EXHIBIT 10.47
SECURED INSTALLMENT NOTE
$25,800,000.00 San Jose, California
April 6, 2005
FOR VALUE RECEIVED, the undersigned, MISSION WEST PROPERTIES, L.P., a
Delaware limited partnership ("Borrower"), as maker, whose address is 00000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, does hereby promise to pay to the
order of ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA, a Minnesota
corporation ("Lender"), as payee, at its office c/o Allianz of America, Inc., 00
Xxxxxx Xxxxx Xxxx, X.X. Box 5160, Westport, Connecticut 06881-5160, Attn: Real
Estate Department, or such other place as Lender may designate in writing, in
lawful money of the United States of America, the principal sum of TWENTY FIVE
MILLION EIGHT HUNDRED THOUSAND DOLLARS ($25,800,000.00), or so much thereof as
may be advanced, together with interest thereon to accrue, at the rate of five
and 56/100 percent (5.56%) per annum (the "Note Rate"), subject to adjustment as
herein provided.
1. Payment. Said principal sum, and interest as herein provided to
accrue on the unpaid principal, shall be paid as follows:
(a) Interest only at the Note Rate from and including the date of
this Note through and including April 9, 2005, shall be paid in
advance on the date of this Note.
(b) On each "Payment Date" to and including March 10, 2020,
payments of principal and interest in the amount of $178,351.00 shall
be due and payable. "Payment Date" means the tenth (10th) day of each
consecutive calendar month for the term of this Note commencing May
10, 2005. The payments due under this subparagraph (b) are each called
a "Monthly Installment."
(c) The entire remaining principal amount, together with any
accrued and unpaid interest (the "Final Installment"), shall be due
and payable in full on April 10, 2020 (the "Maturity Date").
(d) Interest shall be computed on the basis of a three hundred
sixty (360) day year consisting of twelve (12) months of thirty (30)
days each.
2. Application of Payments. All payments shall be applied first to
"Costs", as defined below, and interest accrued thereon; then to the
payment of escrows for taxes and insurance, if any; then to "Late Charges",
as defined below, and interest accrued thereon, if any; then to accrued and
unpaid interest, and the remainder to the reduction of the principal
balance outstanding from time to time. The term "Costs" shall mean any sums
advanced by Xxxxxx as provided under the terms of the "Deed of Trust," as
defined below, and as provided in Paragraph 9 of this Note.
3. Late Charge. If any payment of principal or interest, or both, so
provided for herein is not paid when due, it would be impracticable or
extremely difficult to fix the actual damages resulting therefrom to
Lender, and, therefore, Borrower hereby agrees to pay to Lender a late
charge of FIVE CENTS ($.05) for each ONE DOLLAR ($1.00) so overdue, not as
a penalty, but for the purpose of defraying the expenses incident to
handling such delinquent payment (a "Late Charge"). Such Late Charge
represents the reasonable estimate of a fair average compensation for the
loss that may be sustained by Xxxxxx due to the failure of Borrower to make
timely payments. Such Late Charge (i) shall be paid without prejudice to
the right of Lender to collect any other amounts provided to be paid or to
declare a default under this Note or the Deed of Trust, (ii) shall be
payable not later than the due date of the next payment, and (iii) shall be
secured by the "Security Documents", as defined below. In addition, during
the period of the occurrence of an "Event of Default" (as defined in
Article IV of the Deed of Trust), the entire unpaid principal of this Note
shall accrue interest at the Note Rate, increased by FIVE HUNDRED (500)
BASIS POINTS (the "Default Rate").
Initials: /s/ CEB
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4. Prepayment. (a) Subject to Paragraph 4(e), this Note may be prepaid
in full at any time subject to a prepayment premium that may be
substantial. Such premium represents consideration to Lender for loss of
yield and reinvestment cost. The prepayment premium shall be determined by
Lender and shall be equal to the greater of (i) the prepayment premium
calculated in the manner described below, or (ii) zero. The prepayment
premium shall be an amount equal to the excess, if any,
between (x) the present value at the time of prepayment of the remaining
scheduled Monthly Installments and the present value at the time of
prepayment of the Final Installment, both discounted on a monthly basis at
the "Index Rate," as defined below, and (y) the unpaid principal balance of
this Note at the time of prepayment. The "Index Rate" is defined as the
current yield at the time of prepayment of the Treasury Constant Maturity
(the "TCM") referenced in the weekly Federal Reserve Statistical Release
H-15 (519) for the week immediately preceding the date on which written
request for prepayment is received by Lender for the maturity most closely
corresponding to the remaining loan term as appropriately interpolated,
increased by TWENTY-FIVE (25) BASIS POINTS.
(b) If the TCM ceases to be published during the loan term, the Index
Rate shall be the average of the yield, for the five (5) business days
preceding the date of prepayment of this Note, of the US Treasury Note or
Bond having a remaining term to maturity and coupon rate most closely
corresponding to the remaining term to maturity and interest rate of this
Note. The Index Rate will apply for any prepayment made within thirty (30)
days after such request is received by Xxxxxx, after which a more recent
Index Rate may be used at the sole discretion of Lender.
(c) The prepayment premium is to compensate Lender, and its successors
and assigns, for the loss of interest it would otherwise earn on the
principal hereof, if such principal were allowed to remain outstanding, and
for the cost incurred in connection with reinvestment of principal so
prepaid, at an earlier date than the Maturity Date.
(d) In the event of the occurrence of an Event of Default, and
following acceleration of the maturity of this Note, any payment of the
amount necessary to satisfy this Note shall be deemed to be a voluntary
prepayment of this Note and shall be accompanied by the prepayment premium.
(e) To the extent permitted by law, said prepayment premium shall be
payable regardless of whether the loan evidenced by this Note is prepaid
voluntarily or involuntarily; provided, however, that no premium shall be
payable on prepayments by application of the proceeds of any proceedings in
eminent domain, or proceedings in lieu thereof, by application of the
proceeds of fire or other casualty insurance, or by operation of Section
1.6 of the Deed of Trust; and provided, further, that no premium shall be
payable on a prepayment made during the ninety (90) days immediately prior
to the Maturity Date.
(f) Borrower hereby waives all rights under California Civil Code
Section 2954.10 which provides, in part, as follows:
AN OBLIGEE WHICH ACCELERATES THE MATURITY DATE OF THE PRINCIPAL AND ACCRUED
INTEREST, PURSUANT TO CONTRACT, ON ANY LOAN SECURED BY A MORTGAGE OR DEED
OF TRUST ON REAL PROPERTY UPON THE CONVEYANCE OF ANY RIGHT, TITLE, OR
INTEREST IN THAT PROPERTY, MAY NOT CLAIM, EXACT, OR COLLECT ANY CHARGE,
FEE, OR PENALTY FOR ANY PREPAYMENT RESULTING FROM THAT ACCELERATION.
Xxxxxxxx understands and acknowledges that Lender bargained for this waiver
as part of the consideration which induced Lender to enter into this
transaction. Borrower initials this subparagraph (f) for the purpose of
evidencing its understanding of Civil Code Section 2954.10 recited in part
above and Borrower's agreement to the waiver of its terms.
Initials: /s/ CEB
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5. Security; Deed of Trust. (a) This Note is secured by a Deed of
Trust, Security Agreement, Fixture Filing with Absolute Assignment of Rents
(the "Deed of Trust"), an Absolute Assignment of Leases, Rents and Income
(the "Assignment"), each of even date herewith, encumbering certain
improved real and personal property located in the City of San Xxxx, Santa
Xxxxx County, California, and described in the Deed of Trust (the
"Property"), and any other instruments, now or hereafter executed by
Xxxxxxxx in favor of Xxxxxx, which evidence, or constitute additional
security for, this Note (as used herein the term "Security Documents" mean,
collectively, the Deed of Trust, the Assignment, and all other instruments
evidencing or securing this Note). Reference to the Security Documents is
made for all particulars including, without limitation, the obligation of
Borrower to pay monthly the "Reserves" described in Section 1.2 of the Deed
of Trust.
(b) This Note is given for an actual loan in the original principal
amount of this Note and is the Note referred to in and secured by the Deed
of Trust. All of the agreements, conditions and covenants contained in the
Deed of Trust which are to be kept and performed by Borrower are hereby
made a part of this Note to the same extent and with the same force and
effect as if they were fully set forth herein, and Borrower covenants and
agrees to keep and perform them, or cause them to be kept and performed
strictly in accordance with their terms.
6. Transfer. (a) Except as otherwise specifically provided herein or
in the Deed of Trust, Borrower and all endorsers, guarantors, sureties,
accommodation parties hereof and all other persons liable or to become
liable for all or any part of this indebtedness agree that if the Property
or any part thereof or interest therein is sold, assigned, transferred,
conveyed, encumbered, hypothecated, mortgaged or otherwise alienated by
Borrower (excepting leases in the ordinary course of managing
income property, transfers of personal property authorized herein and
purchase money encumbrances of personalty) whether voluntarily,
involuntarily or by operation of law, without the prior written consent of
Lender, then Lender, at its option, may declare the Note to be forthwith
due and payable.
(b) In the event of a transfer of title without the prior written
approval of Xxxxxx, Lender may, without notice to Borrower, waive such
default and deal with such successor or successors in interest in the
Property in the same manner as with Xxxxxxxx, without in any way releasing,
discharging or otherwise affecting the liability of Borrower, the
endorsers, guarantors, sureties, accommodation parties hereof and all other
persons liable or to become liable for all or any part of this
indebtedness. No sale of the Property, no forbearance on the part of
Lender, no extension of the time for the payment of the indebtedness or any
change in the terms of this Note or the Security Documents consented to by
Lender and Borrower shall in any way whatsoever operate to release,
discharge, modify, change or affect the original liability of Borrower and
all such persons liable or to become liable for all or any part of this
indebtedness, either in whole or in part.
(c) Borrower shall not voluntarily, involuntarily or by operation of
law sell, assign, transfer or otherwise dispose of the collateral
identified in the Security Documents (the "Collateral") or any interest
therein and shall not otherwise do or permit anything to be done or occur
that may impair the Collateral as security under the Security Documents
except so long as no events of default exist under the Security Documents,
Borrower shall be permitted to sell or otherwise dispose of the Collateral
when inadequate, unserviceable or unnecessary for use in the operation of
the Property or in the conduct of the business of Borrower, upon replacing
the same or substituting for the same other Collateral at least equal in
value to the initial value of that disposed of and in such a manner so that
said Collateral shall be subject to the security interest created by the
Security Documents and so that the security interest of Lender shall be the
first priority security interest in said Collateral. In the event the
Collateral is sold in connection with the sale of the Property, Borrower
shall require, as a condition of the sale, that the buyer specifically
agree to assume (preserving the exculpation provisions appearing at the end
of this Note) Borrower's obligations as to the security interest granted by
the Security Documents and to execute whatever agreements and filings are
deemed necessary by Lender to maintain its perfected security interest in
the Collateral.
7. Default; Remedies. (a) Should an "Event of Default" (as defined in
Article IV of the Deed of Trust) occur, then, or at any time thereafter in
the manner authorized by law, the entire principal of this Note,
irrespective of the Maturity Date specified herein, together with the then
accrued interest thereon shall, at the election of Lender hereof, and
without notice (except as required by law) of such election, become
immediately due and payable.
(b) The rights or remedies of Lender, as provided in this Note and the
Security Documents, shall be cumulative and concurrent, and may be pursued
singly, successively or together against the property described in the Deed
of Trust, and any other funds, property or security held by Xxxxxx for the
payment hereof, at the sole discretion of Lender. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or
release of said rights or remedies or of the right to exercise them at any
later time.
8. Waiver of Notice. All Borrowers, endorsers, guarantors, sureties,
accommodation parties hereof and all other persons liable or to become
liable for all or any part of this indebtedness, without affecting their
liability, waive diligence, presentment, protest and demand, and also
notice of protest, of demand, of nonpayment, of dishonor and of maturity,
and all other notices of every kind, other than any notice specifically
required hereby, by the Deed of Trust or other Security Documents, and
hereby consent to any extension of the time of payment hereof, any and all
renewals, extensions or modifications, with the consent of Borrower, of the
terms hereof, any release of all or any part of the security given for the
payment hereof, any acceptance of additional security of any kind, and any
release of or resort to any party liable for payment hereof. Any such
renewals, extensions or modifications may be made without notice to any of
said parties, and without discharging said party's liability hereunder.
9. Costs. Borrower and all endorsers, guarantors, sureties,
accommodation parties hereof and all other persons liable or to become
liable for all or any part of this indebtedness agree to pay all
out-of-pocket costs of collection, including attorneys' fees, and all costs
of suit in the event the unpaid principal sum of this Note or any payment
of interest or principal and interest thereon, is not paid when due, or in
the event it becomes necessary to protect the security for the indebtedness
evidenced hereby, or for the foreclosure by Lender of the Deed of Trust or
other Security Documents, or in the event Lender is made party to any
litigation solely because of the existence of the indebtedness evidenced by
this Note, or solely because of the existence of the Deed of Trust or other
Security Documents, whether suit be brought or not, and whether through
courts of original jurisdiction, as well as in courts of appellate
jurisdiction, or through a bankruptcy court or other legal proceedings.
10. Amendment. This Note may not be amended, modified or changed, nor
shall any waiver of any provision hereof be effective, except only by an
instrument in writing signed by the party against whom enforcement of any
waiver, amendment, change, modification or discharge is sought.
11. Notices. Any notice required or permitted hereunder shall be
deemed sufficient if given in accordance with the provisions of the Deed of
Trust.
12. No Waiver by Lender; Remedies Cumulative. (a) Lender shall not be
deemed, by any act of omission or commission, to have waived any of its
rights or remedies hereunder unless such waiver is in writing and signed by
Xxxxxx, and then only to the extent specifically set forth in the writing.
A waiver with reference to one event shall not be construed as continuing
or as a bar to or waiver of any right or remedy as to a subsequent event.
(b) The remedies of Lender as provided herein and in the Security
Documents shall be cumulative and concurrent and may be pursued singularly,
successively or together, at the sole discretion of Lender and may be
exercised as often as occasion therefor shall occur; and the failure to
exercise any such right or remedy shall in no event be construed as a
waiver or release thereof.
13. Limitation on Charges. Notwithstanding any provisions in the Note
or in the Deed of Trust to the contrary, the total liability for payments
in the nature of interest, including, but not limited to, prepayment
premiums, default interest and late fees shall not exceed the limits
imposed by the laws of the State of California or the United States of
America relating to maximum allowable charges of interest, if applicable.
Lender shall not be entitled to receive, collect or apply, as interest on
the indebtedness evidenced by this Note, any amount in excess of the
maximum lawful rate of interest permitted to be charged by such laws, if
applicable. In the event Lender ever receives, collects or applies as
interest any such excess, such amount which would be excessive interest
shall be applied to reduce the unpaid principal balance of the indebtedness
evidenced by this Note. If the unpaid principal balance of such
indebtedness is paid in full, any remaining excess shall be forthwith paid
to Borrower.
14. Governing Law. This Note is to be construed in accordance with the
laws of the State of California. In case any one or more of the provisions
of this Note shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions of this Note, and
this Note shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein. If any one or more of the
provisions contained in this Note shall for any reason be held to be
excessive as to amount, time, duration, scope, activity, or subject, such
provisions shall be construed by limiting and reducing the provisions so as
to make such provisions enforceable to the extent compatible with the then
existing applicable law.
15. Limited Liability. (a) The liability of Borrower with respect to
the payment of principal, interest and Costs hereunder and with respect to
performance by Xxxxxxxx of Borrower's obligations and any and all other
liability hereunder, under the Deed of Trust, and under the other Security
Documents, shall be "non-recourse" and, accordingly, Xxxxxx's source of
satisfaction of said indebtedness and Xxxxxxxx's other obligations
hereunder and under the other Security Documents shall be limited to the
Property and the rents, issues, and profits from the Property and Lender
shall not seek to procure payment out of any other assets of Borrower, or
any person or entity comprising Borrower, nor to seek judgment for any sums
which are or may be payable under this Note or under any of the other
Security Documents, as well as any claim or judgment (except as hereafter
provided) for any deficiency remaining after foreclosure of the Deed of
Trust. Notwithstanding the above, nothing herein contained shall be deemed
to be a release or impairment of the indebtedness evidenced by this Note or
the security therefor intended by the Security Documents, or be deemed to
preclude Lender from exercising its rights to foreclose the Deed of Trust
or to enforce any of its other rights or remedies under the Security
Documents, subject to the provisions of this Paragraph 15.
(b) Notwithstanding the foregoing, it is expressly understood and
agreed that the aforesaid limitation on liability shall in no way affect or
apply to Borrower's continued personal liability for, and Xxxxxx's right to
recover (including the right to recover out of pocket costs and attorneys'
fees, including the costs of paralegals) the following:
(1) The retention by Borrower of any rental income or other cash
collected arising with respect to the Property, which was collected by
Borrower after an Event of Default has occurred under the Deed of
Trust and while such Event of Default was or is continuing;
(2) The retention by Borrower of any prepaid rental income,
deposit, or other prepaid income under any lease of all or part of the
Property which was unearned as of the occurrence of the Event of
Default under the Deed of Trust;
(3) The replacement cost of any Property, including personal
property or fixtures owned by Xxxxxxxx, encumbered by the Deed of
Trust which is damaged, destroyed, removed, or disposed of and not
repaired, rebuilt or replaced as required by the Deed of Trust, to the
extent that the replacement cost of such Property exceeds the
insurance proceeds (if any) received by Borrower and/or Lender as a
result of such events;
(4) The misapplication of any proceeds, to the extent of
misapplied proceeds, under any insurance policies pertaining to the
Property or awards resulting from condemnation or the exercise of the
power of eminent domain or by reason of damage or destruction to any
portion of the Property or any building or buildings located thereon;
(5) Any unpaid real estate taxes, utilities, assessments,
insurance premiums and any other expenses (excluding principal and
interest payments under the Loan) relating to the Property which were
received by Borrower or which accrued prior to the date that Xxxxxx
acquired ownership of the Property, less a credit for any unapplied
Reserves;
(6) Damages and losses suffered or incurred by Lender as the
result of bad faith, waste, fraud or material misrepresentation by
Borrower under the Security Documents or Borrower's loan application,
or arising from Borrower's bankruptcy, or arising from Borrower's
default or liability under any leases of the Property in effect during
the period of Borrower's ownership of the Property, or arising from
the termination of any such leases as a result of a default by
Borrower as lessor thereunder, or as the result of any prohibited
transfer of title to the Property or ownership interest in Borrower;
and
(7) All indemnification obligations by Xxxxxxxx in favor of
Lender under the Environmental Indemnity Agreement of even date
herewith given to Lender by Xxxxxxxx and Mission West Properties,
Inc., a Maryland corporation ("Principal of Borrower").
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability against Borrower as set forth in Paragraph 15(a)
above SHALL BECOME NULL AND VOID and shall be of no further force or
effect, and the indebtedness of Borrower under this Note and all other sums
due from Borrower to Lender under the Loan shall immediately become FULLY
RECOURSE to Borrower and to Principal of Borrower and any other guarantor
of the Loan, jointly and severally, in the event of:
(1) A default by Borrower or any member of Borrower of any of the
prohibitions of Section 1.11 of the Deed of Trust; or
(2) A voluntary bankruptcy or insolvency proceeding is commenced
by Borrower under the U.S. Bankruptcy Code or any similar federal or
state law; or
(3) An involuntary bankruptcy or insolvency proceeding is
commenced against Borrower or Principal of Borrower (other than by
Xxxxxx) and such action or proceeding is not dismissed within ninety
(90) days after the date of filing hereof.
(d) Nothing herein shall be deemed a waiver of any right which Lender
may have under any provision of the U.S. Bankruptcy Code (i) to file a
claim for the full amount of the indebtedness of Borrower to Lender under
this Note or the Security Documents, or (ii) to require that all collateral
encumbered by the Deed of Trust shall continue to secure all indebtedness
of Borrower under this Note and the Security Documents in accordance with
the terms thereof.
16. Broker. This Note is made in connection with a loan arranged by
Northmarq Capital, San Francisco, California, a licensed real estate broker
under the Laws of California.
17. Successors. Whenever used herein, the singular number shall
include the plural, the plural the singular, and the words "Borrower" and
"Lender" shall be deemed to include their successors and assigns.
18. Receipt of Documents. By signing below, Xxxxxxxx acknowledges
receiving a copy of this Note and acknowledges receiving a copy of all
documents signed by Xxxxxxxx in connection with this Note.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Xxxxxxxx has executed this Note as of the date first
above written.
MISSION WEST PROPERTIES, L.P.,
a Delaware limited partnership
By: Mission West Properties, Inc.,
a Maryland corporation, General Partner
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, Chief Executive Officer
