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EXHIBIT 10.44
[UNION BANK LOGO] COMMERCIAL PROMISSORY NOTE
SECURED BY DEED OF TRUST
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Borrower Name ESSEX PORTFOLIO, L.P., a California limited partnership
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Borrower Address Office Number 795 Loan Number 2696022339-
777 California Street ---------------------------------------------------------------------
Palo Alto, California 94304 Maturity Date Amount
March 1, 2006 $14,475,000.00
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Walnut Creek California Date January 29, 1996 $14,475,000.00
FOR VALUE RECEIVED, the undersigned ("Debtor") promises to pay to the order of
Union Bank ("Bank"), as indicated below, the principal sum of FOURTEEN MILLION
FOUR HUNDRED SEVENTY-FIVE THOUSANDS AND NO/100* Dollars ($14,475,000.00), or so
much thereof as is disbursed, together with interest on the balance of such
principal sum from time to time outstanding, at a per annum rate equal to
/X/ Seven and Nine One Hundredths percent (7.09%) (Fixed Rate);
/ / the Reference Rate plus ____--__________ percent (___-0-________%),
such per annum rate to change as and when the Reference Rate shall
change; or
/ / ________________________________________________________________________
________________________________________________________________________
provided, however, Debtor shall pay total interest over the term of
this note of not less than $500.
As used herein, the term "Reference Rate" shall mean the rate announced by Bank
from time to time at its corporate headquarters as its "Reference Rate." The
Reference Rate is an index rate determined by Bank from time to time as a means
of pricing certain extensions of credit and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of interest
charged by Bank at any given time. All computations of interest under this note
shall be made on the basis of a year of 360 days, for actual days elapsed.
1. PAYMENTS.
PRINCIPAL PAYMENTS. Debtor shall pay principal
/ / in full on _____--________, 19__; however, at any time prior to the
maturity of this note, the Debtor may borrow, repay and reborrow hereon
so long as the total outstanding at any one time does not exceed the
principal amount of this note.
/ / in full on _____--________, 19__.
/X/ in 119 installments in amounts as set forth below each on the 1st day
of each month (commencing April 1, 1996) and a final installment on
March 1, 2006, on which date all principal and interest then unpaid
shall be due and payable.
EACH YEAR AMOUNT
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Year 1 $17,079.00
Year 2 $18,405.00
Year 3 $19,834.00
Year 4 $21,374.00
Year 5 $23,033.00
Year 6 $24,821.00
Year 7 $26,748.00
Year 8 $28,825.00
Year 9 $31,063.00
Year 10 $33,474.00
INTEREST PAYMENTS. Debtor shall pay interest
/X/ on the 1st day of each month (commencing March 1, 1996).
/ / ___________--___________________________________________________________
INTEREST-INCLUDED OPTION. If a fixed rate of interest is applicable to this
note and other principal and interest payment terms are not stated in the
preceding paragraphs, Debtor shall pay principal and interest together in
_____--______ installments of $__-0-_____ each on the ___--______ day of each
_____--______ (commencing)____--___________, 19__) and in a final installment of
$__-0-____ on ______________, 19__, on which date all principal and interest
then unpaid shall be due and payable.
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Debtor shall pay all amounts due under this note in lawful money of the United
States of Bank's Monterey Park Office, or such other office as may be
designated by Bank, from time to time.
2. LATE PAYMENTS. If any installment payment required by the terms of
this note is unpaid ten days after due, Debtor shall, at the option of Bank,
pay a fee of $100 to Bank; provided that if this note is secured by a deed of
trust on real property containing only a single-family owner-occupied dwelling,
such fee shall not exceed six-percent of the installment due that is applicable
to the payment of principal and interest, or five dollars, whichever is greater.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default (as described
in paragraph 4 below), at the option of the Bank, and, to the extent permitted
by law, interest shall be payable on the outstanding principal under this note
at a per annum rate equal to five percent (5%) in excess of the interest rate
specified in the initial paragraph of this note, calculated from the date of
default until such default is cured, or if such default is not cured or is
incapable of being cured, until all amounts payable under this note are paid in
full.
4. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include,
but not be limited to, any of the following: (a) the failure of Debtor to make
any payment required under this note within three (3) Business Days after the
date due; (b) any breach, misrepresentation or other default (not otherwise
specified herein or in the deed of trust securing this note), by Debtor or its
General Partner (hereinafter individually and collectively referred to as the
"Obligor") under any deed of trust, security agreement, guaranty or other
agreement between Bank and any Obligor, which is not cured within thirty (30)
days after written notice thereof from Bank, provided, however, that if such
failure by its nature cannot be cured within such thirty (30) day period (but
is reasonably capable of being cured within ninety (90) days after such
notice), then the cure period shall remain in effect so long as Obligor
commences the cure within such thirty (30) day period and diligently prosecutes
such cure to completion within such ninety (90) day period; (c) the insolvency
of any Obligor or the failure of any Obligor generally to pay such Obligor's
debts as such debts become due; (d) the commencement as to any Obligor of any
voluntary or involuntary proceeding under any laws relating to bankruptcy,
insolvency, reorganization, arrangement, debt adjustment or debtor relief,
provided, however, with respect to any such involuntary proceeding no event of
default shall arise unless said involuntary proceeding is not dismissed within
forty-five (45) days following the date of commencement thereof; (e) the
assignment by any Obligor for the benefit of such Obligor's creditors; (f) the
appointment, or commencement of any proceedings for the appointment, of a
receiver, trustee, custodian or similar official for all or substantially all
of any Obligor's property, which is not dismissed or otherwise discharged
within forty-five (45) days after commencement; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor, which is not
dismissed or otherwise discharged within forty-five (45) days after
commencement; (h) the termination of existence of any Obligor; (i) the failure
of any Obligor to comply with any order, judgment, injunction, decree, writ or
demand of any court or other public authority, which materially or adversely
affects the property securing this note, as determined in Bank's reasonable
discretion, or such Obligor's ability to conduct or operate its business; (j)
the filing or recording against any Obligor, or the property of any Obligor, of
any notice of levy, notice to withhold, or other legal process for taxes other
than property taxes which is not dismissed or rescinded within thirty (30) days
after such occurrence; (k) the default by any Obligor personally liable for
amounts owed hereunder on any obligation in the aggregate of Three Million
Dollars ($3,000,000.00) concerning the borrowing of money; (l) a default occurs
under any instrument encumbering or affecting all or any portion of the
property subject to the deed of trust securing this note not cured within the
applicable cure periods; (m) the issuance against any Obligor, or the property
of any Obligor, of any writ of attachment, execution, or other judicial lien,
which is not dismissed within thirty (30) days following such issuance; or (n)
the material deterioration of the financial condition of any Obligor which
results in Bank deeming itself, in good faith, insecure. Upon the occurrence of
any such default, Bank, in its discretion, may cease to advance funds hereunder
and, following the expiration of any cure period, may declare all obligations
under this note immediately due and payable; however, upon the occurrence of an
event of default under (d) (with respect to a voluntary proceeding only) or (e)
all principal and interest shall automatically become immediately due and
payable.
5. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note
are not paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement
of this note. Debtor and any endorser of this note, for the maximum period of
time and the full extend permitted by law, (a) waive diligence, presentment,
demand, notice of nonpayment, protest, notice of protest, and notice of every
kind; (b) waive the right to assert the defense of any statute of limitations to
any debt or obligation hereunder; and (c) consent to renewals and extensions of
time for the payment of any amounts due under this note. If this note is signed
by more than one party, the term "Debtor" includes each of the undersigned and
any successors in interest thereof, all of whose liability shall be joint and
several. Any married person who signs this note agrees that recourse may be had
against the separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option, shall not
be considered a payment on account until such check or other item of payment if
honored when presented for payment at the drawee bank. Bank may delay the
credit of such payment based upon Bank's schedule of funds availability, and
interest under
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this note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this note, Debtor and any endorser of this note,
including their successors and assigns, hereby consent to the jurisdiction of
any competent court within the State of California, except as provided in any
addendum attached hereto, and consent to service of process by any means
authorized by California Law. The term "Bank" includes, without limitation, any
holder of this note. This note shall be construed in accordance with and
governed by the laws of the State of California.
The deed of trust securing this note permits the Bank to declare all obligations
hereunder immediately due and payable upon breach of the following provision:
"Trustor shall not, directly or indirectly, sell, convey, assign, further
encumber, transfer, alienate or otherwise dispose of the real property
encumbered by said deed of trust or any part thereof or any interest therein,
whether voluntarily, involuntarily, by operation of law or otherwise, without
the prior written consent or Beneficiary."
6. NON-RECOURSE. By accepting this Note, and providing that Debtor in no way
hinders, delays, interferes with, or prejudices Bank's exercise of any rights
and remedies available to it hereunder under the Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing ("Deed of Trust"), or under any
applicable laws, the holder hereof agrees that except as otherwise expressly set
forth in the last sentence of this Section 6, the sole recourse of such holder
for the collection of this Note shall be against the property encumbered by the
Deed of Trust securing this Note and that neither Debtor nor the general or
limited partners of Debtor shall be personally liable for the payment of this
Note nor for the payment of any deficiency established upon foreclosure and sale
of the property encumbered by said Deed of Trust. This provision relating to
limitation on liability shall not extend to (i) any waste, material
misrepresentation or fraud of the Debtor if Debtor has acted maliciously,
recklessly or intentionally, or (ii) any liability of Debtor relating to
environmental matters as more fully set forth in the Environmental Compliance
Agreement executed by Debtor, or (iii) any misapplication of casualty or
condemnation proceeds received by Debtor, or (iv) any rent or other payments
collected after recordation of a notice of default under this Note, or under the
Deed of Trust, (except to the extent applied to the reasonable and necessary
expenses of operating and maintaining the property), and any security deposits,
advances or prepaid rent, or any similar sums paid to Debtor or held for the
account of Debtor by any other person or entity in connection with the property
after a default under this Note or the Deed of Trust, securing this Note.
Notwithstanding anything to the contrary in the foregoing provisions or
elsewhere in this Note, Debtor shall in all events be personally liable for the
payment of principal, interest and other amounts unpaid and owing under the
Note, in the maximum aggregate amount of $2,171,250.00.
The attached Judicial Reference Agreement and Prepayment Addendum are hereby
made a part of this note.
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Individual's Name (Type) Corporation or Partnership (Typed Name)
ESSEX PORTFOLIO, L.P.,
a California limited partnership
BY: ESSEX PROPERTY TRUST, INC.,
a Maryland corporation
its general partner
BY: /s/ Michael Schall
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Individual's Signature By
X
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Date Signed Title
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Individual's Name (Type) By
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Individual's Signature Title
X
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Date Signed Date Signed
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[UNION BANK LOGO] PREPAYMENT ADDENDUM
I. PREPAYMENT
A. Except as provided in subsection I. B., below, this Note may only be
prepaid in whole or in part provided Union Bank has received not less
than five (5) business days prior written notice of an intention to make
such prepayment and the undersigned pays a prepayment fee, to Union Bank
in an amount equal to:
1. the difference between
(a) the Interest rate on this Note on the principal amount which the
undersigned intends to prepay, and
(b) the return which Union Bank could obtain if it used the amount of
such prepayment of principal to purchase at bid price regularly
quoted U.S. Securities having a maturity date most closely
coinciding with the maturity date of this Note and such U.S.
Securities were held by Union Bank until the maturity date of this
Note ("Yield Rate");
2. the above difference, if greater than zero, is multiplied by a
fraction, the numerator of which is the days in the period between the
date of prepayment and the maturity date of this Note and the
denominator of which is 360 days;
3. the above product is multiplied by the amount of the principal so
prepaid (except in the event that principal payments are required and
have been made as scheduled under the terms of the Note, then the
amount multiplied in this section shall be the lesser of the amount
prepaid or 50% of the total of the amount prepaid and the amount of
principal scheduled under the terms of this Note to be outstanding at
the maturity date of this Note);
4. the above product is then discounted to present value using the Yield
Rate as the annual discount factor.
B. In no event shall Union Bank be obligated to make any payment or refund
to the undersigned, nor shall the undersigned be entitled to any setoff
or other claim against Union Bank, should the return which Union Bank
could obtain under the prepayment formula exceed the interest that Union
Bank would have received if no prepayment had occurred. All prepayments
shall include payment of accrued interest on the principal amount so
prepaid and shall be applied to payment of interest before application to
principal.
C. Such prepayment fee, if any, shall also be payable if prepayment occurs
as the result of the acceleration of the principal hereof by Union Bank
because of any default hereunder by the undersigned. If, following such
acceleration, all or any portion of the unpaid principal is satisfied,
whether through sale of the property encumbered by any security agreement
or other agreement securing this Note, if any, as a foreclosure held
thereunder or through the tender of payment at any time following such
acceleration, but prior to such a foreclosure sale, then such
satisfaction of such portion of the principal shall be deemed an evasion
of the prepayment prohibition set forth above, and Union Bank shall,
automatically and without notice or demand, be entitled to receive,
concurrently with such satisfaction the prepayment fee set forth above,
and the obligation to pay such prepayment fee shall be added to the
principal hereof. THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES THAT
UNION BANK WOULD NOT LEND TO THE UNDERSIGNED THE LOAN EVIDENCED BY THIS
NOTE WITHOUT THE UNDERSIGNED'S AGREEMENT, AS SET FORTH ABOVE IN THIS
PARAGRAPH TO PAY UNION BANK A PREPAYMENT FEE UPON THE SATISFACTION OF ALL
OR ANY PORTION OF THE PRINCIPAL BEARING INTEREST AT A FIXED INTEREST RATE
FOLLOWING THE ACCELERATION OF THE MATURITY DATE HEREOF BY REASON OF A
DEFAULT HEREUNDER. THE UNDERSIGNED HAS CAUSED THOSE PERSONS SIGNING THIS
NOTE ON THE UNDERSIGNED'S BEHALF TO SEPARATELY INITIAL THE AGREEMENT
CONTAINED IN THIS PARAGRAPH BY PLACING THEIR INITIALS BELOW:
INITIALS: MJS
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A determination by Union Bank as to the amount, if any, payable pursuant to
this section, shall be conclusive on the undersigned, absent manifest error.
II. AMENDMENT
Except as provided above, this Addendum and the provisions contained herein
cannot be changed, modified or amended except by a written instrument executed
by both the undersigned and the holder hereof.
ESSEX PORTFOLIO, L.P.,
a California limited partnership
BY: ESSEX PROPERTY TRUST, INC.,
a Maryland corporation
its general partner
BY: /s/ Michael Schall
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[UNION BANK LOGO]
JUDICIAL REFERENCE AGREEMENT
(Commercial Transaction Secured By Real Property)
1. CLAIMS OR CONTROVERSIES SUBJECT TO JUDICIAL REFERENCE. Any claim or
controversy alleged in or subject to a lawsuit between or among the parties to
this agreement (collectively, the "Parties" and individually, a "Party") which
arises out of or relates to (i) that certain Commercial Promissory Note Secured
-----------------------------------
by Deed of Trust dated January 29, 1996, executed by ESSEX PORTFOLIO, L.P.,
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a California limited partnership
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in favor of Union Bank ("Bank"), any extensions, renewals, amendments,
substitutions or replacements thereof, and any related guaranty, subordination
agreement, security agreement or any other related agreement or instrument
(collectively, the "Subject Documents"), (ii) any negotiations, correspondence
or communications relating to any of the Subject Documents, whether or not
incorporated into the Subject Documents or any indebtedness evidenced thereby,
(iii) the administration or management of the Subject Documents or any
indebtedness evidenced thereby or (iv) any alleged agreements, promises,
representations or transactions in connection therewith, including but not
limited to any claim or controversy which arises out of or is based upon an
alleged tort, shall, at the written request of any Party, be determined by a
reference in accordance with California Code of Civil Procedure Sections 638 et
seq. In connection with such reference, the Parties hereby expressly,
intentionally and deliberately waive any right they may otherwise have to
trial by jury of such claim or controversy.
2. SELECTION OF REFEREE. Within thirty (30) days after commencement by any
Party of any lawsuit subject to this agreement, the Parties shall select,
pursuant to the Commercial Rules of the American Arbitration Association
("AAA"), a single neutral referee and submit by stipulation such referee to the
court for an order of reference of such claim or controversy. However, the
referee selected must be a retired state or federal court judge with at least
five years of judicial experience in civil matters. In the event that the
Parties do not submit such stipulation to the court within such thirty (30) day
period, any Party may move the court pursuant to this agreement for an order of
reference of such claim or controversy to a single neutral referee having such
qualifications. The Parties shall equally bear the fees and expenses of the
referee unless the referee otherwise provides in the award.
3. POWERS OF AND LIMITATIONS ON THE REFEREE. The referee shall have the powers
provided by Title 9 of the California Code of Civil Procedure Sections 1280 et
seq. (the "California Arbitration Act") and the Commercial Rules of the AAA
except as provided in this agreement, including without limitation the
following:
(a) The referee shall determine all challenges to the legality
and/or enforceability of this agreement.
(b) The referee shall apply the rules of evidence to the same
extent as they would be applied in a court of law.
(c) Subject to the provisions of this agreement, the referee may
order any remedy or relief, including without limitation
judicial foreclosure, a deficiency judgment or equitable
relief, and give effect to all legal and equitable defenses,
including without limitation statutes of limitation, the
statute of frauds, waiver and estoppel.
(d) A Party may not conduct discovery unless the referee grants
such Party leave to do so upon a showing of good cause. All
discovery shall be completed within ninety (90) days after the
appointment of the referee. The referee shall limit discovery to
non-privileged material that is relevant to the issues to be
determined by the referee.
(e) The referee shall determine the time of the hearing and shall
designate its location from among the cities of San Francisco,
Los Angeles and San Diego based upon the convenience of the
referee, the Parties and any witnesses. However, such hearing
must be commenced within (30) days after completion of
discovery, unless the referee grants a continuance upon a
showing of good cause by any Party. At least seven (7) days
before the date set for hearing, the Parties shall exchange
copies of exhibits to be offered as evidence, and lists of
witnesses who will testify, at such hearing. Once commenced,
the hearing shall proceed day to day until completed, unless
the referee grants a continuance upon a showing of good cause
by any Party. Any Party may cause to be prepared, at its
expense, a written transcription or electronic recordation of
such hearing.
(f) Any award by the referee shall be set forth in a statement of
decision supported by written findings of fact and conclusions
of law which the referee shall concurrently deliver to the
Parties.
(g) The referee may not award punitive damages unless the referee
first makes written findings of fact that would satisfy the
requirements for recovery of punitive damages under California
law. Any such award of punitive damages shall not exceed a sum
equal to twice the amount of actual damages as determined by the
referee.
(h) The referee shall award reasonable attorneys' fees (including a
reasonable allocation for the costs of in-house counsel) and
costs the prevailing party.
(i) The provisions of California Civil Code Sections 47 et seq.
shall apply to the judicial reference to the same extent as they
would apply to a judicial proceeding subject to such provisions.
(j) The laws of the State of California shall govern the judicial
reference pursuant to this agreement.
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4. PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision of this
agreement shall limit the right of any Party (i) to exercise any self-help
remedies, (ii) to foreclose upon or sell any collateral, by power of sale or
otherwise, or (iii) to obtain or oppose provisional or ancillary remedies from
a court of competent jurisdiction, including without limitation appointment of
a receiver, before, after or during the pendency of the judicial reference. The
exercise of, or opposition to, any such remedy does not waive the right of any
Party to judicial reference pursuant to this agreement.
5. MISCELLANEOUS. Judgment upon the award of the referee may be entered in any
court of competent jurisdiction in accordance with California Code of Civil
Procedure Sections 644 and 645. In the event that multiple claims are asserted,
some of which are found not subject to this agreement, the Parties agree to stay
the proceedings of the claims not subject to this agreement until all other
claims are resolved in accordance with this agreement.
In the event that claims are asserted against multiple parties, some of whom
are not subject to this agreement, the Parties agree to sever the claims
subject to this agreement and resolve them in accordance with this agreement. In
the event that any provision of this agreement is found to be illegal or
unenforceable, the remainder of this agreement shall remain in full force and
effect. The laws of the State of California shall govern the interpretation of
this agreement. This agreement fully states all of the terms and conditions of
the Parties' agreement regarding the matters mentioned in, or incidental to,
this agreement. This agreement supersedes all oral negotiations and prior
writings concerning the subject matter hereof.
This agreement is duly executed by the Parties as of the day 29th of January,
1996.
UNION BANK ESSEX PORTFOLIO, L.P.,
a California limited partnership
By ____________________________
J. Michael Stedman BY: ESSEX PROPERTY TRUST, INC.,
Title Asst. Vice President a Maryland corporation
its general partner
By ____________________________ BY: Michael J. Schall, CFO
James B. Wohlleb
Title Vice President ________________________________
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________________________________
________________________________
_________________________________
_________________________________
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