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Secured Installment Note

This is an actual contract between Mission West Properties and Allianz Life Insurance Company of North America.

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Sectors: Real Estate, Insurance
Governing Law: California , View California State Laws
Effective Date: July 26, 2005
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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 10050 Bandley Drive, Cupertino, California 95014, 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., 55 Greens Farms Road, P.O. 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 Lender 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 Lender 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 Lender, 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 Lender, 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.


Borrower 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 Clara County, California, and described in the Deed of Trust (the "Property"), and any other instruments, now or hereafter executed by Borrower in favor of Lender, 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" descr
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