PROMISSORY NOTE
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$2,132,500.00 05-06-1999 05-10-2009 1501257103 170 MULTI 104677 40
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Borrower: REGAN HOLDING CORP. Lender: National Bank of the Redwoods
1179 N McDOWELL BLVD Main Office
PETALUMA, CA 94954 111 Santa Rosa Ave
Santa Rosa, CA 96404-4905
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Principal Amount: $2,132,500.00 Initial Rate: 8.250% Date of Note: May 6, 1999
PROMISE TO PAY. REGAN HOLDING CORP. ("Borrower") promises to pay to National
Bank of the Redwoods ("Lender"), or order, in lawful money of the United States
of America, the principal amount of Two Million One Hundred Thirty Two Thousand
Five Hundred & 00/100 Dollars ($2,132,500.00), together with interest on the
unpaid principal balance from May 10, 1999, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the index,
Borrower will pay this loan on demand, or if no demand is made, in 119 regular
payments of $16,826.17 each and one irregular last payment estimated at
$1,750,389.44. Borrower's first payment is due June 10, 1999, and all subsequent
payments are due on the same day of each month after that. Borrower's final
payment due May 10, 2009, will be for all principal and all accrued interest not
yet paid. Payments include principal and interest. Interest on this Note is
computed on a 365/365 simple interest basis; that is, by applying the ratio of
the annual interest rate over the number of days in a year, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the West Coast
Edition Of The Wall Street Journal Prime Rate (the "Index"). The index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes
unavailable during the term of this loan, Lender may designate a substitute
index after notice to Borrower. Lender will tell Borrower the current Index rate
upon Borrower's request. Borrower understands that Lender may make loans based
on other rates as well. The interest rate change will not occur more often than
each first day of each calendar quarter. The Index currently is 7.750% per
annum. The interest rate to be applied to the unpaid principal balance of this
Note will be at a rate of 0.500 percentage points over the Index, resulting in
an initial rate of 8.250% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law. Whenever increases occur in the interest rate, Lender, at its option, may
do one or more of the following: (a) increase Borrower's payments to ensure
Borrower's loan will pay off by its original final maturity date, (b) increase
Borrower's payments to cover accruing interest,
(c) increase the number of Borrower's payments, and (d) continue Borrower's
payments at the same amount and increase Borrower's final payment.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $75.00, whichever is less.
LENDER'S RIGHTS. Upon Lender's demand, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately due,
without notice, and then Borrower will pay that amount. Lender may hire or pay
someone else to help collect this Note it Borrower does not pay. Borrower also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees and Lender's legal expenses whether or
not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection services.
Borrower also will pay any court costs, in addition to all other sums provided
by law. This Note has been delivered to Lender and accepted by Lender in the
State of California. If there is a lawsuit, Borrower agrees upon Lander's
request to submit to the jurisdiction of the courts of Sonoma County, the State
of California. This Note shall be governed by and construed in accordance with
the laws of the State of California.
COLLATERAL Borrower acknowledges this Note is secured by, in addition to any
other collateral, a Deed of Trust and an Assignment of All Rents dated May 6,
1999, to a trustee in favor of Lender on real property located in SONOMA County,
State of California. That agreement contains the following due on sale
provision: Lender may, at its option, declare immediately due and payable all
sums secured by this Note upon the sale or transfer, without the Lender's prior
written consent, of all or any part of the Real Property, or any interest in the
Real Property. A "sale or transfer" means the conveyance of Real Property or any
right, title or interest therein; whether legal, beneficial or equitable;
whether voluntary or involuntary; whether by outright sale, deed, installment
sale contract, land contract, contract for deed, leasehold interest with a term
greater than three (3) years, lease-option contract, or by sale, assignment, or
transfer of any beneficial interest in or to any land trust holding title to the
Real Property, or by any other method of conveyance of Real Property interest.
If any Trustor is a corporation, partnership or limited liability company,
transfer also includes any change in ownership of more than twenty-five percent
(25%) of the voting stock, partnership interests or limited liability company
interests, as the case may be, of Trustor. However, this option shall not be
exercised by Lender if such exercise is prohibited by applicable law.
DEFAULT INTEREST RATE. Notwithstanding any other provisions of this Note,
Borrower acknowledges that in the event of default, Lender, at its option, may
increase the interest rate on this Note to 18.00% per annum. Borrower will be
notified in writing, with a copy to all guarantors, that an event of default has
occurred and that failure to cure the default may result in the application of
the default interest rate effective seven (7) calendar days from the date of
notification to the Borrower.
PAYMENT ADJUSTMENT. This loan is amortized over a period of twenty-five (25)
years, with maturity in ten (10) years. Whenever the interest rate changes,
Lender will reamortize the loan as of the date of the rate change for the
remaining term of the loan.
GENERAL PROVISIONS. Lander may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone. All such parties also agree that
Lender may modify this loan without the consent of or notice to anyone other
than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
REGAN HOLDING CORP.
By: /s/ David A. Skup
________________________________________
DAVID A. SKUP, CHIEF FINANCIAL OFFICER
LENDER:
National Bank of the Redwoods
By: /s/ Brian Reed
________________________________________
Authorized Officer