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HomeMy WebLinkAboutC6 Reading File 1- Promissory Note -1- SECURED PROMISSORY NOTE (BALLOON PAYMENT) $500,000.00 San Luis Obispo, California __________ ___, 201__ FOR VALUE RECEIVED, GARDEN STREET SLO PARTNERS, L.P., a California limited partnership, as maker, having its principal place of business at Garden Street SLO Partners, L.P., c/o Westpac Investments, LLC, 895 Aerovista Place, Suite 100, San Luis Obispo, CA 93401 ("Borrower"), hereby unconditionally promises to pay to the order of THE CITY OF SAN LUIS OBISPO, a municipal corporation and charter city, having an address at 990 Palm Street, San Luis Obispo, CA 9340, Attention: Katie Lichtig, City Manager (together with its successors and/or assigns, "Lender"), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00), or so much thereof as is advanced, in lawful money of the United States of America, with interest thereon to be computed from the date of this Note at the Interest Rate (the "Loan"), and to be paid in accordance with the terms of this Note (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the "Note"). All capitalized terms not defined herein shall have the respective meanings set forth in the other Loan Documents (as that term is defined below). ARTICLE 1: PAYMENT TERMS Borrower agrees to pay equal monthly installments of the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding from the Closing Date at a fixed annual rate equal to the Wall Street Journal Prime Lending Rate in effect on the date of this Note plus two percent (2.0%) (the "Interest Rate"). The outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon shall be due and payable on the date which is ten (10) calendar years after the date of this Note, or such earlier date as may result from acceleration pursuant to Article 2 below (the "Maturity Date"). Each monthly installment of principal and interest shall be due on the first day of each calendar month, and in an equal amount, calculated as of the date of the first disbursement of the loan proceeds, based upon amortization of the total amount due over 25 years; provided that this Note and all amounts remaining due hereunder nevertheless shall be due in full on the Maturity Date as set forth above. For purposes of the foregoing, the term "Wall Street Journal Prime Lending Rate" means, as of any day, the "U.S. Prime Rate" published in The Wall Street Journal's "Money Rate" table on the last business day immediately prior to the day as of which such rate is being determined. If such table or rate is not published as of such date, then the term "Wall Street Journal Prime Lending Rate" shall be deemed to be a reference to the prime lending rate of Bank of America in effect on the last business day immediately prior to such date. If Bank of America does not then exist or does not then publish its prime lending rate, then the "Wall Street Journal Prime Lending Rate" shall be the prime lending rate of Lender’s principal banking institution on the last business day immediately prior to the date as of which such rate is being determined. -2- As used herein and in the Loan Documents, "Debt" shall mean the outstanding principal amount set forth in, and evidenced by, this Note together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement or the other Loan Documents, including, without limitation, the payment of all sums advanced and costs and expenses incurred (including unpaid or unreimbursed servicing and special servicing fees) by Lender in connection with the enforcement and/or collection of the Debt or any part thereof. ARTICLE 2: DEFAULT AND ACCELERATION The outstanding principal and interest, as well as all amounts due pursuant to any security instrument or other documents securing this Note, shall without notice become immediately due and payable at the option of Lender if (a) any p ayment required in this Note is not paid on or prior to the date when due, or if (b) this Note is not paid in full on the Maturity Date, or (c) on the occurrence of any other event of default as defined (i) herein, (ii) in the Security Instrument, the Assignment of Management Agreement or other Loan Documents, or (iii) under that certain Ground Lease between Lender, as landlord, and Borrower, as tenant, dated as of ____________, 2015 (the "Ground Lease"), and each such event or occurrence shall constitute an "Event of Default" under this Note. Upon the occurrence of an Event of Default hereunder, the then outstanding balance pursuant to this Note, including without limitation any balloon payment due, shall bear interest at the Default Rate. As used herein, “Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the maximum non-usurious interest rate, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of the State of California, or (ii) the sum of (a) the Interest Rate and (b) five percent (5%) per annum. ARTICLE 3: LOAN DOCUMENTS This Note is secured by a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith (the "Security Instrument"), that certain Conditional Assignment of Management Agreement of even date herewith (the "Assignment of Management Agreement"), that certain Conditional Assignment of Hotel Management Agreement of even date herewith (the "Assignment of Hotel Management Agreement"), all made by Borrower, and any other documents stating expressly that they secure the repayment of this Note (collectively, the "Loan Documents"). All of the terms, covenants and conditions contained in the Security Instrument and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. ARTICLE 4: SAVINGS CLAUSE Notwithstanding anything to the contrary, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed interest, the interest contracted for, charged or received by Lender shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and -3- spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower. As used herein, "Maximum Legal Rate" shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or in the Loan Documents, under the laws of the state of California. ARTICLE 5: NO ORAL CHANGE This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification , amendment, waiver, extension, change, discharge or termination is sought. ARTICLE 6: WAIVERS Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive diligence, presentment and demand for payment, not ice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind, all to the fullest extent permitted by law. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Security Instrument or the other Loan Documents made by agreement between Lender or any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Security Instrument or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Security Instrument or the other Loan Documents. If Borrower is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the individuals comprising the partnership or limited liability company, and the term "Borrower," as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company and their partners or members shall not thereby be released from any liability. If Borrower is or becomes a corporation, the agreements contained herein shall remain in full force and be applicable notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation, and the term "Borrower," as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation, which may be set forth in th is Note, the Security Instrument or any other Loan Document. As used herein and in the other Loan Documents, "Person" shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal -4- government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing. ARTICLE 7: TRANSFER Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred. ARTICLE 8: EXCULPATION (A) Full Recourse. The Loan and all obligations under the Loan Documents shall be fully recourse to Borrower. (B) Additional Recourse Obligations. Borrower shall also be liable for and shall indemnify, defend and hold Lender harmless with respect to any and all claims, suits, liabilities (including, without limitation, strict liabilities and any impairment of Lender’s security for the Loan), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, amounts paid in settlement of whatever kind or nature (including but not limited to legal fees and other costs of defense) ("Losses") incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with any of the following ("Additional Recourse Obligations"): (i) fraud or intentional misrepresentation or any failure to disclose a material fact by Borrower or any Person acting on behalf of or at the direction of Borrower (each, a "Borrower Party") in connection with the Loan; (ii) the gross negligence or willful misconduct of Borrower or any Borrower Party or the commission of a criminal act by Borrower or any Borrower Party which results in any seizure or forfeiture of any property securing the Loan, including without limitation the Property as defined in the Security Instrument, (the "Collateral"), or any portion of any such property thereof, or Borrower’s interest therein; (iii) material physical waste to the Collateral caused by the intentional acts or intentional omissions of Borrower or any Borrower Party (including, without limitation, any arson or abandonment of the Collateral) and/or the removal or disposal of any portion of the Collateral after an event of default by Borrower or any Borrower Party under this Note or under any of the Loan Documents or under the Environmental Indemnity Agreement delivered by Borrower of even date herewith; -5- (iv) the misapplication, misappropriation or conversion by Borrower or any Person that, directly or indirectly, owns more than twenty percent (20%) of, is in control of, is controlled by or is under common ownership or control with Borrower or is a partner, manager or officer of Borrower (each, an "Affiliate") of (A) any insurance proceeds paid by reason of any loss, damage or destruction to the Collateral, (B) any Awards or other amounts received in connection with the Condemnation of all or a portion of the Collateral, (C) any Rents following an event of default hereunder or (D) any Tenant security deposits or Rents collected in advance; (v) failure to pay any Taxes (as defined in the Security Instrument) or Other Charges, charges for labor or materials or any other charges that can create liens on any portion of the Collateral to the extent that the revenue from the Collateral is sufficient to pay such amounts (other than Taxes or Other Charges owed that are contested strictly in accordance with the terms of the Loan Documents). "Other Charges" shall mean all maintenance charges, impositions other than Taxes, and any other charges and license fees for the use of areas adjoining the Property (as defined in the Security Instrument), now or hereafter levied or assessed or imposed against the Collateral or any part thereof. (vi) failure to maintain insurance as required by the Security Instrument; (vii) the breach of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity, this Agreement or in the Security Instrument concerning Environmental Laws and Hazardous Substances; (viii) any fees or commissions paid by Borrower after the occurrence of an event of default to any Affiliate of Borrower in violation of the terms of the Note, this Agreement, the Security Instrument or the other Loan Documents; (ix) Borrower’s breach of, or failure to comply with, the representations, warranties and covenants contained in this Note, the Security Instrument, any of the other Loan Documents or the Environmental Indemnity; (x) Borrower fails to permit on-site inspections of the Collateral, fails to provide any required financial information upon the request of Lender, as required by, and in accordance with the terms and provisions of the other Loan Documents or the Environmental Indemnity; (xi) Borrower defaults under the Ground Lease and fails to cure any default prior to the expiration of any applicable notice and cure period provided in the Ground Lease; -6- (xii) any litigation or other legal proceeding related to the Debt filed by Borrower or any Borrower Party that delays, opposes, impedes, obstructs, hinders, enjoins or otherwise interferes with or frustrates the efforts of Lender to exercise any rights and remedies available to Lender as provided herein and in the other Loan Documents; and/or (xiii) Borrower and/or any Affiliate of Borrower defaults under any of the Loan Documents or the Environmental Indemnity and fails to cure any such default prior to the expiration of any applicable notice and cure period provided in such document. ARTICLE 9: GOVERNING LAW This Note shall be governed, construed, applied and enforced in accordance with the Applicable Laws of the State where the Collateral is located and Applicable Laws of the United States of America. As used herein, "Applicable Law" shall mean all applicable federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower or the Collateral or any part thereof, or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting Borrower or the Collateral or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Collateral or any part thereof, or (ii) in any way limit the use and enjoyment thereof. ARTICLE 10: NOTICES All notices or other written communications hereunder shall be delivered in accordance with Section 13.1 of the Security Instrument. [NO FURTHER TEXT ON THIS PAGE] -7- IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written. BORROWER: GARDEN STREET SLO PARTNERS, L.P., a California limited partnership By: Downtown Investors, LLC, a California limited liability company, its general partner By Hamish Marshall, its Manager