Non-recourse Promissory Note Secured BY Deed of Trust

Exhibit 10.2


DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same, must be surrendered to the trustee for cancellation before reconveyance.


NON-RECOURSE PROMISSORY NOTE SECURED BY DEED OF TRUST


$9,375,000.00 April 11, 2001


FOR VALUE RECEIVED, the undersigned, TC KEARNY VILLA, L.P., a Delaware limited partnership ("Borrower"), whose address is 4250 Executive Square, Suite 200, La Jolla, California 92037, Attn: Dorcey B. Abshier, promises to pay to DELTA DESIGN, INC., a Delaware corporation ("Lender"), or order, at 5755 Kearny Villa Road, San Diego, California 92123, or such other place as Lender may designate, in lawful money of the United States the principal sum of Nine Million Three Hundred Seventy-Five Thousand and 00/100 Dollars ($9,375,000.00) together with interest thereon as provided herein. The outstanding principal amount of the Loan and interest thereon are payable at the time and in the manner set forth herein. This Note is secured by a Short Form Deed of Trust and Assignment of Rents dated of even date herewith executed by Borrower, as trustor, to Chicago Title Company, as trustee, in favor of Lender, as beneficiary (the "Deed of Trust"), encumbering that certain real property (the "Property") more particularly described in the Deed of Trust.


1. Maturity Date.


(a) The then outstanding principal amount of this Note, together with all interest unpaid and accrued thereon, shall be due and payable on the date that is six (6) months after the date of this Note (the "Original Maturity Date"). Notwithstanding the foregoing, Borrower shall have the option to extend the Original Maturity Date for one hundred eighty (180) days by satisfying each of the following conditions precedent: (i) delivery of written notice to Lender, at least fifteen (15) days prior to the Original Maturity Date, that Borrower desires to extend the Original Maturity Date, (ii) payment delivered with the foregoing notice of an extension fee in the amount of Forty-Six Thousand Eight Hundred Seventy-Five Dollars ($46,875) which is equal to one half of one percent (0.5%) of the original principal amount of the Loan; (iii) delivery to Lender of an endorsement to Lender's title policy obtained in connection with the Loan, insuring that the priority of the lien of the Deed of Trust will not be impaired by such extension and (iv) execution of such documents as Lender reasonably requires to evidence such extension. The term "Maturity Date" as used in this Note shall mean the Original Maturity Date, unless Borrower timely extends the Original Maturity Date as provided in this Section 1(a), in which event the Maturity Date shall mean the Original Maturity Date, as so extended.


(b) If the Maturity Date shall fall on a day other than a Business Day (defined below), payment of the outstanding balance of the principal and accrued interest due under the terms hereof shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest with respect of such payment. As used in this Note, "Business Day" means a day other than Saturday, Sunday or any Optional Bank Holiday (as defined in Section 7.1 of the California Civil Code).


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2. Payment of Interest.


(a) Borrower will pay interest only monthly on the then outstanding principal balance of this Note, commencing May 1, 2001, and continuing on the first (1st) day of each subsequent month thereafter until the entire indebtedness evidenced by this Note is fully paid.


(b) Interest on the outstanding principal amount of the Loan, shall accrue at eight percent (8%) per annum from and after the date hereof.


3. Non-Recourse. Notwithstanding anything to the contrary contained in this Note or the Deed of Trust, (a) this Note is non-recourse as to Borrower, and (b) Lender's recourse under this Note shall be limited solely to the Property and Lender waives it right to enforce against Borrower a judgment imposing liability on Borrower for any deficiency in payment of the indebtedness evidenced by this Note or in payment of financial obligations under this Note or the Deed of Trust. Accordingly, neither Borrower nor any of its officers, directors, shareholders, employees, members, agents or affiliates shall have any personal liability whatsoever under this Note and no other property or assets of Borrower or any other person shall be subject to levy, execution or other enforcement procedure for the satisfaction of Lender's remed ...