EXHIBIT 10.49
PROMISSORY NOTE
$1,925,000.00 December 24, 1998
1. For value received, the undersigned, TNCA HOLDING LLC, a Delaware
limited liability company ("Maker"), promises to pay to the order of
TECHNICLONE CORPORATION, a Delaware corporation ("Payee"), the
principal sum of One Million Nine Hundred Twenty Five Thousand Dollars
($1,925,000) with interest at the rates set forth below. Interest shall
commence to accrue at the rate of seven percent (7%) per annum from the
date hereof with monthly payments based on an amortization period of
twenty (20) years. Commencing on December 1, 2001, the outstanding
principal balance shall bear interest at the rate of seven and one-half
percent (7-1/2%) per annum.
2. Commencing January 1999 and continuing through December 2001, principal
and accrued interest shall be payable in equal monthly installments of
Fourteen Thousand Nine Hundred Twenty Four and 50/100 Dollars
($14,924.50) each pursuant to the terms of the escrow agreement with
Wilmington Trust Company of even date herewith (the "Escrow
Agreement"), a copy of which is attached as Exhibit "A" hereto, but in
no event later than the fifteenth (15th) of the month (the "Payment
Date"). Commencing January, 2002, principal and accrued interest shall
be payable on the Payment Date in equal monthly installments of Fifteen
Thousand Four Hundred Forty and 83/100 Dollars ($15,440.83) until fully
paid. On the earlier to occur of December 1, 2010, or the date that fee
title to that certain real property legally described in the attached
Exhibit "B" is conveyed, assigned, or transferred by TNCA, LLC, a
Delaware limited liability company ("Subsidiary"), the outstanding
principal balance and any and all accrued interest then due and payable
shall be paid in full to Payee by Maker.
3. Notwithstanding the provisions of the first two sentences set forth in
paragraph 2 of this Promissory Note ("Note"), in the event that Finova
Realty Capital, Inc., a Delaware corporation ("Lender") fails to
release funds to Subsidiary pursuant to the terms of the Lock Box
Agreement (hereinafter, a "Cash Sweep") in connection with that certain
loan of even date herewith ("Loan") by Lender to Subsidiary, solely as
a result of Payee's failure to comply with the provisions attached and
incorporated hereto as Exhibit "C," then all monthly payments of
principal and interest due under this Note shall be suspended during
the time the Cash Sweep is in effect. No additional interest will
accrue on the principal outstanding balance of the Note during the time
Note payments are suspended, however, if Lender pays Subsidiary
interest on the cash swept, Maker shall pay to Payee an amount equal to
the interest allocable to Note payments otherwise due hereunder. Upon
Payee's compliance with the provisions of Exhibit "C" and Lender's
resumption of disbursement of funds, Maker shall resume monthly Note
payments as set forth in paragraph 2 of this Promissory Note. Upon
attainment of the total Tenant Improvement and Leasing Commissions
Reserve required by Lender under the provisions of the Lock Box
Agreement set forth in Exhibit "C", Maker shall commence making
additional monthly payments to Payee of Four Thousand Five Hundred
Seventy Eight and no/100 Dollars ($4,578) until such time as the amount
of suspended Note payments have been paid in full. The provisions of
this paragraph 3 shall not apply, and Note payments shall not be
suspended, in the event of a Cash Sweep resulting from Subsidiary's
failure to comply with any of the provisions of Exhibit "C".
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4. Both principal and interest shall be payable to Payee at 14282 Franklin
Avenue, Tustin, CA 92780, or at any other place hereafter designated in
writing by the holder(s) and delivered to Maker. All sums shall be
deemed paid upon receipt of same by the holder(s) hereof.
5. This Promissory Note is secured by that certain Pledge and Security
Agreement ("Pledge Agreement") of even date herewith executed by all of
the members of Maker.
6. Payments on this Promissory Note shall be applied first to payment of
any late charges, second to payment of accrued interest and third to
the outstanding principal. If any installment payment on this
Promissory Note is not paid within five (5) days of when due, Maker
shall pay to the holder hereof an amount equal to six percent (6%) of
such overdue installment, plus interest at the rate equal to the Bank
of America prime (reference) rate plus two percent (2%) (which amounts
are together called the "Late Charge").
7. Maker shall have the right to prepay all or any portion of the
indebtedness evidenced by this Promissory Note at any time without
premium or penalty.
8. Subject in all events to the provisions of Section 9 hereof, (i) if
Maker fails to pay in full any monthly installment of principal and
interest or any other sums required to be paid pursuant to this
Promissory Note within five (5) days of the due date, or (ii) if any of
Maker's members default in the performance or observance of any
covenant or condition contained in the Pledge Agreement and such
default is not cured within thirty (30) days after receipt of written
notice of such default, or (iii) if, pursuant to that certain lease
("Lease") dated as of December ___, 1998 between Subsidiary, as
landlord, and Payee, as tenant, with respect to certain real property
and improvements located in Tustin, CA, particularly described in the
Lease ("Premises"), Payee, or the then tenant under the Lease, is
required to purchase the Premises from Subsidiary in accordance with
the terms of the Lease, or (iv) if the Lease terminates because of a
default on the part of Subsidiary, or (v) if the first trust deed
against the Premises is foreclosed upon by the mortgage holder because
of a default by Subsidiary, unless such foreclosure is caused by the
failure of Payee (or the then tenant under the Lease) to pay any sum
due under the Lease, or (vi) if there is a violation of Maker's
operating agreement which is materially adverse to Payee, then and in
any of such events, the holder of this Promissory Note may, without
further notice, immediately declare to be due and payable the entire
outstanding indebtedness evidenced by this Promissory Note.
9. Notwithstanding any provisions of this Promissory Note to the contrary,
the performance of Maker's obligations pursuant to this Promissory Note
are conditioned upon Payee, as tenant under the Lease, timely tendering
to Subsidiary all rent, charges and monetary obligations under the
Lease ("Lease Payments") as and when the same become due and payable in
accordance with the terms of the Lease. In the event that Payee is late
in tendering any Lease Payment to Subsidiary, then the applicable due
date for Maker's performance of any of Maker's obligations under this
Promissory Note shall automatically be extended for the same period of
time that Payee was delinquent in the payment of such Lease Payment.
Further, in the event that the Lease is terminated pursuant to Section
10 of the Lease due to a default on the part of Payee as tenant
thereunder, then, in such event, this Promissory Note shall be deemed
to be immediately satisfied in full and Maker shall have no further
obligation to Payee hereunder.
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10. The payment obligations of Maker under this Promissory Note may not be
assigned without the consent of Payee, which such consent shall not be
unreasonably withheld.
11. Subject to the provisions of Section 9 above, this Promissory Note
shall be binding Maker and its successors and assigns.
TNCA HOLDING LLC,
a Delaware limited liability company
By: C. Frederick Wehba II 1998 Trust, Manager
By: /S/ CHAD W. WEHBA
-----------------------------------------
Chad W. Wehba, Trustee
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EXHIBIT "A"
WILMINGTON TRUST ESCROW AGREEMENT
ESCROW AGREEMENT
----------------
THIS AGREEMENT (the "Escrow Agreement"), is made as of this _____ day
of December 1998, by and among, TNCA, LLC a Delaware limited liability company
as "Purchaser," TECHNICLONE CORPORATION, a Delaware corporation, as "Seller",
and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as "Escrow Agent".
WHEREAS, Purchaser is acquiring certain real property from Seller
located at 14272 and 14282 Franklin Avenue, Tustin, California (the "Property");
and
WHEREAS, Purchaser has delivered to Seller a promissory note ("Note")
issued by TNCA Holding, LLC, a Delaware limited liability company, in the amount
of One Million Nine Hundred Twenty Five Thousand Dollars ($1,925,000) in
connection with its acquisition of the Property, a true and correct copy of
which is attached hereto as Exhibit "1."
WHEREAS, the monthly amount due Seller on the Note for the period
January 1999 through December 2001 is Fourteen Thousand Nine Hundred Twenty Four
and 50/100 Dollars ($14,924.50).
WHEREAS, the monthly amount due Seller on the Note for the period
January, 2002 until paid in full is Fifteen Thousand Four Hundred Forty and
83/100 Dollars ($15,440.83).
NOW, THEREFORE, in consideration of the premises, and further
consideration of the covenants set forth hereafter, it is hereby agreed mutually
as follows:
I. DESIGNATION AS ESCROW AGENT.
Subject to the terms and conditions hereof, Purchaser and Seller hereby
appoint Wilmington Trust Company as Escrow Agent and Wilmington Trust Company
hereby accepts such appointment.
II. DEPOSIT OF ESCROW FUNDS.
(a) Upon execution of this Escrow Agreement, Purchaser shall deposit
the sum of One Hundred Dollars ($100.00) into an account (the "Escrow Account")
established with Escrow Agent. In addition to such initial deposit, Escrow Agent
shall receive a monthly amount from Finova Realty Capital, Inc., a Delaware
corporation ("FCR") for immediate deposit into the Escrow Account. At all times
from and effect the date of this Agreement, Purchaser shall be the sole owner of
the Escrow Account.
(b) Escrow Agent will hold the initial deposit and all subsequent
deposits from FRC in the Escrow Account, together with all investments thereof
and all interest accumulated thereon and proceeds therefrom, in escrow upon the
terms and conditions set forth in this Escrow Agreement and shall not disburse
funds from the Escrow Account except as provided herein.
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(c) Unless otherwise directed by Purchaser, Escrow Agent shall invest
the Escrow Account solely in securities issued or guaranteed by the United
States or an agency thereof, or in securities of mutual funds the assets of
which are invested in securities issued or guaranteed by the United States or an
agency thereof, or in repurchase agreements involving securities issued or
guaranteed by the United States or an agency thereof, or in certificates of
deposit issued by banks.
III. DISBURSEMENT OF ESCROW ACCOUNT. Escrow Agent will make the following
disbursements to Purchaser and Seller on the first business day of each month or
as soon thereafter as possible (the "Disbursement Date").
(a) To Seller, provided Escrow Agent holds, on the date which is five
(5) business days preceding the Disbursement Date, funds sufficient to fully
satisfy such disbursement, the sum of Fourteen Thousand Nine Hundred Twenty Four
and 50/100 Dollars ($14,924.50) for the period January 1999 through December
2001, and the sum of Fifteen Thousand Four Hundred Forty and 83/100 Dollars
($15,440.83) for the period January 2002 until the Note is fully paid.
(b) To Purchaser, the amount remaining in the Escrow Account after the
payment to Seller as set forth above; provided, however, that Escrow Agent may
retain a sufficient amount in the Escrow Account in order to keep the account
open.
(c) Upon written instruction of Purchaser, Escrow Agent shall commence
making additional monthly payments to Seller of Four Thousand Five Hundred
Seventy Eight and no/100 Dollars ($4,578) (the "Additional Monthly Payment")
until such time as Escrow Agent is directed by Purchaser in writing to cease
making the Additional Monthly Payment.
IV. AUTHORITY OF ESCROW AGENT AND LIMITATION OF LIABILITY.
(a) In acting hereunder, Escrow Agent shall have only such duties as
are specified herein and no implied duties shall be read into this Agreement,
and Escrow Agent shall not be liable for any act done or omitted to be done, by
it in the absence of its gross negligence or willful misconduct.
(b) Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine, and may assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized so to do.
(c) Escrow Agent shall be entitled to consult with legal counsel in the
event that a question or dispute arises with regard to the construction of any
of the provisions hereof, and shall incur no liability and shall be fully
protected in acting in accordance with the advice or opinion of such counsel.
(d) Escrow Agent shall not be required to use its own funds in the
performance of any of its obligations or duties or the exercise of any of its
rights or powers, and shall not be required to take any action which, in Escrow
Agent's sole and absolute judgment, could involve it in expense or liability
unless furnished with security and indemnity which it deems, in its sole and
absolute discretion, to be satisfactory.
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(e) Seller shall pay to Escrow Agent compensation for its services
hereunder to be determined from time to time by the application of the current
rates than charged by Escrow Agent for accounts of similar size and character,
with a minimum rate of Twenty Five Hundred Dollars ($2,500.00) per annum. Seller
shall also pay to Escrow Agent an initial set up fee of Three Thousand Dollars
($3,000.00). In the event Escrow Agent renders any extraordinary services in
connection with the escrow account at the written request of both parties,
Escrow Agent shall be entitled to additional compensation therefor. Escrow Agent
shall have a first lien against the Escrow Account to secure the obligations or
Purchaser and Seller hereunder. The terms of this paragraph shall survive
termination of this Agreement.
(f) Purchaser and Seller hereby agree, jointly and severally, to
indemnify Escrow Agent and hold it harmless from any and against all
liabilities, loses, actions, suits or proceedings at law or in equity, and any
other expenses, fees or charges of any character or nature, including, without
limitation, attorney's fees and expenses, which Escrow Agent may incur or with
which it may be threatened by reason of its acting as Escrow Agent under this
Agreement or arising out of the existence of the Escrow Account, except to the
extent the same shall be caused by Escrow Agent's gross negligence or willful
misconduct. Escrow Agent shall have a first lien against the Escrow Account to
secure the obligations of the parties hereunder. The terms of this paragraph
shall survive termination of this Agreement.
(g) In the event Escrow Agent receives conflicting instructions
hereunder, Escrow Agent shall be fully protected in refraining from acting until
such conflict is resolved to the satisfaction of Escrow Agent. In addition,
Escrow Agent shall have the right to institute a bill of interpleader in any
court of competent jurisdiction to determine the rights of the parties, and the
parties shall pay all costs, expenses and disbursements in connection therewith,
including attorney's fees. For purposes of this Escrow Agreement, the parties
hereto agree to submit to the jurisdiction of the courts of the State of
Delaware.
(h) Escrow Agent may resign as Escrow Agent, and, upon its resignation,
shall thereupon be discharged from any and shall further duties and obligations
under this Agreement by giving notice in writing of such resignation to
Purchaser and Seller, which notice shall specify a date upon which such
resignation shall take effect. Upon the resignation of Escrow Agent, Purchaser
and Seller shall, within sixty (60) business days after receiving the foregoing
notice from Escrow Agent, designate a substitute escrow agent (the "Substitute
Escrow Agent"), which Substitute Escrow Agent shall, upon its designation and
notice of such designation to Escrow Agent, succeed to all of the rights, duties
and obligations of Escrow Agent hereunder.
IV. NOTICES.
Except as otherwise provided herein, any notices, instruction or
instrument to be delivered hereunder shall be in writing and shall be sent by
certified or registered mail, postage prepaid, return receipt requested, or sent
by facsimile, nationally-recognized overnight courier addressed to the parties
or delivered by hand to the addresses forth on the signature page hereof or at
such other address specified in writing by the addressee. Notices shall be
deemed communicated upon the earlier of receipt or seventy-two (72) hours from
the time of mailing as provided in this Article IV, and on the business day or
first business day following transmission if given by facsimile.
V. AMENDMENT.
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This Escrow Agreement may not be amended, modified, supplemented or
otherwise altered except by an instrument in writing signed by the parties
hereto.
VI. TERMINATION.
This Agreement will terminate upon the disbursement of all funds in the
Escrow Account, as provided above, by the Escrow Agent.
VII. GOVERNING LAW.
This is a Delaware contract and shall be governed by Delaware law in
all respects.
VIII. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, and such counterparts
together shall constitute and be one and the same instrument.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereto subscribed by their respective authorized representatives as of the day
and year first above written.
TNCA, LLC WILMINGTON TRUST COMPANY,
as Purchaser Escrow Agent
By: __________________________ By: __________________________
C. Frederick Wehba II, President Title:
TNCA, INC./ Manager
Address: Address:
1900 Avenue of the Stars, Suite 2840 Rodney Square North
Los Angeles, CA 90067 1100 North Market Street
Fax No.: (310) 282-8585 Wilmington, Delaware 19890
Tel No.: (310) 282-8000 Fax No.: (302) 651 - 1576
Attention: C. Frederick Wehba II Tel No.: (302) 651 - 1834
Attention: W. Chris Sponenberg
TECHNICLONE CORPORATION
as Seller
By:_____________________________
Steven C. Burke, CFO
Address:
14282 Franklin Avenue
Tustin, CA 92780
Fax No.: (714) 838-9433
Tel No.: (714) 508-6000
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EXHIBIT "B"
LEGAL DESCRIPTION
-----------------
Parcel A:
Parcels 2 and 3 of parcel map 95-115, in the city of Tustin, County of Orange,
State of California, as per map recorded in book 290 page(s) 3 through 5
inclusive of Miscellaneous maps, in the office of the County Recorder of said
County.
Excepting therefrom all oil, oil rights, minerals, mineral rights, natural gas
rights, and other hydrocarbons by whatsoever name known that may be within or
under the parcel of land hereinabove described, together with the perpetual
rights of drilling, mining, exploring and operating therefor, and storing in and
removing the same from said land or any other land, including the right to
whipstock or directionally drill and mine from land other than those hereinabove
described, oil or gas wells, tunnels and shafts into, through or across the
subsurface of the land hereinabove described, and to bottom such whipstocked or
directionally thereof, and to redrill retunnel, equip, maintain, repair, deepen
and operate any wells or mines, without, however, the right to drill, mine,
store, explore and operate through the surface of the upper 500 feet of the
subsurface of the land hereinabove described, as reserved in deeds or record.
Parcel B:
Easements for access, ingress, egress and parking over parcel A of parcel map
recorded in book 290 , pages 3, 4 and 5 of parcel maps as set forth in that
certain declaration of restrictions entitled "Franklin Court" and recorded
January 9, 1996 as instrument No. 96-0012567 and re-recorded April 30, 1996 as
instrument No. 96-214962 both of official records.
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EXHIBIT "C"
LOCK BOX AGREEMENT CASH SWEEP PROVISION
---------------------------------------
Lender shall not cash sweep the Loan for so long as (i) Borrow submits
all of the reports required under Section 3.12 of the Security Instrument; (ii)
there are no reports from Techniclone's auditors or SEC publications which state
that Techniclone has discontinued operations; (iii) on or before January 6,
2000, Techniclone provides to Lender internal, unaudited cash flow projections
with notes prepared by it's Chief Financial Officer or equivalent reflecting
that Techniclone has adequate sources of cash flow for continued operations for
the succeeding twelve (12) month period; (iv) on or before January 6, 2001,
Techniclone provides to Lender internal, unaudited cash flow projections with
notes prepared by it's Chief Financial Officer or equivalent reflecting that
Techniclone has adequate sources of cash flow for continued operations for the
succeeding twelve (12) month period. In the event of an occurrence of (ii)
above, or the failure by Borrower to provide (i), (iii) or (iv) above, then
Lender shall sweep the lock box until such time as the Tenant Improvement and
Leasing Commission Reserve shall reach the sum of Eight Hundred Fifty Thousand
and no/100 Dollars ($850,000). Lender shall resume disbursement of funds to
Borrower upon (x) submittal of the reports required under Section 3.12, or (y)
Techniclone furnishes an unaudited cash flow projection, as referred to above,
reflecting that it has adequate sources of cash flow for continued operations
for a succeeding twelve (12) month period, respectively. Upon Lender's
resumption of disbursement of funds to the Borrower, the Tenant Improvement and
Leasing Commission Reserve shall be governed by the Reserve and Security
Agreement. For example, if upon Lender's resumption of disbursement of funds,
the Tenant Improvement and Leasing Commission Reserve shall contain $500,000,
Borrower shall deposit the TI & LC Reserve Monthly Deposit (as defined in the
Reserve and Security Agreement) until the Tenant Improvements and Leasing
Commission Reserve shall reach $650,000. If, however, upon Lender's resumption
of disbursement of funds, the Tenant Improvements and Leasing Commission Reserve
shall contain $750,000, Borrower need no longer deposit the TI & LC Reserve
Monthly Deposit into such reserve account. Notwithstanding the foregoing, Lender
shall not resume disbursements under any circumstances if the Borrower is in
default under any of the Loan Documents, which default shall take into account
notice and opportunity to cure if and to the extent provided in the Loan
Documents.
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