PARTICIPATING LOAN DOCUMENTS

Transcription

1 PARTICIPATING LOAN DOCUMENTS By Carl J. (Kim) Seneker II Morrison & Foerster LLP San Francisco, California Copyright 1994 Morrison & Foerster Promissory Note Secured by Deed of Trust LOAN NO., CALIFORNIA NOTICE TO MAKER: UPON MATURITY OR EARLIER ACCELERATION, A BALLOON PAYMENT OF THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE, PLUS ANY THEN ACCRUED BUT UNPAID INTEREST (INCLUDING, WITHOUT LIMITATION, CONTINGENT INTEREST AS DESCRIBED IN THAT CERTAIN CONTINGENT INTEREST AGREEMENT EXECUTED BY MAKER IN FAVOR OF PAYEE AND DATED CONCURRENTLY HEREWITH) WILL BE DUE AND PAYABLE. PROMISSORY NOTE SECURED BY DEED OF TRUST $ July, 1994, California - 1-1

2 THIS PROMISSORY NOTE EVIDENCES A SHARED APPRECIATION LOAN AND IS SECURED BY A DEED OF TRUST, ASSIGNNENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING, ENCIMBERING PROPERTY LOCATED IN THE COUNTY OF, STATE OF CALIFORNIA. For value received, the undersigned ("Maker") promises to pay to the order of (together with any successor holder of this Note, "Payee"), at its office at or at such other location as Payee may from time to time designate, the principal sum of DOLLARS ($ ) together with interest thereon from the date of disbursement of principal at the rate of percent ( %) per annum, subject, however, to adjustment as provided in Paragraph 7 hereof; plus Contingent Interest as defined in the Contingent Interest Agreement ("Contingent Interest Agreement") dated concurrently herewith and executed by Payee and Maker which is incorporated herein by reference. Payments of principal and interest shall be made as provided below Principal and interest shall be due and payable as follows: (a) One installment of interest only, as accrued from and including the date of recordation of the Deed of Trust, shall be due and payable on, (b) Commencing on, 1994, interest only shall be due and payable in arrears in monthly installments of DOLLARS ($ ) each, or such lesser amount as shall have accrued if less than the full principal amount of this Note is outstanding, such payments to continue to be due and payable on the first day of each month thereafter through and including,. (c) Commencing on., an amount shall be due and payable which would be sufficient to fully amortize the then.- outstanding principal balance at the interest rate of percent ( %) per annum over a period of twenty-five (25) years in equal monthly installments of principal and interest, such payments to continue to be due and payable in arrears on the first day of each month thereafter through and including, (the "Maturity Date"), at which time the entire unpaid principal balance together with all accrued but unpaid interest shall be due and payable. (d) Payments of Contingent Interest shall be made at the times and in the amounts set forth in the Contingent Interest Agreement. (e) The full outstanding principal balance of this Note, plus accrued interest and all other sums secured by the First Mortgage (hereinafter defined), plus any prepayment premium provided for herein, shall also be due and payable upon any 2

3 prepayment of this Note permitted hereunder, upon any "Sale or "Other Triggering Event", or any "Recovery" which results in the full repayment of the principal sum of this Note, as such terms are defined in the Contingent Interest Agreement, and upon any other event, condition or occurrence which entitles Maker to full repayment of this Note under the terms of the Loan Documents (as defined in the Contingent Interest Agreement). MAKER ACKNOWLEDGES AND UNDERSTANDS THAT THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE, PLUS ALL ACCRUED BUT UNPAID INTEREST THEREON, PLUS CONTINGENT INTEREST AS PROVIDED IN THE CONTINGENT INTEREST AGREEMENT, SHALL BE DUE AND PAYABLE TO PAYEE ON THE MATURITY DATE. MAKER FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT THIS NOTE DOES NOT PROVIDE FOR FULL AMORTIZATION OF THE PRINCIPAL BALANCE, AND THEREFORE UPON MATURITY A BALLOON PAYMENT OF PRINCIPAL WILL BE REQUIRED This Note shall be governed by the following provisions: 1. All payments shall be applied first to interest due on the outstanding principal balance at the interest rate stated in this Note and, subject to any limitation on prepayment of this Note set forth herein, any balance shall be applied to reduction of principal, and interest shall thereafter cease on the principal so paid. If any amounts are owed to Payee under the terms of that certain Indemnity Agreement executed by Maker in favor of Payee and dated of even date hereof, monies received may, at the option of Payee, and following an Event of Default under the First Mortgage (hereinafter defined), be applied to such amounts in the order set forth in paragraph 4.03 of the First Mortgage. Principal and interest shall be payable in lawful money of the United States. The amount of the monthly payments of interest to be made under this Note shall be calculated on the basis of a year of 360 days consisting of twelve (12) months of thirty (30) days each, except that interest for the month of disbursement shall be calculated as provided in item (a) above. 2. Except as expressly provided herein, no privilege is reserved to prepay all or any portion of this Note. Maker acknowledges that Payee, in making the loan evidenced by this Note, is relying on Maker's creditworthiness and its agreement to repay the loan in strict accordance with the terms set forth in this Note. Maker acknowledges that Payee would not make the loan without full and complete assurance by Maker of its agreement to make the payments of principal and interest under this Note provided above and its further agreement not to prepay all or any part of the principal of this Note prior to the Maturity Date, except on the terms expressly set forth herein or in the Option Agreement. Maker has been advised and acknowledges that Payee is relying on the receipt of payments under this Note to, among other things, match and support its obligations under contracts entered into by Payee with third parties. Therefore, any prepayment of this Note, whether occurring as a voluntary prepayment by Maker or occurring upon an acceleration of the principal balance of this Note by Payee on account of any Event of Default, (as hereinafter defined), by Maker, including, but not limited to, any acceleration 3

4 following any transfer, conveyance or disposition of all or any portion of the Property (as hereinafter defined) or any interest therein, except as expressly permitted under the First Mortgage, could prejudice Payee and result in loss and additional expenses to Payee, the extent of which is extremely difficult and impracticable to ascertain. Accordingly, the parties have agreed that Maker shall not have the right to prepay all or any portion of the principal balance of this Note during the period commencing on the date hereof and ending on the date which is the first day of the full month following the date of this Note (herein, the "Closed Period"). Following the expiration of the Closed Period, Maker shall have the right, on the first day of any month during the term of this Note, and provided that not less than sixty (60) days prior written notice has been given to Payee, to prepay all, but not less than all, of the then outstanding principal balance of this Note, provided that, as a condition to such prepayment and in addition to the unpaid principal balance, accrued interest, Contingent Interest (as calculated in accordance with the Contingent Interest Agreement) and all other sums payable under this Note and any other Loan Instruments (as defined in the First Mortgage), Maker shall pay to Payee a prepayment premium equal to the applicable amount set forth on Schedule 1 attached hereto. 3. This Note is secured by, among other things, the lien of a first Deed of Trust Assignment of Rents, Security Agreement and Fixture Filing (the "First Mortgage") of even date herewith, executed and delivered by Maker as Trustor to Title Company as Trustee, naming Payee as Beneficiary and encumbering certain property described therein (the "Property"). 4. The occurrence of any of the following shall constitute an "Event of Default" hereunder: (a) Default in the payment of any installment of principal or interest on this Note when due or in the payment or performance of any other obligation of Maker hereunder pursuant to the terms hereof. (b) The occurrence of an Event of Default as defined in the First Mortgage or any other instrument (including any amendment, modification or extension thereof) which secures this Note or is entered into in connection with the loan evidenced by this Note, or any other event which, under the terms of this Note or of the First Mortgage or any such other instrument, gives Payee the right to declare this Note entirely due and payable. 5. Upon the occurrence of any such Event of Default, then at the option of Payee, the entire unpaid balance of principal of this Note, together with all accrued interest thereon, all Contingent Interest payable on account thereof as provided in the Contingent Interest Agreement, and all other payments required under this Note, shall at such time or at any time thereafter as Payee may elect, regardless of the Maturity Date of this Note, become immediately due and payable Maker acknowledges that in establishing - 4-4

5 the annual interest rate of percent ( %) plus the Contingent Interest due under the Contingent Interest Agreement, Payee has assumed and taken into account the fact that this Note will not be prepaid except as permitted by this Note, and that there will be no transfer of the Property prohibited by the First Mortgage or any other event which would cause Payee to accelerate the Maturity Date, so that no prepayment of this Note occurring prior to the Maturity Date, regardless of the cause of such prepayment, will be made during the Closed Period and thereafter no prepayment will be made without payment of the appropriate prepayment premium described in Paragraph 2 above. The following provisions relating to Maker's payment of a premium in the event of an acceleration are intended to compensate Payee in the event that this assumption proves to be incorrect. In the event that Payee exercises its option to declare the entire unpaid principal balance due and payable upon the occurrence of an Event of Default, such Event of Default shall be presumed to be and conclusively deemed to be a willful default and a deliberate attempt on the part of the Maker to avoid the Closed Period or the payment of the prepayment premium provided for herein, as applicable, and there shall be due and payable, in addition to the unpaid principal balance, accrued interest, Contingent Interest (as calculated in accordance with the Contingent Interest Agreement) and all other sums payable under this Note and the other Loan Instruments, a prepayment premium equal to (a) if the default giving rise to the Event of Default occurs during the Closed Period, percent ( %) of the principal balance of this Note; or (b) if the default giving rise to the Event of Default occurs after the expiration of the Closed Period, then the applicable account set forth on Schedule 1 attached hereto. Without limiting the scope of the foregoing provisions, the provisions of this paragraph shall constitute, within the meaning of California Civil Code Section , both a waiver of any right Maker may have to prepay this Note, in whole or in part, without premium or charge, upon acceleration of the maturity of this Note, and an agreement by Maker to pay the prepayment premium described above, whether such prepayment is voluntary or upon or following any acceleration of this Note (including, without limitation, any acceleration following a transfer, conveyance or disposition of the Property except as expressly permitted under the First Mortgage), and for such purpose Maker has separately initialled this provision in the space provided below, and Maker hereby declares that Payee's agreement to make the loan to Maker at the interest rate and for the term set forth in the Note constitutes adequate consideration, of individual weight, for this waiver and agreement by Maker. Maker's initials: 6. In the event that any amount payable hereunder is not paid when due, then in addition to all other rights set forth herein, Payee shall have the right to collect a late charge equal to percent ( %) of the delinquent payment, which late charge shall be payable upon demand. Maker and Payee agree that such late charge represents a good faith and fair and reasonable estimate of the probable extraordinary cost to Payee of such delinquency. The right to collect such late charge shall be in addition to all other - 5-5