Exhibit 10.20
FIXED INTEREST NOTE
TIAA Appl. #CA-3208
M-000459500
TRANCHE A PROMISSORY NOTE
$93,800,000.00 New York, New York
Dated: As of February 22, 1999
FOR VALUE RECEIVED, PROLOGIS TRUST ("Borrower"), a Maryland real
estate investment trust having its principal place of business at ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, promises to pay to TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA ("Lender"), a New York corporation, or order, at
Lender's offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other
place as Lender designates in writing, the principal sum of NINETY-THREE MILLION
EIGHT HUNDRED THOUSAND AND 00/100THS DOLLARS ($93,800,000.00) (the principal sum
or so much of the principal sum as may be advanced and outstanding from time to
time, the "Principal"), in lawful money of the United States of America, with
interest on the Principal from the date of this Promissory Note (this "Note")
through and including March 1, 2009 (the "Maturity Date") at the fixed rate of
seven and two-tenths percent (7.2%) per annum (the "Fixed Interest Rate") to be
computed on the basis of a 360 day year. Each monthly payment shall be based on
a 30-day month, with a per diem rate equal to the Fixed Interest Rate divided by
360.
This Note is secured by, among other things, the 7 Tranche A First
Deeds of Trust, Assignment of Leases and Rents, Security Agreements and Fixture
Filing Statements (collectively, the "Tranche A First Deeds of Trust")
encumbering the properties owned by Borrower and identified on Schedule 1 hereto
by their street address or common name and the 5 Tranche A Subordinate Deeds of
Trust encumbering the properties owned by ▇▇▇▇▇▇▇▇ and identified on Schedule 2
hereto by their street address or common name, all made by Borrower for the
benefit of ▇▇▇▇▇▇ as security for the Loan.
All capitalized terms not expressly defined in this Note will have the
definitions set forth in the Tranche A First Deeds of Trust.
Section 1. Payments of Principal and Fixed Interest.
(a) Borrower will make monthly installment payments ("Debt Service
Payments") as follows:
(i) On March 1, 1999, a payment of accrued interest on the Principal
at the Fixed Interest Rate;
(ii) On April 1, 1999 and on the first day of each succeeding calendar
month through and including March 1, 2002, payments in the amount the
accrued interest on the Principal at the Fixed Interest Rate, each of which
will be applied to accrued interest on the Principal at the Fixed Interest
Rate; and
(iii) On April 1, 2002 and on the first day of each succeeding
calendar month through and including February 1, 2009, payments in the
amount of SIX HUNDRED SEVENTY-FOUR THOUSAND NINE HUNDRED SEVENTY-FOUR AND
17/100THS DOLLARS ($674,974.17), each of which will be applied first to
accrued interest on the Principal at the Fixed Interest Rate and then to
the Principal.
(b) On the Maturity Date, Borrower will pay the Principal in full
together with accrued interest at the Fixed Interest Rate and all other amounts
due under the Loan Documents.
Section 2. Prepayment Provisions.
(a) The following definitions apply:
"Discount Rate" means (x) the yield on a U.S. Treasury issue selected
by ▇▇▇▇▇▇, as published in The Wall Street Journal, two weeks prior to
prepayment, having a maturity date corresponding (or most closely
corresponding, if not identical) to the Maturity Date, and, if applicable,
a coupon rate corresponding (or most closely corresponding, if not
identical) to the Fixed Interest Rate plus (y) 25 basis points.
"Default Discount Rate" means the Discount Rate less 300 basis points.
"Discounted Value" means the Discounted Value of a Note Payment based
on the following formula:
NP
-------------
(1 + R/12)/n/ = Discounted Value
NP = Amount of Note Payment
R = Discount Rate or Default Discount Rate as the
case may be.
n = The number of months between the date of prepayment
and the scheduled date of the Note Payment being
discounted rounded to the nearest integer.
"Note Payment" means (i) each scheduled Debt Service Payment for the
period from the date of prepayment through the Maturity Date and (ii) the
scheduled repayment of Principal, if any, on the Maturity Date.
2
"Prepayment Date Principal" means the Principal on the date of
prepayment.
(b) This Note may not be prepaid in full or in part before February
28, 2001. Commencing on March 1, 2001, provided there is no Event of
Default, Borrower may prepay this Note in full, but not in part, on the
first day of any calendar month, upon 60 days prior notice to Lender and
upon payment in full of the Debt which will include a payment (the
"Prepayment Premium") equal to the greater of (i) an amount equal to the
product of 1% times the Prepayment Date Principal and (ii) the amount by
which the sum of the Discounted Value of each remaining Note Payment,
calculated at the Discount Rate, exceeds the Prepayment Date Principal.
Provided there is no Event of Default, this Note may be prepaid in full
without payment of the Prepayment Premium during the last 180 days of the
Term. In addition, the Prepayment Premium shall not apply with respect to
any prepayment due to application by ▇▇▇▇▇▇ of condemnation or insurance
proceeds. This Note may not be prepaid without simultaneous prepayment in
full of (x) any other notes secured by the Loan Documents and (y) that
certain Tranche B Promissory Note in the amount of $88,200,000 dated the
date hereof from Borrower to Lender.
(c) After an Acceleration or upon any other prepayment not permitted
by the Loan Documents, any tender of payment of the amount necessary to
satisfy the Debt accelerated, any judgment of foreclosure, any statement of
the amount due at the time of foreclosure (including foreclosure by power
of sale) and any tender of payment made during any redemption period after
foreclosure, will include a payment (the "Evasion Premium") equal to the
greater of (i) an amount equal to the product of 1% plus 300 basis points
times the Prepayment Date Principal, and (ii) the amount by which the sum
of the Discounted Value of each remaining Note Payment, calculated at the
Default Discount Rate, exceeds the Prepayment Date Principal.
(d) Borrower acknowledges that:
(i) a prepayment will cause damage to Lender;
(ii) the Evasion Premium is intended to compensate Lender for the loss
of its investment and the expense incurred and time and effort associated
with making the Loan, which will not be fully repaid if the Loan is
prepaid;
(iii) it will be extremely difficult and impractical to ascertain the
extent of ▇▇▇▇▇▇'s damages caused by a prepayment after an Event of Default
or any other prepayment not permitted by the Loan Documents; and
(iv) the Evasion Premium represents Lender and ▇▇▇▇▇▇▇▇'s reasonable
estimate of ▇▇▇▇▇▇'s damages for the prepayment and is not a penalty.
(e) BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT ▇▇▇▇▇▇ WOULD NOT LEND
TO BORROWER THE LOAN EVIDENCED BY THIS NOTE WITHOUT (1) BORROWER'S WAIVER
OF ANY RIGHTS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10 TO
PREPAY THIS NOTE IN WHOLE OR IN PART, WITHOUT
3
PENALTY, UPON ACCELERATION OF THE MATURITY DATE OF THIS NOTE, AND (2)
BORROWER'S AGREEMENT, AS SET FORTH ABOVE, TO PAY LENDER A PREPAYMENT
PREMIUM UPON THE SATISFACTION OF ALL OR ANY PORTION OF THE PRINCIPAL
INDEBTEDNESS EVIDENCED FOLLOWING THE ACCELERATION OF THE MATURITY DATE
HEREOF BY REASON OF A DEFAULT HEREUNDER OR UNDER THE TRANCHE A DEEDS OF
TRUST INCLUDING, WITHOUT LIMITATION, A DEFAULT ARISING FROM THE CONVEYANCE
OF ANY RIGHT, TITLE OR INTEREST IN THE PROPERTY ENCUMBERED BY THE TRANCHE A
DEEDS OF TRUST AND BORROWER HAS CAUSED THOSE PERSONS SIGNING THIS NOTE ON
▇▇▇▇▇▇▇▇'S BEHALF TO SEPARATELY EXECUTE THE AGREEMENT CONTAINED IN THIS
PARAGRAPH, IN COMPLIANCE WITH CALIFORNIA CIVIL CODE SECTION 2954.10, BY
PLACING THEIR SIGNATURES BELOW, BORROWER ACKNOWLEDGES THAT (I) THE GENERAL
PARTNERS, PRINCIPALS OR MEMBERS, AS THE CASE MAY BE, OF BORROWER ARE
KNOWLEDGEABLE REAL ESTATE DEVELOPERS OR INVESTORS, (II) BORROWER FULLY
UNDERSTANDS THE EFFECT OF THE ABOVE WAIVER, (III) THE MAKING OF THE LOAN BY
LENDER AT THE RATE SET FORTH ABOVE IS SUFFICIENT CONSIDERATION FOR SUCH
WAIVER, AND (IV) LENDER WOULD NOT MAKE THE LOAN WITHOUT SUCH WAIVER.
PROLOGIS TRUST
BY /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Section 3. Events of Default:
(a) It is an "Event of Default" under this Note:
(i) if Borrower fails to pay any amount due, as and when required,
under this Note or any other Loan Document and the failure continues for
a period of 5 days; or
(ii) if an Event of Default occurs under any other Loan Document.
(b) If an Event of Default occurs, Lender may declare all or any
portion of the Debt immediately due and payable ("Acceleration") and
exercise any of the other Remedies.
Section 4. Default Rate. Interest on the Principal will accrue at
the Default Interest Rate from the date an Event of Default occurs.
4
Section 5. Late Charges.
(a) If Borrower fails to pay any Debt Service Payment when due and the
failure continues for a period of 5 days or more or fails to pay any amount
due under the Loan Documents on the Maturity Date, Borrower agrees to pay
to Lender an amount (a "Late Charge") equal to five cents ($.05) for each
one dollar ($1.00) of the delinquent payment.
(b) Borrower acknowledges that:
(i) a delinquent payment will cause damage to Lender;
(ii) the Late Charge is intended to compensate Lender for loss of use
of the delinquent payment and the expense incurred and time and effort
associated with recovering the delinquent payment;
(iii) it will be extremely difficult and impractical to ascertain the
extent of ▇▇▇▇▇▇'s damages caused by the delinquency; and
(iv) the Late Charge represents ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇'s reasonable
estimate of ▇▇▇▇▇▇'s damages from the delinquency and is not a penalty.
Section 6. Limitation of Liability. This Note is subject to the
limitations on liability set forth in the Article of the Tranche A Deeds of
Trust entitled "Limitation of Liability".
Section 7. WAIVERS. IN ADDITION TO THE WAIVERS SET FORTH IN THE
ARTICLE OF THE TRANCHE A DEEDS OF TRUST ENTITLED "WAIVERS", BORROWER WAIVES
PRESENTMENT FOR PAYMENT, DEMAND, DISHONOR AND, EXCEPT AS EXPRESSLY SET FORTH IN
THE LOAN DOCUMENTS, NOTICE OF ANY OF THE FOREGOING. BORROWER FURTHER WAIVES ANY
PROTEST, LACK OF DILIGENCE OR DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF
THE LOAN DOCUMENTS. BORROWER AND ALL INDORSERS, SURETIES AND GUARANTORS OF THE
OBLIGATIONS CONSENT TO ANY EXTENSIONS OF TIME, RENEWALS, WAIVERS AND
MODIFICATIONS THAT LENDER MAY GRANT WITH RESPECT TO THE OBLIGATIONS AND TO THE
RELEASE OF ANY SECURITY FOR THIS NOTE AND AGREE THAT ADDITIONAL MAKERS MAY
BECOME PARTIES TO THIS NOTE AND ADDITIONAL INDORSERS, GUARANTORS OR SURETIES MAY
BE ADDED WITHOUT NOTICE AND WITHOUT AFFECTING THE LIABILITY OF THE ORIGINAL
MAKER OR ANY ORIGINAL INDORSER, SURETY OR GUARANTOR.
Section 8. Commercial Loan. The Loan is made for the purpose of
carrying on a business or commercial activity or acquiring real or personal
property as an investment or carrying on an investment activity and not for
personal or household purposes.
5
Section 9. Usury Limitations. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ intend to comply
with all Laws with respect to the charging and receiving of interest. Any
amounts charged or received by Lender for the use or forbearance of the
Principal to the extent permitted by Law, will be amortized and spread
throughout the Term until payment in full so that the rate or amount of interest
charged or received by ▇▇▇▇▇▇ on account the Principal does not exceed the
Maximum Interest Rate. If any amount charged or received under the Loan
Documents that is deemed to be interest is determined to be in excess of the
amount permitted to be charged or received at the Maximum Interest Rate, the
excess will be deemed to be a prepayment of Principal when paid, without
premium, and any portion of the excess not capable of being so applied will be
refunded to Borrower. If during the Term the Maximum Interest Rate, if any, is
eliminated, then for purposes of the Loan, there will be no Maximum Interest
Rate.
Section 10. Applicable Law. This Note is governed by and will be
construed in accordance with the Laws of the State of New York except with
respect to provisions related to specific properties which shall be construed in
accordance with the laws of the state or commonwealth in which the relevant
property is located, without regard to conflict of law provisions.
Section 11. Time of the Essence. Time is of the essence with respect
to the payment and performance of the Obligations.
Section 12. Cross-Default. A default under any other note now or
hereafter secured by the Loan Documents or under any loan document related to
such other note constitutes a default under this Note and under the other Loan
Documents. When the default under the other note constitutes an Event of Default
under that note or the related loan document, an Event of Default also will
exist under this Note and the other Loan Documents.
Section 13. Construction. Unless expressly provided otherwise in
this Note, this Note will be construed in accordance with the Exhibit attached
to the Tranche A First Deeds of Trust entitled "Rules of Construction".
Section 14. Deed of Trust Provisions Incorporated. To the extent not
otherwise set forth in this Note, the provisions of the Articles of the Tranche
A First Deeds of Trust entitled "Expenses and Duty to Defend", "Waivers",
"Notices", and "Miscellaneous" are applicable to this Note and deemed
incorporated by reference as if set forth at length in this Note.
Section 15. Joint and Several Liability; Successors and Assigns. If
Maker consists of more than one entity, the obligations and liabilities of each
such entity will be joint and several. This Note binds ▇▇▇▇▇▇▇▇ and successors,
assigns, heirs, administrators, executors, agents and representatives and inures
to the benefit of ▇▇▇▇▇▇ and its successors, assigns, heirs, administrators,
executors, agents and representatives.
Section 16. Absolute Obligation. Except for the Section of this Note
entitled "Limitation of Liability", no reference in this Note to the other Loan
Documents
6
and no other provision of this Note or of the other Loan Documents will impair
or alter the obligation of Borrower, which is absolute and unconditional, to pay
the Principal, interest at the Fixed Interest Rate and any other amounts due and
payable under this Note, as and when required.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has executed and delivered this Note as
of the date first set forth above.
PROLOGIS TRUST, a Maryland real
estate investment trust
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
7
Schedule 2
----------
(Tranche A Subordinate Deed of Trust Properties)
------------------------------------------------------------------------------------------
Building Name Address City, State, County
------------------------------------------------------------------------------------------
Mid Counties 6700-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (#1) Buena Park, CA, Orange County
Distribution Center 1 and 6201-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (#2)
and 2
------------------------------------------------------------------------------------------
Inland Empire 1 3285 ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇, CA, Riverside
County
------------------------------------------------------------------------------------------
Inland Empire 2 & 3 5600 and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
------------------------------------------------------------------------------------------
Inland Empire 4 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
------------------------------------------------------------------------------------------
Inland Empire 5 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
------------------------------------------------------------------------------------------