effective as of the date inadvertently collected. Any payment of
principal in excess of the then outstanding principal balance resulting from
the inadvertent collection of interest shall be refunded to the undersigned,
effective as of the date inadvertently collected, together with interest at
the rate specified in Subsection 687.04(2) of the Florida Statutes or any
successor statute. All agreements between the undersigned and the holder
hereof, 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 the holder hereof exceed the
maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the holder hereof in excess
of the maximum lawful amount, the interest payable to the holder hereof shall
be reduced to the maximum amount permitted under applicable law; and if from
any circumstance the holder hereof 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 the holder hereof, 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 the undersigned. This
paragraph shall control all agreements between the undersigned and the holder
hereof.
The undersigned and any endorsers or guarantors waive presentment,
protest and demand, notice of protest, demand and dishonor and nonpayment and
notice of acceleration and notice of intent to accelerate maturity, and agree
the due 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 attorney's and paralegal s fees, incurred by the holder
hereof in connection with any default or in any proceeding (whether incurred
in any trial, appellate, bankruptcy, condemnation or any other proceeding) to
interpret and/or enforce any provision of this Note or any instrument by which
it is secured. No release of the undersigned from liability hereunder shall
release any other maker, endorser or guarantor hereof.
This Note is secured by instruments and agreements of even date herewith
executed and delivered by the undersigned to Principal Mutual Life Insurance
Company creating among other things legal and valid encumbrances on and an
assignment of all of the undersigned's interest in any leases of certain
Premises set forth on Exhibit A to the Loan Agreement, as such Exhibit may be
adjusted from time to time in accordance with the terms of the Loan Agreement
(collectively, the "Premises"). Terms used herein which are defined in such
instruments or agreements and not otherwise defined herein have the same
definition as in such instruments and agreements. 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 of Florida.
Notwithstanding any provision to the contrary in this Note, the Loan
Agreement, the Mortgage, or any other instrument or agreement by which this
Note is secured (collectively referred to herein as the "Loan Documents"), and
except as otherwise provided in this paragraph, the liability of the
undersigned under the Loan Documents shall be limited to the interest of the
undersigned in the Premises and the rents, issues, proceeds and profits
thereof. 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 the holder of this Note
against the undersigned . Nothing contained in this paragraph shall:
(a) prevent the failure of the undersigned to make any payment or to
perform any obligation under any of the Loan Documents within the
time periods provided therein from being an Event of Default
thereunder;
(b) be construed as limiting the obligations of the undersigned to any
lessee under any lease of the Premises;
(c) in any way limit or impair the lien or enforcement of the Loan
Documents pursuant to the terms thereof; or
(d) limit the obligations of any indemnitor or guarantor, if any, of
obligations of the undersigned under the Loan Documents.
Notwithstanding the foregoing paragraph, the undersigned, but not its
shareholders, officers, directors, employees or agents, shall be personally
liable to the holder of this Note for:
(a) failure of the undersigned to comply with paragraphs 2 (taxes and
assessments) and 3 (insurance) of the Mortgage [or in connection
with the Georgia Deed to Secure Debt, paragraphs 1.02 (taxes,
liens and other charges) and 1.03 (insurance)] with respect to
amounts accruing prior to a Sale of the Premises, as defined
below;
(b) any event or circumstance for which the undersigned indemnifies
the holder of this Note under paragraph 1(m) (environmental
indemnity) of the Mortgage [or in connection with the Georgia Deed
to Secure Debt, paragraph 1.06(m) (environmental indemnity)];
(c) failure of the undersigned to pay utilities accruing prior to a
Sale of the Premises, as defined below, on or before the date such
payments are due;
(d) operation and maintenance of the Premises applicable to the time
period prior to a Sale of the Premises, as defined below;
(e) any sums expended by the holder of this Note in fulfilling the
obligations of the undersigned 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 1(l) of the Mortgage [or in connection with the Georgia
Deed to Secure Debt, paragraph 1.06(i)] or consented to in writing
by the holder of this Note) to an unrelated third party or upon
conveyance to the holder of this Note of the Premises by a deed
acceptable to the holder of this Note in form and content (each of
which shall be referred to as a "Sale" for purposes of this
paragraph) or expended by the holder of this Note after a Sale of
the Premises for obligations of the undersigned which arose prior
to a Sale of the Premises;
(f) any rents or other income regardless of type or source of payment
(including, but not limited to, CAM charges, lease termination
payments, refunds of any type, prepayment of rents, settlements of
litigation, or settlements of past due rents) from the Premises
which the undersigned has received or has a right to receive after
an Event of Default under the Loan Documents or an event which
with the passage of time, the giving of notice or both would
constitute an Event of Default, either or both of which has
occurred and is continuing, and which are not applied to (A)
expenses of operation and maintenance of the Premises and the
taxes, assessments, utility charges and insurance of the Premises,
taking into account sufficient reserves for the same and for
replacements and recurring items, and (B) payment of principal,
interest and other charges when due under the Loan Documents;
provided that any payments to parties related to the undersigned
shall be considered expenses of operation only if they are at
market rates or fees consistent with market rates or fees for the
same or similar services;
(g) any security deposits of tenants not turned over to the holder of
this Note upon conveyance of the Premises to the holder of this
Note pursuant to foreclosure or power of sale or by a deed
acceptable to the holder of this Note 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 the undersigned or any other
entity or person in connection with the operation of the Premises;
(i) any waste committed or allowed by the undersigned with respect to
the Premises prior to a Sale of the Premises,;
(j) any insurance or condemnation proceeds or other similar funds or
payments with respect to a casualty or condemnation occurring
prior to a Sale of the Premises, applied by the undersigned in a
manner other than as expressly provided in the Loan Documents;
(k) any breach or violation of paragraph 1(l) (due on sale or
encumbrance) of the Mortgage [or in connection with the Georgia
Deed to Secure Debt, paragraph 1.06(i) (due on sale or
encumbrance)], other than the filing of a nonmaterial mechanic's
lien affecting the Premises, the granting of any utility or other
nonmaterial easement or servitude burdening the Premises, or any
other transfer or encumbrance not in the nature of a transfer,
reduction or impairment of any material economic interest in the
Premises; and
(l) any fraud or willful misrepresentation by the undersigned
regarding the Premises, the making or delivery of any of the Loan
Documents or in any materials or information provided by the
undersigned in connection with the loan.
Notwithstanding anything herein contained to the contrary, the
undersigned, but not its shareholders, officers, directors, employees,
or agents shall be personally liable to the holder of the Note for 125%
of the amount set forth on Exhibit B to the Loan Agreement, as may be
adjusted from time to time, which is allocated to the respective portion
of the Premises (the Applicable Portion of the Premises ), plus the
Make Whole Premium calculated on such amount had such amount been
prepaid as of the date of the occurrence set forth below:
(a) in the event of any amendment, modification or termination by the
undersigned of the particular Lease (as defined in the Mortgage,
Deed to Secure Debt or Deed of Trust with respect to the
Applicable Portion of the Premises) for the Applicable Portion of
the Premises without the prior written consent of the holder of
the Note;
(b) in the event the Lessee (as defined in the Mortgage, Deed to
Secure Debt or Deed of Trust with respect to the Applicable
Portion of the Premises) under the particular Lease for the
Applicable Portion of the Premises is not obligated to notify the
holder of the Note of a default by the undersigned and the
undersigned defaults under said Lease and the holder of the Note
does not receive notice of said default following the occurrence
thereof within a reasonable period of time to effect cure of said
default; or
(c) in the event the undersigned violates any exclusive use or non-
compete provision granted to the Lessee under the particular Lease
for the Applicable Portion of the Premises.
If more than one, all obligations and agreements of the undersigned are
joint and several.
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 the holder hereof and shall bind the heirs,
successors and assigns of the undersigned.
The parties hereto intend and believe that each provision of this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this note to be unlawful, void or
unenforceable as written, then it is the intent of all parties hereto that
such provision shall be given full force and effect to the fullest possible
extent that it is legal, valid and enforceable, that the remainder of this
Note shall be construed as if such unlawful, void or unenforceable provision
were not contained herein, and that the rights, obligations and interests of
the undersigned and the holder hereof under the remainder of this Note shall
continue in full force and effect.
AFTER CONSULTING WITH COUNSEL AND CAREFUL CONSIDERATION, THE UNDERSIGNED
AND THE HOLDER (BY ITS ACCEPTANCE HEREOF) KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY LITIGATION ARISING OUT OF THIS NOTE OR ANY OTHER
INSTRUMENT OR AGREEMENT BY WHICH THIS NOTE IS, OR MAY HEREAFTER BE,
SECURED, OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(ORAL OR WRITTEN), OR ACTIONS OF THE UNDERSIGNED OR THE HOLDER. THIS
WAIVER IS A MATERIAL INDUCEMENT TO THE HOLDER'S ACCEPTANCE OF THIS NOTE.
COMMERCIAL NET LEASE REALTY, INC., a
Maryland corporation
By: /s/Robert A. Bourne
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Name: Robert A. Bourne
Title: President
[SEAL]