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Exhibit 10.177
PROMISSORY NOTE SECURED BY LEASEHOLD DEED OF TRUST
$18,000,000.00 Loan No.31-0900141A
San Francisco, California
November 22, 2002
1. PROMISE TO PAY. For value received, the undersigned PLAZA SANTA FE II
LLC, a New Mexico limited liability company ("Borrower"), promise(s) to
pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender"),
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 EIGHTEEN MILLION AND NO/100THS DOLLARS ($18,000,000.00) ("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 DEED OF TRUST. This Note is secured by, among other things,
that Leasehold Deed of Trust and Absolute Assignment of Rents and Leases
and Security Agreement (and Fixture Filing) ("Deed of Trust") of even
date herewith, identifying this Note as an obligation secured thereby
and encumbering certain real property described therein ("Property").
3. DEFINITIONS. For the purposes of this Note, the following terms shall
have the following meanings:
"Actual Debt Service Coverage Ratio" shall mean the ratio of (a) the Net
Cash Flow for the Property determined as of the applicable Testing Date
to (b) the Actual Debt Service.
"Actual Debt Service" shall mean the monthly debt service for the Loan
multiplied by twelve (12).
"Adjusted Debt Service Coverage Ratio" shall mean the ratio of (a) the
Net Cash Flow for the Property determined as of the applicable Testing
Date to (b) the Adjusted Debt Service.
"Adjusted Debt Service" shall mean the monthly debt service for the Loan
that would be due and payable based on a loan constant equal to ten
percent (10%) multiplied by twelve (12).
"Approved Annual Budget" shall mean an annual budget to be approved by
Lender detailing the projected operating expenses and capital
expenditures for the Property.
"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.
"Default" shall have the meaning set forth in the 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 the Deed of Trust is recorded in
the Office of the County Recorder of the county where the Property is
located and Lender authorizes the Loan proceeds to be released to
Borrower.
"Gross Operating Income" shall mean the sum of all rental payments
("Gross Rents") plus all expense reimbursements ("Expense
Reimbursements"), in each case to the extent actually received directly
or indirectly by or on behalf or credited to Borrower from any person
with respect to Borrower's ownership, use, development, operation,
leasing, franchising, marketing or licensing of the Property. Gross
Operating Income shall be computed on a cash basis and shall include for
the previous month, all amounts actually received by or on behalf of or
credited to Borrower in such month whether or not such amounts are
attributable to a charge arising in such month. Gross -Operating Income
shall not include proceeds of any loan to Borrower, including, without
limitation, the Loan, any insurance proceeds (other than business
interruption insurance proceeds, which shall be included) or any capital
contribution made to Borrower by partners or members in Borrower.
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"Loan Documents" shall mean the documents listed in EXHIBIT B attached
hereto and incorporated herein by this reference.
"Maturity Date" shall mean December 1, 2012.
"Minimum Vacancy/Collection Loss" shall mean an amount equal to the sum
of (i) four percent (4%) of the Gross Operating Income for the Anchor
Tenants (as defined in Exhibit A to this Note) plus (ii) the greater of
actual or ten percent (10%) of the Gross Operating Income for all other
tenants.
"Net Cash Flow" shall mean the product of (a) four (4) multiplied by (b)
the Gross Operating Income for the three (3) calendar month period
ending on the applicable Testing Date, minus the sum of (c) the
Operating Expenses for such period, (d) an amount for reasonable
management expenses equal to the greater of four percent (4%) or the
actual management expenses for such period, (e) a capital improvement
reserve equal to $33,378.00 on an annual basis, (f) a re-tenanting
expense reserve for tenant improvement and leasing commission expenses
equal to $91,900.00 on an annual basis, and (g) an adjustment for
vacancy/collection losses equal to the greater of actual, market, or the
Minimum Vacancy/Collection Loss. Net Cash Flow shall be reasonably
adjusted by Lender, if necessary, to accurately reflect the amounts of
(any extraordinary non-recurring maintenance items that were incurred
during any such three (3) calendar month period, and to reflect on a
pro-rata basis those expenses paid on an annual or semi-annual basis,
including, but not limited to, payments made with respect to property
taxes and insurance.
"Operating Expenses" shall mean all reasonable operating expenses of the
Property, including, without limitation, those for maintenance, repairs,
annual taxes or payments in lieu of taxes, insurance, utilities and
other annual expenses (but not capital expenses) that are standard and
customary for properties similar to the Property, and which are set
forth in the Approved Annual Budget, Operating Expenses for this purpose
shall not include any interest or principal payments on the Loan or any
allowance for depreciation. For purposes of this Note, but not the Cash
Management Agreement (as hereinafter defined), Operating Expenses in
connection with the Ground Lease (as defined in the Deed of Trust) shall
mean the annual sum of $393,750.00. For purposes of the Cash Management
Agreement, Operating Expenses in connection with the Ground Lease shall
mean the actual rent payable pursuant to the terms of the Ground Lease.
"Testing Date" shall mean (a) for purposes of Section 5 of Exhibit A to
this Note, the last day of the calendar month preceding the calendar
month in which Borrower requests a disbursement of the Holdback (as
hereinafter defined), and (b) for purposes of the Cash Management
Agreement, March 31, June 30, September 30, and December 31 of each
calendar year, with the first such Testing Date commencing as of March
31, 2003.
4. INTEREST; PAYMENTS.
4.1 DEFINITIONS. The following terms shall have the meanings
indicated:
"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 annual rate of 6.20%.
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 twenty-five
(25) 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. Except as otherwise
specifically provided in this Note or the other Loan Documents,
all payments and deposits due under this Note or the other Loan
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Documents shall be made to Lender not later than 12:00 noon,
California time, on the day on which such payment or deposit is
due. Any funds received by Lender after such time shall, for all
purposes, be deemed to have been received on the next succeeding
Business Day.
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. Borrower irrevocably waives the
right to direct the application of any and all payments at any
time hereafter received by Lender from or on behalf of Borrower,
and 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 all or any portion of any payment or deposit
required hereunder (other than the payment due on the Maturity
Date) is not paid or deposited on or before the fourth day
following the day on which such payment or deposit is due,
Borrower shall pay a late or collection charge, as liquidated
damages, equal to 5% of the amount of such unpaid payment or
deposit. If all or any portion of the payment due on the
Maturity Date is paid more than 4 days after the Maturity Date
and on a date other than the first day of a month. Borrower
shall pay a late or collection charge, as liquidated damages,
equal to the interest which would have accrued on such amount
during the period commencing on the date payment of such amount
is actually made and ending on the last day of the month in
which payment of such amount is actually made. Borrower
acknowledges that Lender will incur additional expenses as a
result of any late payments or deposits hereunder, which
expenses would be impracticable to quantify, and that Borrower's
payments under this Section 5.1 are a reasonable estimate of
such expenses.
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 an annual
rate equal to 5% plus the Interest Rate, but not higher than the
maximum rate of interest permitted by applicable law ("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
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 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 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 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 Deed of Trust or such other Loan Document.
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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 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 (a)
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: (i) fraud or
willful misrepresentation by Borrower (or any direct or indirect
owner of Borrower); (ii) material physical waste of the Property
or the Collateral (provided such waste is not cured within
thirty (30) days after notice from Lender); (iii) 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 Deed of Trust on all or any portion of the
Property; (iv) failure to deliver any insurance or condemnation
proceeds or awards or any security deposits received by Borrower
to Lender if such delivery is required pursuant to the terms of
the Loan Documents or, otherwise to apply such sums as required
under the terms of the Loan Documents or any other instrument
now or hereafter securing this Note; (v) 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; (vi) any breach by Borrower of any covenant in
this Note or in the Deed of Trust regarding Hazardous Materials
(as defined in the Deed of Trust) OR; any representation or
warranty of Borrower regarding Hazardous Materials proving to
have been untrue when made; (vii) any representation or warranty
of Borrower regarding the Ground Lease (as defined in the Deed
of Trust) proving to have been untrue when made; or (viii) any
termination, surrender, amendment, restatement, modification, or
subordination of the Ground Lease having occurred, other than as
a result of the action or inaction of Lender, without, in each
case, Lender's prior written consent; or (b) in the event the
Property or the Collateral shall become an asset in (i) a
voluntary bankruptcy or insolvency proceeding or (ii) an
involuntary bankruptcy or insolvency proceeding (other than one
filed by Lender) which is not dismissed within 120 days of
filing.
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, 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
Deed of Trust, such Borrower hereby makes all representations and
warranties in favor of Lender contained in Article 5 of the Deed of
Trust, all covenants contained in Section 6.15 of the Deed of Trust, and
all indemnities of Lender contained in Section 6.19 of the Deed of
Trust, jointly and severally with the "Trustor, "
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 in any other
Loan Document, Borrower hereby waives presentment, demand,
notice of dishonor, notice of default or delinquency, notice of
intent to accelerate, notice of acceleration, notice of
nonpayment, notice of costs, expenses or losses and interest
thereon, and notice of interest on interest and late charges.
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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
Deed of Trust shall constitute a waiver of any breach, default
or failure of condition under this Note, the Deed of Trust or
the obligations secured thereby. A waiver of any term of this
Note, the 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 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 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 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 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.
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 AND APPROVALS. 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.
11. NOTICES. All 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
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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. The addresses and facsimile numbers of the
parties shall be:
BORROWER: LENDER:
Plaza Santa Fe II LLC Wells Fargo Bank, N.A.
415 North LaSalle Street 1320 Willow Pass Road, Suite 205
Suite 200 Concord, CA 94520
Chicago, IL 60610 Loan No.
FAX No.: (312) 527-4664 FAX No.: (925) 691-5947
12. ADDITIONAL TERMS AND CONDITIONS. The additional terms and conditions set
forth in EXHIBIT A attached hereto are incorporated herein by this
reference.
13. PREPAYMENT - DEFEASANCE ONLY. 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 VOLUNTARY PREPAYMENT. Any voluntary prepayment of this Note: (a)
is prohibited except during the last 6 months of the term, and
(b) is permitted in full only, and not in part.
13.2 PREPAYMENT CHARGE.
a. BASIC CHARGE. Except as provided below, if this Note is
prepaid prior to the last 6 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: (i)
an amount equal to 1% of the amount prepaid; or (ii) an
amount equal to (a) 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 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 (b) a fraction whose numerator is the
amount prepaid and whose denominator is the outstanding
principal balance of the Loan as of the prepayment date.
For purposes of the foregoing, "Periodic Treasury Yield"
means (iii) 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 (iv) 12, if scheduled payment dates are
monthly, or 4, if scheduled payment dates are quarterly.
b. ADDITIONAL CHARGE. If this Note is prepaid on any day
other than the first day of a month, whether such
prepayment is voluntary, involuntary or upon full
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 the basic
prepayment charge described in Section 13.2.a above and
all other sums then due and owing to Lender under this
Note and the other Loan Documents) an additional
prepayment charge equal to the interest which would
otherwise have accrued on the amount prepaid (had such
prepayment not occurred) during the period commencing on
the prepayment date and ending on the last day of the
month in which the prepayment occurred.
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c. EXCLUSION. Notwithstanding the foregoing, no prepayment
charge of any kind shall apply in respect to any
prepayment resulting from Lender's application of any
insurance proceeds or condemnation awards to the
outstanding principal balance of the Loan.
13.3 EFFECT OF PREPAYMENT. No partial prepayment of this Note shall
change the dates or amounts of subsequent monthly installments
of principal and interest, unless Lender otherwise agrees in
writing.
13.4 WAIVER. Borrower waives any right to prepay this Note except
under the terms and conditions set forth in this Section 13 and
agrees that if this Note is prepaid, Borrower shall 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: /s/ [ILLEGIBLE]
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14. DEFEASANCE-FULL
14.1 DEFEASANCE DEFINITIONS. In addition to the terms defined
elsewhere in this Note or the other Loan Documents, the
following terms shall have the meanings indicated:
"Code" means the Internal Revenue Code of 1936, as amended to
date and as further amended from time to time, or any successor
statutes thereto, together with applicable regulations issued
pursuant thereto in temporary or final form.
"Defeasance" means the Borrower's substitution of collateral and
Lender's release of the lien of the Deed of Trust upon
satisfaction of all of the terms and conditions of this Section
14.
"Defeasance Collateral" means obligations or securities, not
subject to prepayment, call or early redemption, each of which
qualifies as a "Government security" as defined in Section
2(a)(16) of the Investment Company Act of 1940, as amended (15
U.S.C. Section 80a-I et seq.), together with all revenues and
proceeds of such obligations or securities.
"Defeasance Date" means the date upon which the Defeasance is
completed, which shall be a scheduled payment date.
"Defeasance Security Agreements" shall have the meaning
specified in Section 14.3(d)(ii).
"Lockout Period" means the period beginning on the effective
date of this Note and ending on the later of (a) the second
anniversary of the Startup Day of the REMIC, if any, that holds
this Note on the Defeasance Date, and (b) the 3rd anniversary of
the effective date of this Note.
"Rating Agencies" means Fitch, Inc., Moody's Investors Service,
Inc., Standard & Poor's Rating Services and any other
nationally-recognized statistical rating organization that, in
connection with the securitization of the Loan by a REMIC
maintains a rating, on the Defeasance Date, of the securities
issued by the REMIC.
"REMIC" means a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"Startup Day" means the "startup day" within the meaning of
Section 860G(a)(9) of the Code.
"Successor Borrower" means an entity designated by Lender whose
sole purpose is to own the Defeasance Collateral delivered by
Borrower under this Section 14 and assume Borrower's obligations
with respect to the Loan either alone, or together with the
Defeasance Collateral for other, previously defeased loans or
portions of loans assumed by Successor Borrower which are also
held by the REMIC that holds this Note. Successor Borrower
shall, in either case, be restricted from taking actions that
could result in its bankruptcy or dissolution.
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14.2 BORROWER RIGHT TO DEFEASE. At any time after the Lockout Period,
Borrower may elect to effect a Defeasance of the Loan in
accordance with the provisions of this Section 14, at Borrower's
sole cost and expense.
14.3 CONDITIONS. Borrower shall only have the right to cause a
Defeasance if 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 Borrower's intended Defeasance Date. Simultaneously
with the delivery of such notice, Borrower shall deposit
with Lender an amount estimated by Lender to be
sufficient to reimburse Lender's anticipated expenses in
connection with the Defeasance, for which Borrower shall
be solely responsible whether or not the Defeasance
shall be completed. If any such notice shall have been
given by Borrower, Borrower shall be obligated to
complete the Defeasance of the Loan on the Defeasance
Date, unless such notice is revoked in writing by
Borrower prior to the Defeasance Date. Upon completion
of the Defeasance or revocation by Borrower as specified
above, Lender shall return any surplus deposit to
Borrower;
b. NO DEFAULT. No Default shall exist or would exist with
notice or passage of time, or both, either on the date
of receipt of Borrower's notice under Section 14.3.a
above or on the Defeasance Date;
c. PAYMENTS. Borrower shall pay in full, on or before the
Defeasance Date (i) all unpaid interest accruing under
this Note to and including the Defeasance Date (or
otherwise cause Successor Borrower to assume liability
for such interest), (ii) all other sums due under this
Note and the other Loan Documents on or before the
Defeasance Date, (iii) all escrow, closing, recording,
legal, appraisal, Rating Agency and other fees, costs
and expenses paid or incurred by Lender or its agents in
connection with the Defeasance, the release of the lien
of the Deed of Trust on the Property, the review of the
proposed Defeasance Collateral and the preparation of
the Defeasance Security Agreements and related
documentation, (iv) a defeasance fee to Lender of 1% of
the outstanding principal balance of the Loan as of the
Defeasance Date, and (v) 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;
d. DELIVERIES. Borrower shall, at Borrower's sole cost and
expense, deliver the following items to Lender on or
before the Defeasance Date:
(i) The Defeasance Collateral, as substitute
collateral for the Loan. The principal and
interest payments under the Defeasance
Collateral (without regard to earnings from
reinvestment of proceeds) must be, in timing and
amounts, sufficient to provide for payment
prior, but as close as possible, to all
successive scheduled payment dates occurring
after the Defeasance 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. Borrower shall take
such actions, enter such agreements and issue
such orders or directions (including those
specified below), as are necessary or
appropriate end in accordance with customary
commercial standards to effectuate book-entry
transfers and pledges through the book-entry
facilities of the institution holding the
Defeasance Collateral or otherwise to create and
perfect a valid, enforceable, first priority
security interest in the Defeasance Collateral
in favor of Lender;
(ii) A pledge and security agreement and an account
control agreement, each in form and substance
customary in commercial mortgage defeasance
transactions (such agreements, the "Defeasance
Security Agreements"), creating, attaching and
perfecting a first priority security interest in
favor of Lender in the Defeasance Collateral
under the law of the jurisdiction selected by
Lender, which agreements shall provide, among
other things, that all 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;
(iii) A certificate of Borrower certifying that all of
the requirements of this Section 14 have been
satisfied;
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(iv) Opinions of counsel for Borrower, addressed to
Lender and all Rating Agencies and delivered by
counsel satisfactory to Lender, subject only to
customary assumptions, qualifications and
exceptions, stating, among other things, that
(a) Lender has a perfected first priority
security interest in the Defeasance Collateral,
(b) the Defeasance Security Agreements are
enforceable against Borrower in accordance with
their terms and (c) any REMIC that holds this
Note immediately prior to the Defeasance Date
will not, as a result of the Defeasance, fail to
maintain its status as a "real estate mortgage
investment conduit" within the meaning of
Section 860D of the Code;
(v) A certificate, addressed to Lender and all
Rating Agencies, from a firm of independent
certified public accountants acceptable to
Lender, subject only to customary assumptions,
qualifications and exceptions, certifying that
the Defeasance Collateral satisfies the
requirements of Section 14.3.d.(i) above and
certifying that in no fiscal year of Successor
Borrower will the interest earned on the
Defeasance Collateral exceed the interest
payable for the same period on the Loan under
this Note;
(vi) If this Note is held by a REMIC, written
evidence from all of the 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 representing
interests in such REMIC which are then
outstanding; and
(vii) Such other certificates, opinions, documents or
instruments as are customary in commercial
mortgage defeasance transactions to effect the
Defeasance.
e. RELEASE OF LIEN. Upon satisfaction of all conditions
specified in this Section 14, the Property shall be
released from the lien of the Deed of Trust and the
other Loan Documents, and the Defeasance Collateral and
the proceeds thereof shall constitute the only
collateral securing the obligations of Borrower under
this Note and the other Loan Documents. Lender shall, at
Borrower's expense, prepare, execute and deliver any
instruments reasonably necessary to release the lien of
the Deed of Trust from the Property.
f. ASSIGNMENT AND ASSUMPTION. In connection with the
Defeasance, 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 and the
Defeasance Security Agreements to Successor Borrower.
Successor Borrower shall execute an assumption agreement
in form and substance customary in commercial mortgage
defeasance transactions, pursuant to which it shall
assume Borrower's obligations under this Note and the
Defeasance Security Agreements. As conditions to such
assignment and assumption, Borrower shall (X) deliver to
Lender opinions of counsel addressed to Lender and all
Rating Agencies, in form and substance customary in
commercial defeasance transactions and delivered by
counsel satisfactory to Lender, and subject only to
customary assumptions, qualifications and exceptions,
stating, among other things, that such assumption
agreement is enforceable against Borrower and Successor
Borrower in accordance with its terms and that this Note
and the Defeasance Security Agreements, as so assumed,
are enforceable against Successor Borrower in accordance
with their respective terms, and that the bankruptcy of
any affiliate of Successor Borrower will not affect the
assets of Successor Borrower; and (y) pay all costs and
expenses incurred by Lender or its agents in connection
with such assignment and assumption (including, without
limitation, the formation or review of Successor
Borrower and the preparation of the assumption agreement
and related documentation). Upon such assumption by
Successor Borrower, Borrower shall be relieved of its
obligations under this Note, the Defeasance Security
Agreements and the other Loan Documents other than (i)
representations and warranties made in connection with
the Defeasance, (ii) the obligation to effect the
Defeasance in accordance with this Section 14, and to
provide further assurances as necessary to do so, (iii)
liability for losses to Lender resulting from an
avoidance, rescission or set-aside of the Defeasance as
a result of actions taken or suffered by Borrower, and
(iv) those obligations which are specifically intended
to survive the repayment of the Loan or other
termination, satisfaction or assignment of this Note,
the Defeasance Security Agreements or the other Loan
Documents or Lender's exercise of its rights and
remedies under any of such documents and instruments.
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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.
"BORROWER"
PLAZA SANTA FE II LLC, a New Mexico
limited liability company
BY: PSF II Manager, INC., a New Mexico
corporation, its managing member
By: /s/ [ILLEGIBLE]
------------------------------
Name: [ILLEGIBLE]
-----------------------
Title: [ILLEGIBLE]
-----------------------
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Loan No. 31-0900141A
EXHIBIT A TO PROMISSORY NOTE
ADDITIONAL TERMS AND CONDITIONS
This Exhibit A is attached to and forms a part of that Promissory Note ("Note")
executed by PLAZA SANTA FE II LLC ("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 Rio Grande Title Company of Santa Fe, Inc. 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 15 days after and as
of the end of each calendar month during the period
prior to any sale 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, 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 15 days after and as of the
end of each calendar month during the period prior to
any sale 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, 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, dates
of commencement and expiration 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, in a form
acceptable to Lender (or audited financial statements if
Borrower obtains them), showing all assets and
liabilities of Borrower;
d. ANNUAL BUDGET. Not later than November 15 of each
calendar year, a proposed budget detailing the projected
operating expenses and capital expenditures for the
Property for the next calendar year to be approved by
Lender; and
e. 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; (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
EXHIBIT A
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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 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(a) through 2.1(d) is not timely delivered following
Lender's notice, 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.
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. (i) $23,176 on the Disbursement Date, and (ii) 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 sole discretion to be sufficient to pay
for taxes and other liabilities payable by Borrower
under Section 6.9 of the Deed of Trust. The initial
estimated monthly amount to be deposited by Borrower on
each payment date is $11,588.
b. INSURANCE. (i) $40,060 on the Disbursement Date, and
(ii) 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 sole discretion to be
sufficient to pay for premiums for insurance payable by
Borrower under Section 6.10 of the Deed of Trust. The
initial estimated monthly amount to be deposited by
Borrower on each payment date is $4,006.
c. GENERAL TENANT IMPROVEMENTS. $7,500 on the first payment
date on which both principal and interest under the Loan
are payable and on each payment date thereafter for
tenant improvements, brokerage commissions and other
leasing costs that may be required for new tenants in
the Property.
d. ANCHOR TENANT IMPROVEMENTS. $12,500 on the first payment
date on which both principal and interest under the Loan
are payable and on each payment date thereafter until
such time as the escrow account balance exceeds
$750,000 for reimbursement of tenant improvements,
brokerage commissions and other leasing costs that may
be required for retenanting any space in the Property
occupied by an Anchor Tenant (as defined below). At such
time as the escrow account balance exceeds $750,000,
then, at the time thereafter that all existing Anchor
Tenants (or replacement Anchor Tenants acceptable to
Lender) are in physical occupancy of their respective
space, are open for business, and are paying rent to
Borrower pursuant to the terms of their respective
leases, Lender shall disburse all funds in the escrow
account in excess of $375,000 to Borrower; provided,
however, at any time the escrow account balance is less
than $375,000, Borrower shall resume making the monthly
payment of S12,500 until such time as the escrow account
balance exceeds $375,000. For purposes of this Note, an
"Anchor Tenant" shall mean any tenant that occupies
15,000 or more square feet of the Property.
e. DEFERRED MAINTENANCE. $45,000 on the Disbursement Date
for Deferred Maintenance Work (defined below).
f. CAPITAL EXPENDITURES. $2,781.50 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).
EXHIBIT A
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3.2 APPLICATION.
a. TAXES. If no Default exists, Lender shall apply the
Impounds 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. GENERAL TENANT IMPROVEMENTS. If no Default exists,
Lender shall release the Impounds to Borrower once a
quarter, in amounts equal to $5.00 per net rentable
square foot, to reimburse Borrower for the tenant
improvements, brokerage commissions, and leasing costs
stated in Sections 3.1(c) and 3.1(d) above; PROVIDED,
HOWEVER, that Lender shall have received and approved
each of the following for each tenant for which such
costs were incurred:
(i) Borrower's written request for such release,
including the name of the tenant, the location
and net rentable area of the premises leased by
such tenant and a description in reasonable
detail of the costs covered by the request;
(ii) Borrower's certification that the tenant
Improvements have been completed lien-free and
in a workmanlike manner;
(iii) a fully executed lease, or extension or renewal
of the current lease;
(iv) prior to the last release of Impounds for each
space, an estoppel certificate executed by the
tenant including its acknowledgment that all
tenant Improvements have been satisfactorily
completed; and
(v) such other information with respect to such
costs as Lender may request.
d. ANCHOR TENANT IMPROVEMENTS. If no Default exists, Lender
shall release the Impounds to Borrower once a quarter,
in amounts equal to the lesser of the actual costs of
the specified tenant Improvements, brokerage
commissions, and leasing costs or $15.00 per net
rentable square foot, to reimburse Borrower for the
tenant improvements, brokerage commissions, and leasing
costs stated in Section 3.1(d) above; PROVIDED,
HOWEVER, that Lender shall have received and approved
each of the following for each tenant for which such
costs were incurred:
(i) Borrower's written request for such release,
including the name of the tenant, the location
and net rentable area of the premises leased by
such tenant and a description and cost breakdown
in reasonable detail of the costs covered by the
request;
(ii) Borrower's certification that the tenant
improvements have been completed lien-free and
in a workmanlike manner;
(iii) a fully executed lease, or extension or renewal
of the current lease;
(iv) prior to the last release of Impounds for each
space, an estoppel certificate executed by the
tenant including its acknowledgment that all
tenant improvements have been satisfactorily
completed; and
(v) such other information with respect to such
costs as Lender may request.
e. DEFERRED MAINTENANCE WORK. If no Default exists, Lender
shall release the Impounds to Borrower to pay or
reimburse Borrower for the Deferred Maintenance Work;
PROVIDED, HOWEVER, that Lender shall have received and
approved each of the following;
(i) Borrower's written request for such release,
including a description of the Deferred
Maintenance Work and a cost breakdown thereof in
reasonable detail, and Borrower's certification
that all
EXHIBIT A
3
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such Deferred Maintenance Work has been
completed lien-free and in a workmanlike manner;
and
(ii) an inspection report if required by Lender,
signed by an inspector selected by Lender, whose
fees and expenses shall be paid by Borrower and
deducted from requested release of Impounds, and
such other evidence as Lender shall require,
confirming Borrower's certification.
f. CAPITAL EXPENDITURES. If no Default exists, Lender shall
release the Impounds to Borrower once a quarter, in
increments of no less than $25,000.00 per release, to
pay or reimburse Borrower for the Capital Expenditures;
PROVIDED, HOWEVER, that Lender shall have received and
approved each of the following:
(i) Borrower's written request for such release,
including a description of the Capital
Expenditures and Borrower's certification 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) an inspection report if required by Lender,
signed by an inspector selected by Lender, whose
fees and expenses shall be paid by Borrower and
deducted from requested release of Impounds, and
such other evidence as Lender shall require,
confirming Borrower's certification.
3.3 GENERAL. Subject to the terms of the Cash Management Agreement
(as defined below), 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 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.
Notwithstanding anything to the contrary in the Deed of Trust,
all accounts containing Impounds for taxes, insurance, tenant
improvements, deferred maintenance work and capital expenditures
shall bear interest at a rate established by Lender or its
servicing agent, which may or may not be the highest rate then
available.
3.4 MAINTENANCE AND CONSTRUCTION.
a. TENANT IMPROVEMENTS. Borrower shall construct all tenant
improvements in a workmanlike manner and in accordance
with all applicable laws, ordinances, rules and
regulations.
b. DEFERRED MAINTENANCE WORK. Borrower shall complete the
lien-free performance of the Deferred Maintenance Work
(as defined below) on or before June 30, 2003. Borrower
shall perform the Deferred Maintenance Work in a
workmanlike manner and in accordance with all applicable
laws, ordinances, rules and regulations. "Deferred
Maintenance Work" shall mean the resurfacing of
approximately 120,000 square feet of damaged and
defective parking lot area, all as more fully described
in the Property Condition Report dated June 6, 2002,
prepared by Integrated Property Analysis, Inc.
c. 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.
d. RIGHT OF INSPECTION. Lender shall have the right to
enter upon the Property at all reasonable times to
inspect all work for the purpose of verifying
information disclosed or required pursuant to this Note.
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.
EXHIBIT A
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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: Banco Popular
-----------------------------------
ABA Routing No.: 071924458
-----------------------------------
Account Name: Plaza Santa Fe II LLC
-----------------------------------
Reference: a/c # 0102404100269
-----------------------------------
Advise:
-----------------------------------
Lender shall 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 shall 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 shall 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. Notwithstanding anything to the
contrary contained in Section 6.15 of the Deed of Trust, Lender shall,
one time only, consent to the voluntary sale or exchange of all of the
Property by Trustor (as defined in the Deed of Trust) to a bona-fide
third party purchaser, without any modification of the terms of this
Note or the other Loan Documents, if no Default has occurred and is
continuing and all of the following conditions have been satisfied:
4.1 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
requirement of Lender that the proposed borrowing entity satisfy
Lender's then applicable criteria for a single purpose
bankruptcy remote entity;
4.2 Lender's reasonable determination that the proposed purchaser
possesses satisfactory recent experience in the ownership and
operation of properties comparable to the Property;
4.3 Intentionally Omitted;
4.4 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
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;
4.5 if required by Lender, delivery to Lender of evidence of title
insurance reasonably satisfactory to Lender insuring Lender that
the lien of the Deed of Trust and the priority thereof will not
be impaired or affected by reason of such transfer or exchange
of the Property;
4.6 payment to Lender of an assumption fee equal to 1% of the then
outstanding principal balance of this Note, but not less than
$15,000;
4.7 reimbursement to Lender of any and all costs and expenses paid
or incurred by Lender in connection with such transfer or
exchange, 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; and
EXHIBIT A
5
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4.8 if required by Lender, delivery to Lender of written evidence
from the applicable rating agencies that such transfer or
exchange will not result in a downgrading, withdrawal or
qualification of the respective ratings in effect immediately
prior to the transfer or exchange for any securities issued in
connection with the securitization of the Loan which are then
outstanding.
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 or exchange in
accordance with the provisions of this Section.
5. HOLDBACK. As of the Disbursement Date, Osaka Grill & Seafood ("Osaka"),
a tenant at the Property, is not open for business and paying rent to
Borrower pursuant to the terms of that certain lease for a portion of
the Property between Borrower, as landlord, and Osaka, as tenant (the
"Osaka Lease"). Accordingly, Borrower hereby acknowledges and agrees
that Lender, notwithstanding anything to the contrary in this Note or
the other Loan Documents, shall withhold the sum of Nine Hundred Seventy
Five Thousand and No/l00ths Dollars ($975,000.00) of the Loan (the
"Holdback"). The Holdback shall be held in an escrow account by Lender
or its servicing agent, which may be a commingled account, and shall
accrue interest at a rate established from time to time by Lender or its
servicing agent, which may not be the highest rate available (the
"Holdback Escrow"). The Holdback Escrow shall constitute Collateral (as
defined in the Deed of Trust). Upon any Default, Lender shall have the
right, in addition to any other rights of Lender under the Loan
Documents, to foreclose its security interest in the Holdback Escrow and
apply the sums to the Holdback Escrow to the repayment of the
indebtedness outstanding under this Note in such order as Lender shall
determine. At any time and from time to time, promptly upon Lender's
request, Borrower shall execute such additional documents and
instruments as Lender shall reasonably deem necessary or desirable for
the purpose of confirming and perfecting Lender's security interest in
the Holdback Escrow. If the Release Conditions (as hereinafter defined)
are not satisfied to Lender's satisfaction by the date which is six (6)
months after the Disbursement Date, Borrower agrees (x) that it shall be
required to pay down the outstanding principal balance of the Loan (out
of the Holdback Escrow) in an amount equal to the sum necessary to
provide that the Actual Debt Service Coverage Ratio shall not be less
than 1.5 to 1.0 and the Adjusted Debt Service Coverage Ratio shall not
be less than 1.23 to 1.0., and (y) that such payment will be subject to
the prepayment charge set out in Section 13 of this Note. The Holdback
(or a portion thereof if a prepayment of the Loan is made pursuant to
the immediately preceding sentence) shall be released to Borrower upon
Borrower's satisfaction of the following terms, provisions, and
conditions precedent (collectively referred to herein as the "Release
Conditions"): (i) no Default shall have occurred and be continuing; (ii)
Borrower shall have provided evidence acceptable to Lender that Osaka is
open for business and paying rent pursuant to the terms of the Osaka
Lease; (iii) the Actual Debt Service Coverage Ratio shall not be less
than 1.5 to 1.0; and (iv) the Adjusted Debt Service Coverage Ratio shall
not be less than 1.23 to 1.0. Notwithstanding anything to the contrary
contained in this Note, if all the tenants at the Property that have
entered into leases with Borrower as of the Disbursement Date (other
than H&R Block) are open for business, paying rent, and have not
suffered a material adverse change in their financial condition, the Net
Cash Flow for purposes of calculating the debt service coverage ratios
in connection with the Release Conditions shall be deemed to be
$2,211,000.00.
6. CASH MANAGEMENT. Borrower shall enter into (i) that certain Cash
Management Agreement of even date herewith among Lender, Borrower, and
Redford Properties IV, Inc., a Delaware corporation d/b/a CB Richard
Ellis (the "Cash Management Agreement"), (ii) that certain Restricted
Account Agreement of even date herewith among Lender, as "Bank", Lender,
as "Lender", and Borrower (the "Restricted Account Agreement"), and
(iii) that certain Lockbox Agreement of even date herewith among
Borrower, Regulus West LLC, and Lender (the "Lockbox Agreement") which
shall govern the collection and disbursement of Gross Income (as defined
in the Cash Management Agreement) during the term of the Loan.
7. PREPAYMENT.
7.1 The Note contains provisions which permit Full Defeasance Only.
EXHIBIT A
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Loan No. 31-0900141A
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 ("Note")
executed by PLAZA SANTA FE II LLC ("Borrower") in favor of WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Lender").
1. LOAN DOCUMENTS. The documents numbered 1.1 through 1.12 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 Deed of Trust;
1.3 State of New Mexico Uniform Commercial Code - Financing
Statement - Form UCC-1;
1.4 Limited Liability Company Borrowing Certificate;
1.5 Corporate Resolution Authorizing Limited Liability Company
Activity and Certificate of Incumbency;
1.6 Estoppels, Non-Disturbance and Attornment Agreements of various
date(s);
1.7 Subordination Agreements, and Estoppels, Non-Disturbance and
Attornment Agreements of various date(s);
1.8 Assignment of Management Contracts;
1.9 Cash Management Agreement;
1.10 Restricted Account Agreement;
1.11 Lock Box Agreement; and
1.12 Freedom to Choose - Insurance Company and Insurance Agent.
2. OTHER RELATED DOCUMENTS WHICH ARE NOT LOAN DOCUMENTS.
2.1 Agreement for Disbursement Prior to Recording and Amendment to
Note; and
2.2 2 Limited Guaranties.
EXHIBIT B
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