Loan No: 87532 Executive 45
$6,600,000 April 29, 1997
SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, 710 RT. 46 REALTY, LLC., a limited
liability company organized under New Jersey law, and whose principal place
of business is c/o Principal Investment Group, 950 3rd Avenue, 31st floor,
New York, New York 10022 (the "Borrower"), promises to pay SIX MILLION SIX
HUNDRED THOUSAND DOLLARS ($6,600,000), together with interest according to
the terms of this secured promissory note (the "Note"), to the order of LIFE
INVESTORS INSURANCE COMPANY OF AMERICA, an Iowa corporation (together with
any future holder, (the "Lender"), whose address is c/o AEGON USA Realty
Advisors, Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-5223.
1. CONTRACT INTEREST RATE
The principal balance of this Note shall bear interest at the rate of
eight and twenty nine one hundredths percent (8.29%) per annum (the
"Note Rate"). Interest shall be calculated on the basis of a 360-day
year and computed each month in arrears on the basis of a 30-day month.
2. SCHEDULED PAYMENTS
A) PREPAYMENT OF INTEREST FOR THE MONTH OF FUNDING
On the date of this Note, Borrower shall prepay interest due from
and including the date of this Note through and including the last
day of April, 1997.
B) MONTHLY PRINCIPAL AND INTEREST PAYMENTS
On the first day of June 1997 and of each subsequent calendar month
through May 2007, Borrower shall pay an installment in the amount
of $56,402.15. Monthly installments of principal and interest shall
be made when due, regardless of the prior acceptance by the Lender
of unscheduled payments.
C) FINAL PAYMENT
This Note shall mature on the first day of May, 2007 (the "Maturity
Date"), when the Borrower shall pay its entire principal balance,
together with all accrued interest and any other amounts owed by
the Borrower under this Note or under any of the other documents
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enter into now or in the future in connection with the loan
evidenced by this Note (the "Loan Documents").
3. BALLOON PAYMENT ACKNOWLEDGEMENT
The Borrower acknowledges that the scheduled monthly installments
referred to in Subsection 2(B) will not amortize fully the principal sum
of this Note over its term, resulting in a "balloon" payment at
maturity. Any future agreement to extend the Note or refinance the
indebtedness it evidences may be made only by means of a writing
executed by a duly authorized officer of the Lender.
4. APPLICATION OF MONTHLY PRINCIPAL AND INTEREST PAYMENTS
When the Lender receives a monthly principal and interest payment, the
Lender shall apply it first to interest in arrears for the previous
month and then to the amortization of the principal amount of the Note,
unless other amounts are then due under the Note or the other Loan
Documents. If other amounts are due when a payment is received, the
Lender shall apply the payment first to accrued interest and then, at
its discretion, to either those other amounts or to principal.
5. DEFAULT INTEREST
If a Default exists (as defined in Section 8 below) the outstanding
principal balance of this Note shall, at the option of Lender, bear
interest at a rate (the "Default Rate") equal to the lesser of (i)
eighteen percent (18%) per annum and (ii) the maximum rate allowed by
law. If a court of competent jurisdiction determines that any interest
charged has exceeded the maximum rate allowed by law, the excess of the
amount collected over the legal rate of interest will be applied to the
indebtedness as a principal prepayment without premium, retroactively,
as of the date of receipt.
6. LATE CHARGE
Borrower shall pay a late charge equal to five percent (5%) of the
amount of each scheduled monthly principal and interest payment that is
not received by Lender on or before the tenth day of the calendar month
in which it is due. Late charges shall be paid on or before the tenth
day of the calendar month following the month during which they accrue.
Interest on unpaid late charges shall, at Lender's discretion, accrue at
the
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Note Rate beginning on the first day of the calendar month following
their accrual.
7. PREPAYMENT
A. This Note may be prepaid, in whole or in part, upon not less than
thirty (30) days' prior written notice to the Lender. At the time of any
prepayment, the Borrower shall pay all accrued interest on the principal
balance of the Note and all other sums due to the Lender under the Loan
Documents. In addition, unless the prepayment occurs during the 90-day
period preceding the Maturity Date, the Borrower shall pay a prepayment
premium equal to the greater of (a) one percent of the prepayment and
(b) an amount that the parties agree will compensate the Lender for the
loss of its bargained-for investment (the "Yield Protection Amount").
B. The Lender shall calculate the Yield Protection Amount as follows:
C. First, the Lender shall determine the annual percentage yield on
U.S. Treasury securities maturing at the end of the term of the loan
evidenced by this Note (the "Annual Treasury Instrument Yield"). The
Annual Treasury Instrument Yield shall be determined as of ten (10)
business days before the effective date of the prepayment. The Lender
shall base its determination of the Annual Treasury Instrument Yield on
the yield on U.S. Treasury Instruments, as published in THE WALL STREET
JOURNAL (or, if THE WALL STREET JOURNAL is not then being published or
if no such reports are then being published in THE WALL STREET JOURNAL,
as reported in another public source of information nationally
recognized for accuracy in the reporting of the trading of governmental
securities). If no such instruments mature on the exact maturity date of
the Note, the Lender shall interpolate the Annual Treasury Instrument
Yield on a straight-line basis using the yield on the instrument whose
maturity date most closely precedes that of the Note and the yield on
the instrument whose maturity date most closely succeeds that of the
Note.
D. Second, the Lender shall determine the hypothetical monthly
interest-only payment (based on a 360-day year and 30-day months) which
would be payable on a promissory note having a principal balance equal
to the prepaid amount and bearing interest at the "bond-equivalent" rate
which would produce a yield equal to the Annual Treasury Instrument
Yield (the "Monthly Reinvestment Payment").
E. Third, the Lender shall determine the hypothetical monthly
interest-only payment (based on a 360-day year and 30-day months) which
would be payable on a promissory note having a principal balance equal
to the prepaid amount and bearing interest at the Note Rate (the
"Monthly Coupon Rate Payment").
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F. Fourth, the Lender shall determine the present value of a series of
monthly payments, each equal in amount to the amount by which the
Monthly Coupon Rate Payment exceeds the Monthly Reinvestment Payment,
received on the first day of each calendar month from and including the
first day of the first full calendar month immediately following the
effective date of prepayment to and including the Maturity Date, using
the Annual Treasury Instrument Yield as the discount rate.
G. The present value of that series of payments is the "Yield
Protection Amount."
8. DEFAULT
A default on this Note ("Default") shall exist if (a) the Lender fails
to receive any required installment of principal and interest on or
before the tenth day of the calendar month in which it is due, (b) the
Borrower fails to pay the matured balance of the Note on the Maturity
Date or (c) a "Default" exists as defined in any other Loan Document.
9. ACCELERATION
If a Default exists, the Lender may, at its option, without notice to
Borrower, declare the unpaid principal balance of this Note to be
immediately due and payable, together with all accrued interest on the
indebtedness and all other charges due and payable by Borrower under any
other Loan Document.
10. PREPAYMENT FOLLOWING ACCELERATION
Any Default resulting in the acceleration of the indebtedness shall be
presumed to be an attempt to avoid the provisions of Section 7 of this
Note, which prohibit prepayment on condition the Lender's obligation to
accept prepayment on the payment of a prepayment premium. Accordingly,
if the indebtedness is accelerated, any amounts tendered to repay the
accelerated indebtedness, or realized by the Lender through its remedies
following acceleration, shall be subject to the prepayment premium
required under Section 7.
11. SECURITY
This Note is secured by a Mortgage and Security Agreement (the
"Mortgage") granted by Borrower to the Lender, encumbering certain real
property located in the Essex County, New Jersey and granting a security
interest in certain fixtures and personal property, and by an Absolute
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Assignment of Leases and Rents made by Borrower to Lender, assigning the
landlord's interest in all present and future leases of all or any
portion of the real property encumbered by the Mortgage. Reference is
made to the Loan Documents for a description of the security and rights
of the Lender. This reference shall not affect the absolute and
unconditional obligation of the Borrower to pay the indebtedness
evidenced by this Note in accordance with its terms.
12. RECOURSE TO BORROWER
Borrower shall have no personal liability for, and the Lender shall have
no recourse to any property of Borrower other than the property
subjected to the liens or security interests of any of the Loan
Documents (the "Property"), in the event of Default by Borrower in
performing its obligations under this Note or any other Loan Document;
PROVIDED, HOWEVER, that Borrower shall be personally liable for, and
shall defend the Lender and hold Lender harmless from and against any
and all Lender's costs, expenses (including reasonable attorneys' fees),
losses and actual damages caused by, or incurred in connection with, (i)
waste, not including ordinary wear and tear, unless Borrower fails to
maintain the real property securing the Note (the "Real Property") with
ordinary care; (ii) fraud or written material misrepresentation; (iii)
failure to pay taxes, assessments, ground rent or any other lienable
impositions as required under the Loan Documents; (iv) misapplication of
tenant security deposits, insurance proceeds or condemnation proceeds,
or the unavailability to the Lender of condemnation proceeds because a
lease of the Real Property grants a tenant the right to a portion of the
award for the estate taken (unless that portion is specifically awarded
to the tenant or allocated to the tenant's interest by the condemning
authority); (v) failure while in monetary default to pay to Lender all
rents, income and profits, while in monetary default to pay to Lender
all rents, income and profits, net or reasonable and customary operating
expenses; (vi) failure to perform under the environmental covenants or
indemnifications set forth in the Loan Documents; (vii) destruction or
removal from the Real Property of fixtures or personal property securing
the Loan, unless replaced by items of equal value; (viii) terminating,
amending or entering into a lease of the Real Property in violation of
the Loan Documents; or (ix) wilful or grossly negligent violation of
applicable law. The Borrower may also assume recourse liability under
Loan Documents or other agreements that expressly provide for such
personal liability, and such Loan Documents or agreements, if any, shall
not be subject to the exculpation from personal liability set forth in
this Paragraph.
In addition, the Borrower shall have personal liability for the entire
indebtedness if the Borrower (a) voluntarily transfers or encumbers the
Property in violation of the Loan Documents, or (b) files a voluntary
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petition for reorganization under the Bankruptcy Code and has not
offered, prior to the filing, to enter into the Lender's choice of
either an agreement to permit an uncontested foreclosure or an agreement
to deliver a deed in lieu of foreclosure, within sixty days of Lender's
acceptance of the offer. Following Lender's acceptance of such an
offer, default by the Borrower shall trigger personal liability for the
entire indebtedness. No such offer shall be conditioned on any payment
by the Lender, on the release of any obligor from any recourse
obligation, or on any other concession.
13. SEVERABILITY
If any provision of this Note is held to be invalid, illegal or
unenforceable in any respect, or operates, or would if enforced operate
to invalidate this Note, then that provision shall be deemed null and
void. Nevertheless, its nullity shall not affect the remaining
provisions of this Note, which shall in no way be affected, prejudiced
or disturbed.
14. WAIVER
A. The Borrower waives demand, presentment for payment, protest,
notice of protest, dishonor and of nonpayment and any and all lack of
diligence or delays in collection or enforcement of this Note. Without
affecting the liability of Borrower under this Note, the Lender may
release any of the Property, grant any indulgence, forbearance or
extension of time for payment, or release any other person now or in the
future liable for the payment or performance of any obligation under
this Note or any of the Loan Documents.
B. Borrower (i) waives any homestead of similar exemption; (ii) waives
any statute of limitation; (iii) agrees that the Lender may, without
impairing any future right to insist on strict and timely compliance
with the terms of this Note, grant any number of extensions of time for
the scheduled payments of any amounts due, and may make any other
accommodation with respect to the indebtedness; (iv) waives any right to
require a marshalling of assets; and (v) to the extent not prohibited by
applicable law, waives the benefit of any law or rule of law intended
for its advantage or protection as a debtor or providing for its release
or discharge from liability under this Note, excepting only the defense
of full and complete payment of all amounts due under this Note and the
Loan Documents.
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15. VARIATION IN PRONOUNS
All the terms and words used in this Note, regardless of the number and
gender in which they are used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine,
feminine, or neuter, as the context or sense of this Note or any
paragraph or clause herein may require, the same as if such word had
been fully and properly written in the correct number and gender.
16. WAIVER OF JURY TRIAL
THE BORROWER AND LENDER WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS NOTE OR ANY
OTHER LOAN DOCUMENT OR (B) ARISING FROM ANY LENDING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, AND
THE BORROWER AND LENDER AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.
17. OFFSET RIGHTS
In addition to all liens upon and rights of setoff against the money,
securities, or other property of the Borrower given to the Lender by
law, the Lender shall have a lien upon and a right of setoff against all
money, securities, and other property of the Borrower, now or hereafter
in possession of or on deposit with Lender, whether held in a general or
special account or deposit, or safe-keeping or otherwise, and every such
lien and right of setoff may be exercised without demand upon, or
notice to the Borrower. No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of the Lender, or by
any neglect to exercise such right of setoff or to enforce such lien, or
by any delay in so doing, and every right of setoff and lien shall
continue in full force and effect until such right of setoff or lien is
specifically waived or released by an instrument in writing executed by
the Lender.
18. COMMERCIAL LOAN
The Borrower hereby represents and warrants to the Lender that the Loan
was made for commercial or business purposes, and that the funds
evidenced by this Note will be used solely in connection with such
purposes.
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19. GOVERNING LAW
This Note shall be construed and enforced according to, and governed by,
the laws of New Jersey without reference to conflicts of laws provisions
which, but for this provision, would require the application of the law
of any other jurisdiction.
20. TIME OF ESSENCE
In the performance of the Borrower's obligations under this Note, time
is of the essence.
WITNESS: 710 RT. 46 REALTY, LLC, a New
Jersey limited liability company
/s/ By /s/ Richard F. Wagman (SEAL)
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Name: Richard F. Wagman
Title: Member
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