Secured promissory note.

Secured Promissory Note





1. For value received, _________ Properties, Inc., a [state] corporation ("Properties") promises to pay to the order of _________ Life Insurance Company, a _________ corporation, at its office at _________, or at such other place as the holder of it may from time to time designate in writing, the principal sum of $_____ together with interest from this date at the rate of _________ percent per year.

2. Principal and interest shall be payable in _________ equal quarterly installments of $_____ commencing on [date], and continuing on each [months and days] and until [date] _________, at which time all sums then due under this note shall be due and payable. Interest only on the amount advanced will be due and payable on [date].

3. Interest on this note shall be computed on the basis of _________ days per year. Should any payment of interest not be paid when due, it shall become a part of the principal and bear like interest, but such unpaid interest so compounded shall not exceed an amount equal to simple interest on the unpaid principal at the maximum rate permitted by law. Principal and interest are payable in lawful money of the United States of America.

4. Properties shall have no right to prepay this Secured Promissory Note (the "Note"), or any part of it, except as follows:

(a). Optional Prepayments Without Premium. On any quarterly installment date, beginning on _________, _________ properties may, at its option and upon notice as provided in paragraph 4(c) prepay a portion of the then outstanding principal amount of the Note (in multiples of $10,000) [or the amount that applies], each such optional prepayment to be made without premium but together with interest on the principal amount prepaid accrued to the date fixed for such prepayments; provided, that the aggregate optional prepayments pursuant to this paragraph 4(a) in any Loan Year (as defined below) shall not exceed $_____. The right to make optional prepayments under this paragraph 4(a) shall not be cumulative and, if and to the extent not exercised on any such prepayment date, shall not increase the principal amount of the Note subject to prepayment under this paragraph 4(a) on any subsequent prepayment date.

(b). Optional Prepayments With Premium. In addition to optional prepayments pursuant to paragraph 4(a), on any quarterly installment date, beginning on _________, _________, properties may, at its option and upon notice as provided in paragraph 4(c) prepay all or any part (in multiples of $10,000) [or the amount that applies] of the then outstanding principal amount of the Note in excess of the prepayments permitted by paragraph 4(a), together with accrued interest, plus the premium (a percentage of such excess principal amount prepaid pursuant to this paragraph 4(b)) applicable in accordance with the following table:

Loan Year



_________ percent


_________ percent


_________ percent


_________ percent


_________ percent


_________ percent


_________ percent


_________ percent


_________ percent


(c). Notice of Optional Prepayments. Written notice of each optional prepayment under paragraph 4(a) or 4(b) shall be given by Properties to the holder of the Note not less than _________ days nor more than _________ days prior to the date fixed for such prepayment, in each case specifying such date, the principal amount of the Note to be prepaid on such date, the premium, if any, applicable to such prepayment, and the paragraph of this Note under which such prepayment is to be made.

(d). Maturity on Prepayments; Cessation of Interest. In the case of each prepayment of the Note, the principal amount of the Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable premium, if any. From and after such date, unless Properties shall fail to pay such principal amount when so due and payable, together with the interest and premium, if any, as above, interest on such principal amount shall cease to accrue.

(e). Loan Year. A "Loan Year" for the purposes in this note shall mean each successive 12-month period beginning on each [month, day].

5. This Note is secured by the following documents:

(a) a Deed of Trust and Assignment of Rents (the "Deed of Trust") of even date with this note, executed by Properties as trustor to _________ Title Insurance and Trust Company as trustee and naming _________ as Beneficiary covering the leasehold interest of Properties in certain real property (the "Real Property") in _________ county, [state], and the fee interest of Properties in certain improvements constructed on it;

(b) an Assignment of Lease and Agreement (the "Lease Assignment") of even date with this note executed by Properties as assignor to _________ as assignee relating to the interest of Properties under a Lease Agreement (the "Hotel Lease") of even date with this note between Properties as landlord and _________ Corporation, a [state] corporation, as tenant;

(c) an assignment of that certain Security Agreement (the "Security Agreement") of even date with this note by _________ as debtor and Properties as Secured Party covering certain Personal Property located on the Real Property; and

(d) a Guaranty Agreement (the "Guaranty Agreement") of even date with this note by _________ as guarantor, in favor of _________.

6. Upon the occurrence of any of the following (referred to as an "Event of Default"):

(a) Default in the payment of principal or interest when due pursuant to the terms of this note;

(b) A default under the Deed of Trust, the Lease Assignment, the Security Agreement or in any of the documents referred to in them (including any amendment, modification or extension);

(c) A default under any other deed of trust, security agreement or other agreement, including any amendment, modification or extension securing this Note; or

(d) A default by the landlord under the Hotel Lease (including any amendment modification or extension);

then, at the option of the holder of this note, the entire balance of principal together with all accrued interest on it shall immediately become due and payable. Upon the occurrence of an Event of Default and irrespective of whether the holder of this note exercises its option to accelerate the maturity of this Note by reason of such event of default, this Note shall bear interest while such default continues at the rate of _________ percent per year. No delay or omission on the part of the holder of this note in exercising any right under this paragraph 6, shall operate as a waiver of such right or of any other right under this note or under the agreements. Notwithstanding the foregoing _________ shall not exercise any right or remedy it may have by reason of default in payment of principal or interest under the Note and the instruments securing the Note for _________ days following such default or for _________ days following any other default under this note.

7. If this Note is not paid when due, or if any event or default occurs, Properties promises to pay all costs of collection including, but not limited to, reasonable attorneys' fees incurred by the holder of this note on account of such collection, whether or not action is filed on this note. Properties waives the defense of the statute of limitations in any action on this Note to the extent permitted by law.

8. Anything in this note or in any of the agreements referred to in this note to the contrary notwithstanding, the aggregate of the interest accruing under this note, including all payments in the nature of interest received by _________, if any, shall never exceed any limitation on the maximum amount of interest permitted on the indebtedness evidenced by this note by the laws and statutes of the state of _________ as amended from time to time.

9. The Deed of Trust securing this Note contains the following provision:

"1.14 Transfer of Trust Estate by Trustor. Trustor shall not transfer the Trust Estate without the prior written consent of Beneficiary. Beneficiary may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to the Deed of Trust, the Ground Lease and the Hotel Lease and any such transferee shall assume all of Trustor's obligations under this instrument and agree to be bound by all provisions and perform all obligations contained in this instrument, in the Ground Lease, in the Hotel Lease, in the Lease Assignment, in the Security Agreement of even date with this instrument by and among Trustor, _________ and Beneficiary, and in any other document or agreement referred to in them. In the event of any such transfer without the prior written consent of Beneficiary, Beneficiary may, at its option, declare all sums secured by this instrument immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. As used here, 'Transfer' shall mean:

"(a) the sale, agreement to sell, lease, transfer or conveyance of the Trust Estate or any portion of or interest in it, whether voluntarily, involuntarily, by operation of law or otherwise; or

"(b) the change in ownership of the stock or corporate structure of Trustor:

" 'Transfer' shall not include:

"(a) the Hotel Lease and the renting by _________ of individual rooms, or other rentable areas located within the improvements on the Real Property; or

"(b) the transfer of the Trust Estate by any wholly-owned subsidiary of _________, provided such transferee shall assume liability for Trustor's obligations under the Note and under the instruments securing it."

10. This Note shall be governed and construed in accordance with the laws of the state of _________. Every provision of this Note is intended to be severable. In the event any term or provision of this note is declared to be illegal or invalid for any reason by a court of competent jurisdiction, such illegality or invalidity shall not affect the validity or enforceability of the remainder of the terms and provisions set forth in this note.



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