EXHIBIT 10.51
SECURED INSTALLMENT NOTE
$125,000,000.00 Cupertino, California
July 26, 2005
FOR VALUE RECEIVED, the undersigned, MISSION WEST PROPERTIES, L.P., a
Delaware limited partnership, and MISSION WEST PROPERTIES, L.P. I, a Delaware
limited partnership doing business in California as MISSION WEST PROPERTIES I,
L.P., a Delaware limited partnership (collectively, "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 ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000.00), or
so much thereof as may be advanced, together with interest thereon to accrue, at
the rate of five and 22/100 percent (5.22%) 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:
5. Interest only at the Note Rate from and including the date of this
Note through and including August 9, 2005, shall be paid in advance on the
date of this Note.
6. On each "Payment Date" to and including July 10, 2025, payments of
principal and interest in the amount of $840,212.00 shall be due and
payable. "Payment Date" means the tenth (10th) day of each consecutive
calendar month for the term of this Note commencing September 10, 2005. The
payments due under this subparagraph (b) are each called a "Monthly
Installment."
7. The entire remaining principal amount, together with any accrued
and unpaid interest (the "Final Installment"), shall be due and payable in
full on August 10, 2025 (the "Maturity Date").
8. Interest shall be computed on the basis of a three hundred sixty
(360) day year consisting of twelve (12) months of thirty (30) days each.
2. APPLICATION OF PAYMENTS. All payments shall be applied first to "Costs",
as defined below, and interest accrued thereon; then to the payment of escrows
for taxes and insurance, if any; then to "Late Charges", as defined below, and
interest accrued thereon, if any; then to accrued and unpaid interest, and the
remainder to the reduction of the principal balance outstanding from time to
time. The term "Costs" shall mean any sums advanced by Xxxxxx as provided under
the terms of the "Deed of Trust," as defined below, and as provided in Paragraph
9 of this Note.
3. LATE CHARGE. If any payment of principal or interest, or both, so
provided for herein is not paid when due, it would be impracticable or extremely
difficult to fix the actual damages resulting therefrom to Lender, and,
therefore, Borrower hereby agrees to pay to Lender a late charge of FIVE CENTS
($.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: 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 by
Xxxxxx, 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: 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 Santa Xxxxx County, California, and described in
the Deed of Trust (the "Property"), and any other instruments, now or hereafter
executed by Borrower 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 Event
of Default exists 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, including
attorneys' and paralegal fees, and costs, and all costs of collection and 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,
including, without limitation, any action arising out of the matters described
in Paragraph 15(b) below, 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 XXXXXX; 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) Except as set forth in Paragraph 15(b) below,
the liability of Borrower with respect to the payment of principal, interest and
Costs hereunder and with respect to performance by Xxxxxxxx of Xxxxxxxx'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 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 Xxxxxx 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;
(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"); and
(8) The out-of-pocket costs and expenses incurred by Xxxxxx to enforce
Xxxxxx's rights under this Paragraph 15(b), including attorneys' fees and
costs (including the costs of paralegals).
(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:
(a) A default by Borrower or any member of Borrower of any of the
prohibitions of Section 1.11 of the Deed of Trust; or
(b) A voluntary bankruptcy or insolvency proceeding is commenced by
Borrower under the U.S. Bankruptcy Code or any similar federal or state
law; or
(c) 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
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
MISSION WEST PROPERTIES, L.P. I,
a Delaware limited partnership doing
business in California as
MISSION WEST PROPERTIES I, L.P.,
a Delaware limited partnership
By: Mission West Properties, Inc.,
a Maryland corporation,
General Partner
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
