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[WELLS FARGO LOGO]
PROMISSORY NOTE SECURED BY LEASEHOLD DEED OF TRUST
EXHIBIT 10.40
Loan No. 31-0900195R
$15,750,000.00 San Francisco, California
July 13, 2000
THIS PROMISSORY NOTE SECURED BY LEASEHOLD DEED OF TRUST (this
"Note") is made and entered into by and between MHC DATE PALM, L.L.C., a
Delaware limited liability company ("Borrower"), and WELLS FARGO NATIONAL BANK,
NATIONAL ASSOCIATION ("Lender").
1. PROMISE TO PAY. For value received, Borrower promises to pay to the
order of Lender, at 1320 Willow Pass Road, Suite 205, Concord,
California 94520, or at such other place as may be designated in writing
by Lender, the principal sum of FIFTEEN MILLION SEVEN HUNDRED FIFTY
THOUSAND AND NO/100THS DOLLARS ($15,750,000.00) ("Loan"), with interest
thereon as specified herein. All sums owing hereunder are payable in
lawful money of the United States of America, in immediately available
funds, without offset, deduction or counterclaim of any kind.
2. SECURED BY LEASEHOLD DEED OF TRUST. This Note is secured by, among other
things, that certain Leasehold Deed of Trust and Absolute Assignment of
Rents and Leases and Security Agreement (And Fixture Filing) ("Leasehold
Deed of Trust") of even date herewith, executed by Borrower encumbering
certain real property and improvements located in Cathedral City,
California, as more particularly described therein ("Property").
3. DEFINITIONS. For the purposes of this Note, the following terms shall
have the following meanings:
"Affiliate" shall mean, as to any specified Person, any other Person
that, directly or indirectly, is in Control of, is Controlled by or is
under common Control with such specified Person.
"Business Day" shall mean any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banks in California are
authorized or required by law to close. All references in this Note to a
"day" or a "date" shall be to a calendar day unless specifically
referenced as a Business Day.
"Control" shall mean with respect to such Person either (i) ownership
directly or through other entities of more than 100% of all beneficial
equity interest in such Person and (ii) the power to direct the
management, operation and business of such person.
"Default" shall have the meaning set forth in the Leasehold Deed of
Trust.
"Disbursement Date" shall mean the date upon which the Loan proceeds are
funded into escrow in connection with the closing of the Loan.
"Effective Date" shall mean the date Lender authorizes the Loan proceeds
to be released to Borrower.
"Loan Documents" shall mean the documents listed in Exhibit B attached
hereto and incorporated herein by this reference.
"Maturity Date" shall mean July 1, 2010.
"Person" shall mean any individual, corporation, partnership, joint
venture, estate, trust, unincorporated association, any federal, state,
county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of
the foregoing.
4. INTEREST; PAYMENTS.
4.1 DEFINITIONS. The following terms shall have the meanings
indicated:
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"Actual/360 Basis" shall mean on the basis of a 360-day year and
charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated.
"30/360 Basis" shall mean on the basis of a 360-day year
consisting of 12 months of 30 days each.
"Interest Rate" shall mean a fixed interest rate equal to 7.96%.
4.2 INTEREST ACCRUAL. Interest on the outstanding principal balance
of this Note shall accrue from the Disbursement Date at an
annual rate equal to the Interest Rate calculated on an
Actual/360 Basis.
4.3 PAYMENTS. Monthly payments hereunder shall commence on the first
day of the calendar month following the Disbursement Date and
continue on the first day of each calendar month thereafter
through the Maturity Date. If the Disbursement Date is a date
other than the first day of a calendar month, the first monthly
payment shall be interest only. Subsequent monthly payments
shall be calculated on the basis of an equal-payment thirty (30)
year amortization of principal and interest. Notwithstanding
that interest on this Note accrues on an Actual/360 Basis, the
total amount of each such amortized monthly payment of principal
and interest shall be determined using a 30/360 Basis. On the
Maturity Date, all unpaid principal and accrued but unpaid
interest shall be due and owing in full. All interest shall be
paid in arrears.
4.4 ACKNOWLEDGMENTS. Borrower acknowledges that interest calculated
on an Actual/360 Basis exceeds interest calculated on a 30/360
Basis and, therefore: (a) a greater portion of each monthly
installment of principal and interest will be applied to
interest using the Actual/360 Basis than would be the case if
interest accrued on a 30/360 Basis; and (b) the unpaid principal
balance of this Note on the Maturity Date will be greater using
the Actual/360 Basis than would be the case if interest accrued
on a 30/360 Basis.
4.5 APPLICATION OF PAYMENTS. In the absence of a specific
determination by Lender to the contrary, all payments paid by
Borrower to Lender in connection with the obligations of
Borrower under this Note and under the other Loan Documents
shall be applied in the following order of priority: (a) to
amounts, other than principal and interest, due to Lender
pursuant to this Note or the other Loan Documents; (b) to
accrued but unpaid interest on this Note; and (c) to the unpaid
principal balance of this Note. Upon the occurrence of a
Default: (i) Borrower irrevocably waives the right to direct the
application of any and all payments at any time thereafter
received by Lender from or on behalf of Borrower, and (ii)
Borrower irrevocably agrees that Lender shall have the
continuing exclusive right to apply any and all such payments
against the then due and owing obligations of Borrower in such
order of priority as Lender may deem advisable.
5. LATE CHARGE; DEFAULT RATE.
5.1 LATE CHARGE. If any payment required hereunder is not paid on or
before the fifth calendar day of the month in which it is due,
Borrower shall pay a late or collection charge, as liquidated
damages, equal to 4% of the amount of such unpaid payment.
Borrower acknowledges that Lender will incur additional expenses
as a result of any late payments hereunder, which expenses would
be impracticable to quantify, and that Borrower's payments under
this paragraph are a reasonable estimate of such expenses. The
foregoing to the contrary notwithstanding, no late or collection
charge shall be payable by Borrower as a result of any delay in
the payment of any sum due and payable on the Maturity Date.
5.2 DEFAULT RATE. Commencing upon a Default and continuing until
such Default shall have been cured by Borrower, all sums owing
on this Note shall bear interest until paid in full at a rate
per annum equal to 5% plus the Interest Rate ("Default Rate").
6. MAXIMUM RATE PERMITTED BY LAW. Neither this Note nor any of the other
Loan Documents shall require the payment or permit the collection of any
interest or any late payment charge in excess of the maximum rate
permitted by law. If any such excess interest or late payment charge is
provided for under this Note or any of the other Loan Documents or if
this Note or any of the other Loan Documents shall be adjudicated to
provide for such excess, neither Borrower nor Borrower's successors or
assigns shall be obligated to pay such excess, and the right to demand
the payment of any such excess shall be and hereby is waived, and this
provision shall control any other provision of this Note or any of the
other Loan Documents. If Lender shall collect amounts which are deemed
to constitute interest and which would increase the effective interest
rate to a rate in excess of the maximum rate permitted by law, all such
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amounts deemed to constitute interest in excess of the maximum legal
rate shall, upon such determination, at the option of Lender, be
returned to Borrower or credited against the outstanding principal
balance of this Note.
7. ACCELERATION. If (a) Borrower shall fail to pay when due, subject to any
applicable grace or cure period, any sums payable under this Note; (b)
any other Default shall occur; or (c) any other event or condition shall
occur which, under the terms of the Leasehold Deed of Trust or any other
Loan Document, gives rise to a right of acceleration of sums owing under
this Note, then Lender, at its sole option, shall have the right to
declare all sums owing under this Note immediately due and payable;
provided, however, that if the Leasehold Deed of Trust or any other Loan
Document provides for the automatic acceleration of payment of sums
owing under this Note, all sums owing under this Note shall be
automatically due and payable in accordance with the terms of the
Leasehold Deed of Trust or such other Loan Document.
8. BORROWER'S LIABILITY.
8.1 LIMITATION. Except as otherwise provided in this Section 8,
Lender's recovery against Borrower under this Note and the other
Loan Documents shall be limited solely to the Property and the
"Collateral" (as defined in the Leasehold Deed of Trust).
8.2 EXCEPTIONS. Nothing contained in Section 8.1 or elsewhere in
this Note or the other Loan Documents, however, shall limit in
any way the personal liability of Borrower owed to Lender for
any losses or damages incurred by Lender (including, without
limitation, any impairment of Lender's security for the Loan)
with respect to any of the following matters: (a) fraud or
willful misrepresentation; (b) material physical waste of the
Property or the Collateral; (c) failure to pay property or other
taxes, assessments or charges (other than amounts paid to Lender
for taxes, assessments or charges pursuant to Impounds as
defined in Exhibit A and where Lender elects not to apply such
funds toward payment of the taxes, assessments or charges owed)
which may create liens senior to the lien of the Leasehold Deed
of Trust on all or any portion of the Property; (d) failure to
deliver any insurance or condemnation proceeds or awards or any
security deposits received by Borrower to Lender as required
under the terms of the Loan Documents or any other instrument
now or hereafter securing this Note or to otherwise apply such
sums as required under the terms of the Loan Documents or any
other instrument now or hereafter securing this Note; (e)
failure to apply any rents, royalties, accounts, revenues,
income, issues, profits and other benefits from the Property
which are collected or received by Borrower during the period of
any Default or after acceleration of the indebtedness and other
sums owing under the Loan Documents to the payment of either (i)
such indebtedness or other sums or (ii) the normal and necessary
operating expenses of the Property; (f) any breach by Borrower
of any covenant in this Note or in the Leasehold Deed of Trust
regarding Hazardous Materials (as defined in the Leasehold Deed
of Trust) or any representation or warranty of Borrower
regarding Hazardous Materials proving to have been untrue when
made; or (g) failure of any of the Date Palm Ground Lease
Documents (as hereinafter defined) required to be executed by
the ground lessors in connection with this Loan to be legally
binding on all of the ground lessors under the ground lease
encumbering the Property.
8.3 NO RELEASE OR IMPAIRMENT. Nothing contained in Section 8.1 shall
be deemed to release, affect or impair the indebtedness
evidenced by this Note or the obligations of Borrower under, or
the liens and security interests created by the Loan Documents,
or Lender's rights to enforce its remedies under this Note and
the other Loan Documents, including, without limitation, the
right to pursue any remedy for injunctive or other equitable
relief, or any suit or action in connection with the
preservation, enforcement or foreclosure of the liens,
mortgages, deeds of trust, assignments and security interests
which are now or at any time hereafter security for the payment
and performance of all obligations under this Note or the other
Loan Documents.
8.4 PREVAIL AND CONTROL. The provisions of this Section 8 shall
prevail and control over any contrary provisions elsewhere in
this Note or the other Loan Documents.
9. NON-TRUSTOR BORROWER. If any Borrower is not also a "Trustor" under the
Leasehold Deed of Trust, such Borrower hereby makes all representations
and warranties in favor of Lender contained in Article 5 of the
Leasehold Deed of Trust, all covenants contained in Section 6.15 of the
Leasehold Deed of Trust, and all indemnities of Lender contained in
Section 6.19 of the Leasehold Deed of Trust, jointly and severally with
"Trustor".
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10. MISCELLANEOUS.
10.1 JOINT AND SEVERAL LIABILITY. If this Note is executed by more
than one person or entity as Borrower, the obligations of each
such person or entity shall be joint and several. No person or
entity shall be a mere accommodation maker, but each shall be
primarily and directly liable hereunder.
10.2 WAIVER OF PRESENTMENT. Except as otherwise provided herein or in
any other Loan Document, Borrower hereby waives presentment,
demand, notice of dishonor, notice of default or delinquency,
notice of acceleration, notice of nonpayment, notice of costs,
expenses or losses and interest thereon, and notice of interest
on interest and late charges.
10.3 DELAY IN ENFORCEMENT. No previous waiver or failure or delay by
Lender in acting with respect to the terms of this Note or the
Leasehold Deed of Trust shall constitute a waiver of any breach,
default or failure of condition under this Note, the Leasehold
Deed of Trust or the obligations secured thereby. A waiver of
any term of this Note, the Leasehold Deed of Trust or of any of
the obligations secured thereby must be made in writing signed
by Lender, shall be limited to the express terms of such waiver,
and shall not constitute a waiver of any subsequent obligation
of Borrower. The acceptance at any time by Lender of any
past-due amount shall not be deemed to be a waiver of the right
to require prompt payment when due of any other amounts then or
thereafter due and payable.
10.4 TIME OF THE ESSENCE. Time is of the essence with respect to
every provision hereof.
10.5 GOVERNING LAW. This Note was accepted by Lender in the state of
California and the proceeds of this Note were disbursed from the
state of California, which state the parties agree has a
substantial relationship to the parties and to the underlying
transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing,
matters of construction, validity, enforceability and
performance, this Note, the Leasehold Deed of Trust and the
other Loan Documents and the obligations arising hereunder and
thereunder shall be governed by, and construed in accordance
with, the laws of the state of California applicable to
contracts made and performed in such state and any applicable
law of the United States of America, except that at all times
the provisions for the enforcement of Lender's STATUTORY POWER
OF SALE granted under the Leasehold Deed of Trust securing this
Note and the creation, perfection and enforcement of the
security interests created pursuant thereto and pursuant to the
other Loan Documents shall be governed by and construed
according to the law of the state where the Property is located.
Except as provided in the immediately preceding sentence,
Borrower hereby unconditionally and irrevocably waives, to the
fullest extent permitted by law, any claim to assert that the
law of any jurisdiction other than California governs the
Leasehold Deed of Trust, this Note and the other Loan Documents.
10.6 CONSENT TO JURISDICTION. Borrower irrevocably submits to the
jurisdiction of: (a) any state or federal court sitting in the
state of California over any suit, action, or proceeding,
brought by Borrower against Lender, arising out of or relating
to this Note or the Loan evidenced hereby; (b) any state or
federal court sitting in the state where the Property is located
or the state in which Borrower's principal place of business is
located over any suit, action or proceeding, brought by Lender
against Borrower, arising out of or relating to this Note or the
Loan evidenced hereby; and (c) any state court sitting in the
county of the state where the Property is located over any suit,
action, or proceeding, brought by Lender to exercise its
STATUTORY POWER OF SALE under the Leasehold of Deed of Trust or
any action brought by the Lender to enforce its rights with
respect to the Collateral. Borrower irrevocably waives, to the
fullest extent permitted by law, any objection that Borrower may
now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim
that any such suit, action, or proceeding brought in any such
court has been brought in an inconvenient forum.
10.7 COUNTERPARTS. This Note may be executed in any number of
counterparts, each of which when executed and delivered shall be
deemed an original and all of which taken together shall be
deemed to be one and the same Note.
10.8 HEIRS, SUCCESSORS AND ASSIGNS. All of the terms, covenants,
conditions and indemnities contained in this Note and the other
Loan Documents shall be binding upon the heirs, successors and
assigns of Borrower and shall inure to the benefit of the
successors and assigns of Lender. The foregoing sentence shall
not be construed to permit Borrower to assign the Loan except as
otherwise permitted in this Note or the other Loan Documents.
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10.9 SEVERABILITY. If any term of this Note, or the application
thereof to any person or circumstances, shall, to any extent, be
invalid or unenforceable, the remainder of this Note, or the
application of such term to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be
affected thereby, and each term of this Note shall be valid and
enforceable to the fullest extent permitted by law.
10.10 CONSENTS, APPROVALS AND EXPENSES. Wherever Lender's consent,
approval, acceptance or satisfaction is required under any
provision of this Note or any of the other Loan Documents, such
consent, approval, acceptance or satisfaction shall not be
unreasonably withheld, conditioned or delayed by Lender unless
such provision expressly so provides. Wherever costs or expenses
are required to be paid under any provision of this Note or any
of the other Loan Documents, such costs or expenses shall be
reasonable.
11. NOTICES. All requests, demands, notices and other communications that
are required or permitted to be given to a party under this Note shall
be in writing and shall be sent to such party, either by personal
delivery, by overnight delivery service, by certified first class mail,
return receipt requested, or by facsimile transmission to the address or
facsimile number below. All such notices and communications shall be
effective upon receipt of such delivery or facsimile transmission,
together with a printed receipt of the successful delivery of such
facsimile transmission. The addresses and facsimile numbers of the
parties shall be:
Borrower: Lender:
c/o Manufactured Home Communities, Inc. Wells Fargo Bank, N.A.
Two North Riverside Plaza 1320 Willow Pass Road, Suite 205
Suite 800 Concord, CA 94520
Chicago, Illinois 60606 Loan No. 31-0900195R
Attention: General Counsel FAX No.: (925) 691-5947
FAX No.: (312) 279-1715
With a copy to:
Katz Randall Weinberg & Richmond
333 West Wacker Drive
Suite 1800
Chicago, IL 60606-1288
Attention: Benjamin J. Randall
FAX No.: (312) 807-3903
12. ADDITIONAL TERMS AND CONDITIONS. The additional terms and conditions set
forth in Exhibit A and Exhibit B attached hereto are incorporated herein
by this reference.
13. PREPAYMENT. Borrower acknowledges that any prepayment of this Note will
cause Lender to lose its interest rate yield on this Note and will
possibly require that Lender reinvest any such prepayment amount in
loans of a lesser interest rate yield (including, without limitation, in
debt obligations other than first mortgage loans on commercial
properties). As a consequence, Borrower agrees as follows, as an
integral part of the consideration for Lender's making the Loan:
13.1 RESTRICTIONS. Any voluntary prepayment of this Note: (a) is
prohibited except during the last 3 months of the term, (b) is
permitted in full only, and not in part, and (c) may only be
made on the first day of a month.
13.2 PREPAYMENT CHARGE. Except as provided below, if this Note is
prepaid prior to the last three (3) months of the term, whether
such prepayment is involuntary or upon acceleration of the
principal amount of this Note by Lender following a Default,
Borrower shall pay to Lender on the prepayment date (in addition
to all other sums then due and owing to Lender under the Loan
Documents) a prepayment charge equal to the greater of the
following two amounts: (a) an amount equal to 1% of the then
outstanding principal balance of the Loan; or (b) an amount
equal to (i) the amount, if any, by which the sum of the present
values as of the prepayment date of all unpaid principal and
interest payments required under this Note, calculated by
discounting such
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payments from their respective scheduled payment dates back to
the prepayment date at a discount rate equal to the Periodic
Treasury Yield (defined below) exceeds the outstanding principal
balance of the Loan as of the prepayment date, multiplied by
(ii) a fraction whose numerator is the amount of the prepayment
and whose denominator is the outstanding principal balance of
the Loan as of the prepayment date. Notwithstanding the
foregoing, no prepayment charge shall apply in respect to any
insurance or condemnation proceeds received by Lender and
applied by Lender to the outstanding principal balance of the
Loan. For purposes of the foregoing, "Periodic Treasury Yield"
means (c) the annual yield to maturity of the actively traded
non-callable United States Treasury fixed interest rate security
(other than any such security which can be surrendered at the
option of the holder at face value in payment of federal estate
tax or which was issued at a substantial discount) that has a
maturity closest to (whether before, on or after) the Maturity
Date (or if two or more such securities have maturity dates
equally close to the Maturity Date, the average annual yield to
maturity of all such securities), as reported in The Wall Street
Journal or other authoritative publication or news retrieval
service on the fifth Business Day preceding the prepayment date,
divided by (d) 12, if scheduled payment dates are monthly, or 4,
if scheduled payment dates are quarterly.
13.3 WAIVER. Borrower waives any right to prepay this Note except
under the terms and conditions set forth in this Section and
agrees that if this Note is prepaid, Borrower will pay the
prepayment charge set forth above. Borrower hereby acknowledges
that: (a) the inclusion of this waiver of prepayment rights and
agreement to pay the prepayment charge for the right to prepay
this Note was separately negotiated with Lender; (b) the
economic value of the various elements of this waiver and
agreement was discussed; (c) the consideration given by Borrower
for the Loan was adjusted to reflect the specific waiver and
agreement negotiated between Borrower and Lender and contained
herein; and (d) this waiver is intended to comply with
California Civil Code Section 2954.10.
Borrower's Initials: ________
13.4 INSURANCE PROCEEDS; CONDEMNATION AWARDS. Notwithstanding
anything herein to the contrary, no prepayment charge shall be
due and owing with respect to any involuntary prepayment
resulting from Lender's application of any insurance proceeds or
condemnation awards to the Loan.
14. DEFEASANCE. At any time after the Lockout Expiration Date (defined
below), Borrower may elect to cause Lender to release the Property from
the lien of the Leasehold Deed of Trust and the other Loan Documents and
to accept other collateral in substitution therefor, in accordance with
the provisions of this Section ("Defeasance"), at Borrower's sole cost
and expense. "Lockout Expiration Date" means the earlier of (a) the
second anniversary of the "startup day" (as defined in Internal Revenue
Code Section 860(G)(a)(9)) of any "real estate mortgage investment
conduit" (as defined in Internal Revenue Code Section 860D) that holds
this Note and (b) the third anniversary of the date of this Note.
14.1 CONDITIONS. Borrower shall only have the right to cause a
Defeasance if no Default has occurred and is continuing and all
of the following conditions have been satisfied:
a. Notice. Borrower shall give at least 60 days but not
more than 90 days' written notice to Lender specifying
the date of Borrower's intended Defeasance ("Release
Date"), which date shall be a scheduled payment date and
such notice shall indicate the principal amount of the
Note to be defeased;
b. Payments. Borrower shall pay in full, on or before the
Release Date, all accrued and unpaid interest and all
other sums due under this Note and the other Loan
Documents on or before the Release Date, including
without limitation, (i) all costs and expenses paid or
incurred by Lender or its agents in connection with the
Defeasance, the purchase of the Defeasance Collateral
(defined below), the release of the Property, the review
of the proposed Defeasance Collateral and the
preparation of the Defeasance Security Agreement
(defined below) and related documentation, and (ii) any
revenue, documentary stamp, intangible or other taxes,
charges or fees due in connection with the transfer or
assumption of this Note or the Defeasance;
c. Deliveries. Borrower shall deliver the following items
to Lender on or before the Release Date:
(i) immediately available funds ("Defeasance
Deposit") in an amount sufficient to enable
Lender to purchase, through means and sources
customarily employed and available to Lender,
for the
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account of Borrower, direct, non-callable
obligations of the United States of America that
provide for payments prior, but as close as
possible, to all successive scheduled payment
dates occurring after the Release Date, with
each such payment being equal to or greater than
the amount of the corresponding installment of
principal and interest required to be paid under
this Note (including, without limitation, all
amounts due on the Maturity Date) for the
balance of the term hereof ("Defeasance
Collateral"), each of which shall be duly
endorsed by the holder as directed by Lender or
accompanied by a written instrument of transfer
in form and substance satisfactory to Lender in
its sole discretion (including, without
limitation, such instruments as may be required
by the depository institution holding such
securities or the issuer of such securities, as
the case may be, to effectuate book-entry
transfers and pledges through the book-entry
facilities of such institution) in order to
perfect upon the delivery of the Defeasance
Security Agreement (as defined below) the first
priority security interest in the Defeasance
Collateral in favor of Lender.
(ii) a pledge and security agreement, in form and
substance satisfactory to Lender in its
reasonable discretion, creating a first priority
security interest in favor of Lender in the
Defeasance Collateral ("Defeasance Security
Agreement"), which shall provide, among other
things, that any payments generated by the
Defeasance Collateral shall be paid directly to
Lender and applied by Lender to amounts then due
and payable under this Note and that any excess
received by Lender from the Defeasance
Collateral over the amounts payable by Borrower
under this Note shall be first, paid to Lender
and applied by Lender to any other amounts then
due and payable under this Note, and second,
refunded to Borrower promptly after each
scheduled payment date;
(iii) a certificate of Borrower certifying that all of
the requirements of this Section 14.1 have been
satisfied;
(iv) an opinion of counsel for Borrower in form and
substance and delivered by counsel satisfactory
to Lender in its sole discretion, subject,
however, to standard enforceability opinion
qualifications and limitations, stating, among
other things, that (aa) Lender has a perfected
first priority security interest in the
Defeasance Collateral, (bb) the Defeasance
Security Agreement is enforceable against
Borrower in accordance with its terms and (cc)
any REMIC Trust formed pursuant to a
securitization will not fail to maintain its
status as a "real estate mortgage investment
conduit" within the meaning of Internal Revenue
Code Section 860D, as amended from time to time,
or any successor statute, as a result of the
Defeasance;
(v) a certificate from a firm of independent
certified public accountants acceptable to
Lender certifying that the Defeasance Collateral
satisfies the requirements of Section 14.1c(i);
(vi) written evidence from the applicable Rating
Agencies that the Defeasance will not result in
a downgrading, withdrawal or qualification of
the respective ratings in effect immediately
prior to the Defeasance for any securities
issued in connection with the securitization
which are then outstanding;
(vii) such other certificates, documents or
instruments as Lender may reasonably require,
including, without limitation, such amendments
to this Note and the other Loan Documents as
Lender reasonably deems appropriate to reflect
the Defeasance.
14.2 RELEASE OF LIEN. Upon satisfaction of all conditions specified
above with respect to the Defeasance, the Property shall be
released from the lien of the Leasehold Deed of Trust and the
other Loan Documents to which it is subject, and the Defeasance
Collateral and the proceeds thereof shall constitute the only
collateral which shall secure the obligations of Borrower under
this Note and the other Loan Documents. Simultaneously with the
release of the Property pursuant to this Section, Lender shall
release that portion of all cash or other accounts maintained
pursuant to the Loan Documents relating to the Property. Lender
shall, at Borrower's expense, execute and deliver any agreements
reasonably requested by Borrower to release the lien of the
Leasehold Deed of Trust from the Property.
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14.3 DEFEASANCE DEPOSIT. Borrower hereby authorizes and directs
Lender, using the means and sources customarily employed and
available to Lender, to use the Defeasance Deposit to purchase
the Defeasance Collateral as agent and for the account of
Borrower. Payments from the Defeasance Collateral shall be made
directly to Lender for application to the Loan as provided
hereinabove. Any part of the Defeasance Deposit exceeding the
amount necessary to purchase the Defeasance Collateral and to
pay the other costs which Borrower is obligated to pay under
this Section 14 shall be refunded to Borrower. Borrower agrees
to pay all sums referred to in Section 14.1b above on or before
the Release Date.
14.4 ASSIGNMENT AND ASSUMPTION. Upon the release of the Property in
accordance with this Section 14, Borrower shall, at the request
of Lender, assign all of its right, title and interest in and to
the pledged Defeasance Collateral and all its obligations and
rights under this Note, the Defeasance Security Agreement and
the other Loan Documents, to a successor entity designated by
Borrower and approved by Lender in its sole discretion. Such
successor entity shall execute an assumption agreement in form
and substance satisfactory to Lender in its sole discretion
pursuant to which it shall assume Borrower's obligations under
this Note, the Defeasance Security Agreement and the other Loan
Documents. As conditions to such assignment and assumption,
Borrower shall: (a) deliver to Lender a new limited guaranty in
form and substance satisfactory to Lender in its sole discretion
executed by the principals of such successor entity; (b) deliver
to Lender an opinion of counsel in form and substance and
delivered by counsel satisfactory to Lender in its sole
discretion subject, however, to standard enforceability opinion
qualifications and limitations, stating, among other things,
that such assumption agreement is enforceable against Borrower
and such successor entity in accordance with its terms and that
this Note, the Defeasance Security Agreement and the other Loan
Documents, as so assumed, are enforceable against such successor
entity in accordance with their respective terms; and (c) pay
all costs and expenses incurred by Lender or its agents in
connection with such assignment and assumption (including,
without limitation, the review of the proposed transferee and
the preparation of the assumption agreement and related
documentation). Upon such assumption, Borrower shall be relieved
of its obligations under this Note, the Defeasance Security
Agreement and the other Loan Documents other than those
obligations which are specifically intended to survive the
payment of the Loan or other termination, satisfaction or
assignment of this Note, the Defeasance Security Agreement or
the other Loan Documents or Lender's exercise of its rights and
remedies under any of such documents and instruments.
15. WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS NOTE OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTIONS OF LENDER OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER TO MAKE THE LOAN TO BORROWER. BY ACCEPTANCE OF THIS EXECUTED
NOTE, LENDER AGREES TO THE FOREGOING WAIVER.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
9
"BORROWER"
MHC DATE PALM, L.L.C.,
a Delaware limited liability company
By: MHC-QRS DATE PALM, INC.,
a Delaware corporation, its Managing Member
By: /s/ John Zoeller
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Name: John Zoeller
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Its: Vice President
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Loan No. 31-0900195R
EXHIBIT A TO PROMISSORY NOTE
ADDITIONAL TERMS AND CONDITIONS
This Exhibit A is attached to and forms a part of that Promissory Note Secured
by Leasehold Deed of Trust ("Note") executed by MHC DATE PALM, L.L.C., a
Delaware limited liability company ("Borrower") in favor of WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Lender").
1. DISBURSEMENT OF LOAN PROCEEDS; LIMITATION OF LIABILITY. Borrower hereby
authorizes Lender to disburse the proceeds of the Loan, after deducting
any and all fees owed by Borrower to Lender in connection with the Loan,
to Commonwealth Land Title Insurance Company (the "Title Company"). With
respect to such disbursement, Borrower understands and agrees that
Lender does not accept responsibility for errors, acts or omissions of
others, including, without limitation, the escrow company, other banks,
communications carriers or clearinghouses through which the transfer of
Loan proceeds may be made or through which Lender receives or transmits
information, and no such entity shall be deemed Lender's agent. As a
consequence, Lender shall not be liable to Borrower for any actual
(whether direct or indirect), consequential or punitive damages which
may arise with respect to the disbursement of Loan proceeds, whether or
not (a) any claim for such damages is based on tort or contract, or (b)
either Lender or Borrower knew or should have known of the likelihood of
such damages in any situation.
2. FINANCIAL STATEMENTS.
2.1 STATEMENTS REQUIRED. During the term of the Loan and while any
liabilities of Borrower to Lender under any of the Loan
Documents remain outstanding and unless Lender otherwise
consents in writing, Borrower shall provide to Lender the
following:
a. OPERATING STATEMENT. Not later than 10 days after and as
of each calendar month during the first 6 months of the
term of the Loan, and thereafter not later than 30 days
after and as of the end of each calendar quarter, an
operating statement, signed and dated by Borrower and in
a form acceptable to Lender, showing all revenues and
expenses during such month or quarter and year-to-date,
relating to the Property, including, without limitation,
all information requested under any of the Loan
Documents;
b. RENT ROLL. Not later than 10 days after and as of each
calendar month during the first 6 months of the term of
the Loan, and thereafter not later than 30 days after
and as of the end of each calendar quarter, a rent roll
signed and dated by Borrower and in a form acceptable to
Lender, showing the following lease information with
regard to each tenant: the name of the tenant, monthly
or other periodic rental amount, date of commencement of
the lease, and payment status;
c. BALANCE SHEET. If requested by Lender, not later than 90
days after and as of the end of each fiscal year, a
balance sheet, signed and dated by Borrower and in a
form acceptable to Lender (or audited financial
statements if Borrower obtains them), showing all assets
and liabilities of Borrower; and
d. OTHER INFORMATION. From time to time, upon Lender's
delivery to Borrower of at least 10 days' prior written
notice, such other information with regard to Borrower,
principals of Borrower, guarantors or the Property as
Lender may reasonably request in writing.
2.2 FORM; WARRANTY. Borrower agrees that all financial statements to
be delivered to Lender pursuant to Section 2.1 shall: (a) be
complete and correct in all material respects; (b) present
fairly the financial condition of the party; (c) disclose all
liabilities that are required to be reflected or reserved
against; and (d) be prepared in accordance with the same
accounting standard used by Borrower to prepare the financial
statements delivered to and approved by Lender in connection
with the making of the Loan or other accounting standards
acceptable to Lender. Borrower shall be deemed to warrant and
represent that, as of the date of delivery of any such financial
statement, there has been no material adverse change in
financial condition, nor have any assets or properties been
sold, transferred, assigned, mortgaged, pledged or encumbered
since the date of such financial statement except as disclosed
by Borrower in a writing delivered to Lender. Borrower agrees
that all
EXHIBIT A
1
11
rent rolls and other information to be delivered to Lender
pursuant to Section 2.1 shall not contain any misrepresentation
or omission of a material fact.
2.3 LATE CHARGE. If any financial statement, leasing schedule or
other item required to be delivered to Lender pursuant to
Section 2.1 is not timely delivered, Borrower shall promptly pay
to Lender, as a late charge, the sum of $500 per item. In
addition, Borrower shall promptly pay to Lender an additional
late charge of $500 per item for each full month during which
such item remains undelivered following written notice from
Lender. Borrower acknowledges that Lender will incur additional
expenses as a result of any such late deliveries, which expenses
would be impracticable to quantify, and that Borrower's payments
under this Section 2.3 are a reasonable estimate of such
expenses. Notwithstanding anything to the contrary contained
herein, once during each year of the term of the Loan Lender
will give notice to Borrower of its failure to provide any item
required to be delivered to Lender pursuant to Section 2.1 and
if any such items are not delivered within three (3) Business
Days following such notice, then at such time the late charge
specified herein shall take effect.
3. IMPOUNDS.
3.1 AMOUNTS. Borrower shall deposit with Lender the amounts
("Impounds") stated below on the dates stated below, for the
purpose of paying the costs stated below:
a. TAXES. on the first payment date on which both principal
and interest under the Loan are payable and on each
payment date thereafter, an amount estimated from time
to time by Lender in its reasonable discretion to be
sufficient to pay for taxes and other liabilities
payable by Borrower under Section 6.9 of the Leasehold
Deed of Trust. The initial estimated monthly amount to
be deposited by Borrower on each payment date is
$24,865.00.
b. INSURANCE. on the first payment date on which both
principal and interest under the Loan are payable and on
each payment date thereafter, an amount estimated from
time to time by Lender in its reasonable discretion to
be sufficient to pay for premiums for insurance payable
by Borrower under Section 6.10 of the Leasehold Deed of
Trust. The initial estimated monthly amount to be
deposited by Borrower on each payment date is $833.00.
c. INTENTIONALLY DELETED.
d. CAPITAL EXPENDITURES. $2,241.67 on the first payment
date on which both principal and interest under the Loan
are payable and on each payment date thereafter for
payment or reimbursement of Capital Expenditures
(defined below). Notwithstanding the foregoing, once
$80,700.00 is held in this account (the "Capped
Amount"), Borrower may temporarily cease making payments
to this account; provided, however, that upon a release
of Impounds from this account causing the amount held in
such account to drop beneath the Capped Amount, Borrower
must immediately resume payments on each payment date
until such time as the Capped Amount has been reached.
3.2 APPLICATION.
a. TAXES. If no Default exists, Lender shall apply the Impounds in
a timely fashion to the payment of the taxes and other
liabilities stated above.
b. INSURANCE. If no Default exists, Lender shall apply the Impounds
to the payment of the insurance premiums stated above.
c. INTENTIONALLY DELETED.
d. CAPITAL EXPENDITURES. If no Default exists, Lender shall release
the Impounds to Borrower once a quarter, no less than $50,000.00
per release, to pay or reimburse Borrower for the Capital
Expenditures (defined below); provided, however, that Lender
shall have received and approved each of the following:
EXHIBIT A
2
12
(i) Borrower's written request for such release, describing
the Capital Expenditures and certifying that all Capital
Expenditures have been paid or incurred by Borrower for
work completed lien-free and in a workmanlike manner;
(ii) copies of invoices supporting the request for such
release; and
(iii) if deemed necessary by Lender, an inspection report
signed by an inspector selected by Lender, whose fees
and expenses shall be paid by Borrower, and such other
evidence as Lender shall reasonably require, confirming
borrower's certification.
3.3 GENERAL. Any portion of the Impounds that exceeds the amount
required for payment of the foregoing costs shall be repaid to
Borrower upon Borrower's compliance with the foregoing.
Reference is made to Section 6.12(b) of the Leasehold Deed of
Trust for a description of the account into which the Impounds
shall be deposited and for a description of certain rights and
remedies of Lender with respect to amounts in such account.
3.4 MAINTENANCE AND CONSTRUCTION.
a. INTENTIONALLY DELETED.
b. CAPITAL EXPENDITURES. Borrower shall complete the
lien-free performance or installation of the Capital
Expenditures (as defined below) from time to time as
necessary, in a workmanlike manner and in accordance
with all applicable laws, ordinances, rules and
regulations. "Capital Expenditures" shall mean major
repairs and replacements to maintain or improve the
Property, including, without limitation, structural
repairs, roof replacements, HVAC repairs and
replacements, mechanical and plumbing repairs and
replacements and boiler repair and replacements.
c. RIGHT OF INSPECTION. Lender shall have the right to
enter upon the Property at all reasonable times, subject
to reasonable notice except in the event of an
emergency, in which case no notice shall be required, to
inspect all work for the purpose of verifying
information disclosed or required pursuant to this Note,
in a manner which does not unreasonably interfere with
the operations on the Property. Notwithstanding the
foregoing, Lender shall not be obligated to supervise or
inspect any work or to inform Borrower or any third
party regarding any aspect of any work.
3.5 RELEASE. Lender shall release any Impounds to Borrower through a
funds transfer of such Impounds initiated by Lender to the
following account or such other account as Borrower specifies in
a notice to Lender:
Bank Name: Bank of America
ABA Routing No.: 071-000039
Account Name: 7366-9-01095
Reference: MHC Operating Limited Partnership
Advise: Megan McBride (312) 828-6274
Lender will determine the funds transfer system and other means
to be used in making each such release. Borrower agrees that
each such funds transfer initiated by Lender will be deemed to
be a funds transfer properly authorized by Borrower, even if the
transfer is not actually properly authorized by Borrower.
Borrower acknowledges that Lender will rely on the account
number and ABA routing number set forth above or specified in a
notice from Borrower to Lender, even if such account number
identifies an account with a name different from the name so
specified, or the routing number identifies a bank different
from the bank so specified. If Borrower learns of any error in
the transfer of any Impounds or of any transfer which was not
properly authorized, Borrower shall notify Lender as soon as
possible in writing but in no case more than 14 days after
Lender's first confirmation to Borrower of such transfer.
4. ONE-TIME RIGHT OF TRANSFER OF PROPERTY TO THIRD PARTY. Notwithstanding
anything to the contrary contained in Section 6.15 of the Leasehold Deed
of Trust, Lender shall, one time only, consent to the voluntary sale or
exchange of the Property by assignment of lease to a bona-fide third
party purchaser ("Transfer"), if
EXHIBIT A
3
13
no Default has occurred and is continuing, no event has occurred which,
with the giving of notice or the passage of time, or both, would
constitute a Default and all of the following conditions have been
satisfied:
4.1 Lender receives at least sixty-five (65) days prior written
notice of the proposed Transfer;
4.2 Lender's reasonable determination that the proposed purchaser,
the proposed guarantor, if any, and the Property all satisfy
Lender's then applicable credit review and underwriting
standards, taking into consideration, among other things, (a)
any decrease in the Property's cash flow which would result from
any increase in real property taxes due to any anticipated
reassessment of the Properties for tax purposes and (b) any then
applicable requirement of Lender that such proposed borrowing
entity constitute a single purpose asset and bankruptcy remote
entity which, at the time of the Transfer, shall be in full
compliance with the representations and covenants set forth in
Section 5.2 of the Leasehold Deed of Trust (as such
representations may be reasonably modified by Lender after
reviewing the ownership structure of the proposed borrowing
entity);
4.3 if required by Lender, delivery to Lender of a non-consolidation
opinion from a law firm reasonably acceptable to Lender and in
form and substance reasonably satisfactory to Lender;
4.4 Lender's reasonable determination that the proposed purchaser
possesses satisfactory recent experience in the ownership and
operation of properties comparable to the Property;
4.5 the execution and delivery to Lender of such documents and
instruments as Lender shall reasonably require, in form and
content reasonably satisfactory to Lender, including, without
limitation, (i) an assumption agreement under which the
purchaser assumes all obligations and liabilities of Borrower
under this Note and the other Loan Documents and agrees to
periodically pay such new or additional Impounds to Lender as
Lender may reasonably require, and (ii) a consent to the
Transfer by any existing guarantor and a reaffirmation of such
guarantor's obligations and liabilities under any guaranty made
in connection with the Loan or a new guaranty executed by a new
guarantor reasonably satisfactory to Lender;
4.6 if required by Lender, delivery to Lender of evidence of title
insurance reasonably satisfactory to Lender insuring Lender that
the lien of the Leasehold Deed of Trust and the priority thereof
will not be impaired or affected by reason of such Transfer of
the Property;
4.7 payment to Lender of an assumption fee equal to 0.5% of the then
outstanding principal balance of this Note;
4.8 if reasonably required by Lender, deposit with Lender of any new
or additional Impounds;
4.9 reimbursement to Lender of any and all costs and expenses paid
or incurred by Lender in connection with such Transfer,
including, without limitation, all in-house or outside counsel
attorneys' fees, title insurance fees, appraisal fees,
inspection fees, environmental consultant's fees and any fees or
charges of the applicable Rating Agencies;
4.10 if required by Lender, delivery to Lender of written evidence
from the applicable Rating Agencies that such Transfer will not
result in a downgrading, withdrawal or qualification of the
respective ratings in effect immediately prior to the Transfer
for any securities issued in connection with the securitization
of the Loan which are then outstanding; and
4.11 any third party consents or approvals that are required in order
to consummate the contemplated transaction shall have been
obtained and Lender shall be provided with satisfactory evidence
of same.
Lender shall fully release Borrower and any existing guarantor from any further
obligation or liability to Lender under this Note and the other Loan Documents
upon the assumption by the purchaser and any new guarantor of all such
obligations and liabilities and the satisfaction of all other conditions
precedent to a Transfer in accordance with the provisions of this Section.
5. AFFILIATE TRANSFERS. Notwithstanding anything to the contrary contained
in Section 6.15 of the Leasehold Deed of Trust and in addition to the
right contained in Section 4 of Exhibit A to this Note, Lender shall one
time only with respect to the Property consent to either (a) the
voluntary transfer of the Property by assignment of lease to an
Affiliate of Manufactured Home Communities, Inc. ("MHC") or (b) the
assignment of all or any portion of the membership interests in
Borrower, except for the one percent (1%) managing membership interest
held by MHC-QRS
EXHIBIT A
4
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Date Palm, Inc., to an Affiliate of MHC (both of which are referred to
herein as the "Affiliate Transfer"), if no Default has occurred and is
continuing, no event has occurred which, with the giving of notice or
the passage of time, or both, would constitute a Default and all of the
following conditions have been satisfied:
5.1 Lender receives at least sixty-five (65) days prior written
notice of the proposed Affiliate Transfer;
5.2 Lender's reasonable determination that the proposed purchaser,
the proposed guarantor, if any, and the Property all satisfy
Lender's then applicable credit review and underwriting
standards, taking into consideration, among other things, (a)
any decrease in the Property's cash flow which would result from
any increase in real property taxes due to any anticipated
reassessment of the Property for tax purposes and (b) any then
applicable requirement of Lender that such proposed borrowing
entity constitute a single purpose asset and bankruptcy remote
entity which, at the time of the Affiliate Transfer, shall be in
full compliance with the representations and covenants set forth
in Section 5.2 of the Leasehold Deed of Trust (as such
representations may be reasonably modified by Lender after
reviewing the ownership structure of the proposed borrowing
entity);
5.3 if required by Lender, delivery to Lender of a non-consolidation
opinion from a law firm reasonably acceptable to Lender and in
form and substance reasonably satisfactory to Lender;
5.4 the execution and delivery to Lender of such documents and
instruments as Lender shall reasonably require, in form and
content reasonably satisfactory to Lender, including, without
limitation, (i) an assumption agreement under which the
purchaser assumes all obligations and liabilities of Borrower
under this Note and the other Loan Documents and agrees to
periodically pay such new or additional Impounds to Lender as
Lender may reasonably require, and (ii) a consent to the
Affiliate Transfer by any existing guarantor and a reaffirmation
of such guarantor's obligations and liabilities under any
guaranty made in connection with the Loan or a new guaranty
executed by a new guarantor reasonably satisfactory to Lender;
5.5 if required by Lender, delivery to Lender of evidence of title
insurance reasonably satisfactory to Lender insuring Lender that
the lien of such Leasehold Deed of Trust and the priority
thereof will not be impaired or affected by reason of the
Affiliate Transfer;
5.6 reimbursement to Lender of any and all costs and expenses paid
or incurred by Lender in connection with such Affiliate
Transfer, including, without limitation, all in-house or outside
counsel attorneys' fees, title insurance fees, appraisal fees,
inspection fees, environmental consultant's fees and any fees or
charges of the applicable Rating Agencies;
5.7 if required by Lender, delivery to Lender of written evidence
from the applicable Rating Agencies that such Affiliate Transfer
will not result in a downgrading, withdrawal or qualification of
the respective ratings in effect immediately prior to the
Affiliate Transfer for any securities issued in connection with
the securitization of the Loan which are then outstanding; and
5.8 any third party consents or approvals that are required in order
to consummate the contemplated transaction shall have been
obtained and Lender shall be provided with satisfactory evidence
of same.
If the Affiliate Transfer consists of an assignment of lease to an Affiliate of
MHC, then Lender shall fully release Borrower from any further obligation or
liability to Lender under this Note and the other Loan Documents upon the
assumption by an Affiliate of MHC of all such obligations and liabilities and
the satisfaction of all other conditions precedent to the Affiliate Transfer in
accordance with the provisions of this Section. In addition to the Affiliate
Transfer permitted above, Lender's consent shall not be required for the normal
day to day trading of shares of MHC in the public securities market and such
transactions shall not constitute a Affiliate Transfer hereunder.
EXHIBIT A
5
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Loan No. 31-0900195R
EXHIBIT B TO PROMISSORY NOTE
LOAN DOCUMENTS AND OTHER RELATED DOCUMENTS
This Exhibit B is attached to and forms a part of that Promissory Note Secured
by Leasehold Deed of Trust ("Note") executed by MHC DATE PALM, L.L.C., a
Delaware limited liability company ("Borrower") in favor of WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Lender").
1. LOAN DOCUMENTS. The documents numbered 1.1 through 1.11 below of even
date herewith (unless otherwise specified) and any amendments,
modifications and supplements thereto which have received the prior
written approval of Lender and any documents executed in the future that
are approved by Lender and that recite that they are "Loan Documents"
for purposes of this Note are collectively referred to as the "Loan
Documents".
1.1 This Note;
1.2 Leasehold Deed of Trust;
1.3 State of Illinois Commercial Code - Financing Statement - Form
UCC-1;
1.4 State of California Uniform Commercial Code - Financing
Statement - Form UCC-1;
1.5 Limited Liability Company Borrowing Certificate;
1.6 Corporate Resolution Authorizing Limited Liability Company
Activity and Certificate of Incumbency;
1.7 Corporate Resolutions Authorizing Execution of Guaranty and
Certificate of Incumbency;
1.8 Ground Lease Estoppel Certificate and Agreement ("Estoppel")
executed by the requisite ground lessors thereunder and approved
by the Bureau of Indian Affairs ("BIA");
1.9 Supplemental Agreement No. 5 ("Supplemental Agreement") executed
by the requisite ground lessors thereunder the approved by the
BIA;
1.10 Assignment of Management Contracts and Consent and Subordination
of Manager; and
1.11 O&M Plan Letter.
2. OTHER RELATED DOCUMENTS WHICH ARE NOT LOAN DOCUMENTS.
2.1 Limited Guaranty;
2.2 Bankruptcy Non-Consolidation Opinion of Borrower's legal
counsel;
2.3 Consent and Approval of the Loan executed by the BIA;
2.4 Sublease by and between Borrower and LP Management Corp.
approved by the BIA; and
2.5 Assignment and Assumption of Business Lease by and between MHC
Operating Limited Partnership and Community Systems, Inc., as
assignor, and Borrower, as assignee ("Assignment of Ground
Lease"), consented to by the requisite ground lessors thereunder
and approved by the BIA (the Assignment of Ground Lease,
Supplemental Agreement and Estoppel are referred to collectively
herein as the "Date Palm Ground Lease Documents").
EXHIBIT B
1