Exhibit 10.56

PROMISSORY NOTE

DEFINED TERMS

 

 

Execution Date: July 6, 2010

  

 

City and State of Signing:

Los Angeles, California

 

 

Loan Amount: $150,000,000.00

 

  

 

Interest Rate: 5.90% per annum

Borrower: 515/555 FLOWER ASSOCIATES, LLC, a Delaware limited liability company

 

 

Borrower’s Address:

 

c/o Thomas Properties Group

515 South Flower Street, 6th Floor

Los Angeles, California 90071

Attn: John R. Sischo, Co-Chief Operating Officer, and Paul S. Rutter, Co-Chief
Operating Officer

 

 

Holder or Lender: NEW YORK STATE TEACHERS’ RETIREMENT SYSTEM, a public pension
system created and existing pursuant to Article 11 of the Education Law of the
State of New York and having the power and privileges of a corporation pursuant
to Section 502 thereof

 

 

Holder’s Address:

 

New York State Teachers’ Retirement System

10 Corporate Woods Drive

Albany, New York 12211-2395

Attention: Assistant Manager of Real Estate Mortgages

 

With a copy to:

 

New York State Teachers’ Retirement System

10 Corporate Woods Drive

Albany, New York 12211-2395

Attention: General Counsel

 

 

Maturity Date: July 1, 2020

 

  

 

Advance Date: The date funds are disbursed to Borrower.

 

 

Interest Only Period: The period commencing on the Advance Date and ending on
the last day of the 48th full calendar month after the month in which the
Advance Date occurs.

 

  

 

Principal and Interest Installment Date: The first day of the 49th full calendar
month following the month in which the Advance Date occurs.

 

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Monthly Installment: Equal monthly installments of principal and interest at the
Interest Rate each in the amount of $926,635.48. The Monthly Installment is
based upon an amortization period of 27 years.

 

Monthly Payment during Interest Only Period: $737,500.00, if there shall be no
change in the outstanding principal amount.

 

 

Permitted Prepayment Periods:

 

During the 120 day period prior to the Maturity Date, Borrower may prepay the
Loan in whole but not in part, with no Prepayment Fee on 30 days’ prior written
notice.

 

From the Advance Date through the last day of the 60th full calendar month after
the month in which the Advance Date occurs, Borrower may prepay the Loan in
whole but not in part, with Prepayment Fee A (as defined herein), on 45 days’
prior written notice.

 

From the first day of the 61st full calendar month after the month in which the
Advance Date occurs through the 121st day prior to the Maturity Date, Borrower
may prepay the Loan in whole but not in part, with Prepayment Fee B (as defined
herein), on 45 days’ prior written notice.

 

In each case, Borrower’s right to prepay shall be contingent on simultaneous
prepayment of the Other Note.

 

 

Liable Parties: As of the Execution Date, there are no Liable Parties.

 

Addresses of Liable Parties: Not Applicable

 

 

Late Charge: An amount equal to four cents ($.04) for each dollar that is not
paid within five days of the date on which the same is due; provided however
that with respect only to the first time in each calendar year that any payment
due under the Loan Documents is not paid within said five-day grace period, the
Late Charge shall not be imposed unless and until such late payment has not been
paid within two Business Days after receipt of Holder’s written notice of such
non-payment.

 

Default Rate: An annual rate equal to the Interest Rate plus an additional four
percent (4%) per annum calculated on the applicable principal balance.

 

 

Note: This Promissory Note.

 

Other Note: Promissory Note of even date herewith in the principal amount of
$200,000,000.00, executed by Borrower payable to the order of Metropolitan Life
Insurance Company, a New York corporation (“MetLife”).

 

Lenders: Holder and MetLife.

 

Deed of Trust: Deed of Trust, Security Agreement, and Fixture Filing dated as of
the Execution Date granted by Borrower to the Trustee named in the Deed of Trust
for the benefit of Holder and MetLife.

 

Loan Documents: This Note, the Other Note, the Deed of Trust, the Assignment of
Leases, and any other documents given by Borrower and accepted by Holder or
MetLife to evidence or secure the Loan or the Other Loan (except the Indemnity
Agreement, the Bottom Dollar Contribution Agreement and any Guaranty), and all
renewals, amendments, modifications, restatements and extensions of these
documents.

 

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Assignment of Leases: Assignment of Leases dated as of the Execution Date and
executed by Borrower in favor of Holder.

 

Bottom Dollar Contribution Agreement: Contribution Agreement dated as of the
Execution Date executed by Maguire Thomas Partners-Commerce Square II, Ltd., a
California limited partnership, Maguire/Thomas Partners-Philadelphia, Ltd., a
California limited partnership, and Thomas Master Investments, LLC, a California
limited liability company.

 

Guaranty: Other than the Bottom Dollar Contribution Agreement, any guaranty of
all or any part of the obligations of Borrower under the Loan Documents or the
Indemnity Agreement that shall be executed by one or more Liable Parties and
accepted by Lender or MetLife for such purpose. As of the Execution Date, there
is no Guaranty.

 

Indemnity Agreement or Unsecured Indemnity Agreement: Unsecured Indemnity
Agreement dated as of the Execution Date and executed by Borrower in favor of
Holder and MetLife. The Unsecured Indemnity Agreement, the Bottom Dollar
Contribution Agreement and any Guaranty are not Loan Documents and shall survive
repayment of the Loan or other termination of the Loan Documents.

 

Loan: The loan evidenced by this Note.

 

Other Loan: The loan evidenced by the Other Note. Holder and MetLife have
entered into or are entering into a co-lending agreement addressing, among other
things, each of their respective rights under the Loan Documents and the
Indemnity Agreement.

 

FOR VALUE RECEIVED, Borrower promises to pay to the order of Holder at Holder’s
Address or such other place as Holder may from time to time designate, the Loan
Amount with interest payable in the manner described below, in money of the
United States of America that at the time of payment shall be legal tender for
payment of all obligations.

Capitalized terms which are not defined in this Note shall have the meanings set
forth in the Deed of Trust.

1. Payment of Principal and Interest. Interest on the principal balance of the
Loan outstanding from time to time hereunder shall accrue at the Interest Rate
from the Advance Date, and all such interest accruing during each calendar month
shall be due and payable on the first day of the following calendar month.
Principal and interest under this Note shall be payable as follows:

(a) On the first day of each calendar month during the Interest Only Period,
Borrower shall pay all interest having accrued during the immediately preceding
calendar month; and

(b) Commencing on the Principal and Interest Installment Date and on the first
day of each calendar month thereafter, to and including the first day of the
calendar month immediately preceding the Maturity Date, Borrower shall pay the
Monthly Installment; and

(c) On the Maturity Date, a final payment in the aggregate amount of the unpaid
Indebtedness shall become immediately payable in full. The “Indebtedness” means
the aggregate amount of the unpaid principal sum evidenced by this Note, all
accrued and unpaid interest, and all other sums evidenced by this Note or
secured by the Deed of Trust and/or any other Loan Documents as well as any
future advances under the Deed of Trust that may be made to or on behalf of
Borrower by Holder. Notwithstanding any provision in the Deed of Trust to the
contrary, such final payment of the Indebtedness (with respect to this Note only
and without duplication of payments owed and made under the Other Note) shall be
paid and payable to Holder, and not to any servicer, on the Maturity Date by
wire transfer to the following account in accordance with the following wire

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instructions (or to such other account in accordance with such other wire
instructions which Holder may hereafter provide to Borrower):

State Street Bank & Trust Co., Boston

ABA # 011000028

Beneficiary Acct # (DDA): 5013-4923

Beneficiary Name: New York State Teachers’ Retirement System, X41B

Reference: City National Plaza – Mtg # 759

Borrower acknowledges and agrees that a substantial portion of the original Loan
Amount shall be outstanding and due on the Maturity Date.

Interest shall be calculated on the basis of a thirty (30) day month and a three
hundred sixty (360) day year, except that (i) if the Advance Date occurs on a
date other than the first day of a calendar month, interest payable for the
period commencing on the Advance Date and ending on the last day of the month in
which the Advance Date occurs shall be calculated on the basis of the actual
number of days elapsed over a 365 day or 366 day year, as applicable, and
(ii) if the Maturity Date occurs on a date other than the last day of the month,
interest payable for the period commencing on the first day of the month in
which the Maturity Date occurs and ending on the Maturity Date shall be
calculated on the basis of the actual number of days elapsed over a 365 day or
366 day year, as applicable.

2. Application of Payments. At the election of Holder, and to the extent
permitted by law, all payments shall be applied in the order selected by Holder
to any expenses, prepayment fees, late charges, escrow deposits and other sums
due and payable under the Loan Documents, and to unpaid interest at the Interest
Rate or at the Default Rate, as applicable. The balance of any payments shall be
applied to reduce the then unpaid Loan Amount.

3. Security. The covenants of the Deed of Trust are incorporated by reference
into this Note. This Note shall evidence, and the Deed of Trust shall secure,
the Indebtedness. The Other Note and the obligations evidenced thereby are also
secured by the Deed of Trust.

4. Late Charge. If any payment of interest, any payment of a Monthly Installment
or any payment of a required escrow deposit is not paid within five days after
the due date, Holder shall have the option to charge Borrower the Late Charge;
provided however that with respect only to the first time in each calendar year
that any payment due under the Loan Documents is not paid within said five-day
grace period, the Late Charge shall not be imposed unless and until such late
payment has not been paid within two Business Days after receipt of Holder’s
written notice of such non-payment. The Late Charge is for the purpose of
defraying the expenses incurred in connection with handling and processing
delinquent payments and is payable in addition to any other remedy Holder may
have. Unpaid Late Charges shall become part of the Indebtedness and shall be
added to any subsequent payments due under the Loan Documents.

5. Acceleration Upon Default. At the option of Holder, if Borrower fails to pay
any sum specified in this Note within five days after the due date, or if an
Event of Default occurs and is continuing, the Indebtedness, and all other sums
evidenced and/or secured by the Loan Documents, including without limitation any
applicable prepayment fees (collectively, the “Accelerated Loan Amount”) shall
become immediately due and payable.

6. Interest Upon Default. The Accelerated Loan Amount shall bear interest at the
Default Rate which shall never exceed the maximum rate of interest permitted to
be contracted for under the laws of the State of California. The Default Rate
shall commence upon the occurrence of an Event of Default and shall continue
until all defaults are cured.

7. Limitation on Interest. The agreements made by Borrower with respect to this
Note and the other Loan Documents are expressly limited so that in no event
shall the amount of interest received, charged or contracted for by Holder
exceed the highest lawful amount of interest permissible under the laws
applicable to the Loan. If at any time performance of any provision of this Note
or the other Loan Documents results in the highest lawful rate of interest
permissible under applicable laws being exceeded, then the amount of interest
received,

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charged or contracted for by Holder shall automatically and without further
action by any party be deemed to have been reduced to the highest lawful amount
of interest then permissible under applicable laws. If Holder shall ever
receive, charge or contract for, as interest, an amount which is unlawful, at
Holder’s election, the amount of unlawful interest shall be refunded to Borrower
(if actually paid) or applied to reduce the then unpaid Loan Amount. To the
fullest extent permitted by applicable laws, any amounts contracted for, charged
or received under the Loan Documents included for the purpose of determining
whether the Interest Rate would exceed the highest lawful rate shall be
calculated by allocating and spreading such interest to and over the full stated
term of this Note.

8. Prepayment. Borrower shall not have the right to prepay all or any portion of
the Loan at any time during the term of this Note except as expressly set forth
in the Defined Terms, in this Section, and in Section 14.10 of the Deed of
Trust. If Borrower provides notice of its intention to prepay, the Accelerated
Loan Amount shall become due and payable on the date specified in the prepayment
notice. In the event that any full or partial prepayment of the Other Note shall
occur, then Lender may require immediate or simultaneous prepayment of this Note
in an amount such that both Notes shall have been prepaid in the same proportion
(i.e., the ratio of the amount of the prepayment to the outstanding principal
balance immediately prior to the prepayment shall be the same under each Note),
and together with such prepayment of this Note, Borrower shall pay the
applicable Prepayment Fee. In addition to the foregoing limitations upon
prepayment, this Note may not be prepaid without the simultaneous prepayment of
the Other Note in accordance with its terms.

9. Prepayment Fee.

(a) Any tender of payment by Borrower or any other person or entity of the
Indebtedness, other than as expressly provided in the Loan Documents, shall
constitute a prohibited prepayment. If a prepayment of all or any part of the
Indebtedness is made following (i) an Event of Default and an acceleration of
the Maturity Date, (ii) the application of money to the principal of the Loan
after a casualty or condemnation, or (iii) in connection with a purchase of the
Property or a repayment of the Indebtedness at any time before, during or after,
a judicial or non-judicial foreclosure or sale of the Property, then to
compensate Holder for the loss of the investment, Borrower shall pay an amount
equal to the Prepayment Fee (as hereinafter defined). Notwithstanding the
foregoing, so long as Borrower makes a good faith effort to recover any
Prepayment Fee which would be due as a result of a casualty or condemnation,
from the insurer in the case of a casualty or from the condemning authority,
then the Prepayment Fee due as a result of the casualty or condemnation shall be
waived except to the extent recovered by Borrower.

(b) The “Prepayment Fee” shall be Prepayment Fee A or Prepayment Fee B,
whichever is applicable on the date of the subject prepayment as specified in
the Defined Terms.

(c) The “Prepayment Fee A” shall be the greater of (A) the product of the
Prepayment Ratio (as hereinafter defined) multiplied by the difference of (x
minus y) where (x) is the present value of all remaining payments of principal
and interest including the outstanding principal due on the Maturity Date,
discounted at the rate which, when compounded monthly, is equivalent to the
Treasury Rate compounded semi-annually, and (y) is the amount of the principal
then outstanding immediately prior to the prepayment, or (B) one percent (1%) of
the amount of the principal being prepaid.

(d) The “Prepayment Fee B” shall be the greater of (A) the product of the
Prepayment Ratio (as hereinafter defined) multiplied by the difference of (x
minus y), where (x) is the present value of all remaining payments of principal
and interest including the outstanding principal due on the Maturity Date,
discounted at the rate which, when compounded monthly, is equivalent to the
Treasury Rate plus 50 basis points compounded semi-annually, and (y) is the
amount of the principal then outstanding immediately prior to the prepayment, or
(B) one percent (1%) of the amount of the principal being prepaid.

(e) The “Treasury Rate” shall be the annualized yield on securities issued by
the United States Treasury having a maturity equal to the remaining stated term
of this Note, as quoted in the Federal Reserve Statistical Release [H. 15 (519)]
under the heading “U.S. Government Securities - Treasury Constant Maturities”
for the date which is five (5) Business Days prior to the date on which
prepayment is being made. If this rate is not available as of the date of
prepayment, the Treasury Rate shall be determined by interpolating between the
yield on securities of the next longer and next shorter maturity. If the
Treasury Rate is no longer published, Holder shall

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select a comparable rate. Holder will, upon request, provide an estimate of the
amount of the Prepayment Fee two weeks before the date of the scheduled
prepayment. A Business Day is a day on which Holder is conducting normal
business operations.

(f) The “Prepayment Ratio” shall be a fraction, the numerator of which shall be
the amount of principal being prepaid, and the denominator of which shall be the
principal then outstanding immediately prior to the prepayment.

10. Waiver of Right to Prepay Note Without Prepayment Fee. Borrower acknowledges
that Holder has relied upon the anticipated investment return under this Note in
entering into transactions with, and in making commitments to, third parties and
that the tender of any prohibited prepayment or any permitted prepayment which
pursuant to the terms of this Note requires a Prepayment Fee, shall include the
Prepayment Fee. Borrower agrees that the determination of the Interest Rate was
based on the intent, expectation and agreement (and the Interest Rate would have
been higher without such agreement) of Borrower and Holder that the amounts
advanced under this Note would not be prepaid during the term of this Note, or
if any such prepayment would occur, the Prepayment Fee would apply (except as
expressly permitted by the terms of this Note). Borrower also agrees that the
Prepayment Fee represents the reasonable estimate of Holder and Borrower of a
fair average compensation for the loss that may be sustained by Holder as a
result of a prepayment of this Note and it shall be paid without prejudice to
the right of Holder to collect any other amounts provided to be paid under the
Loan Documents.

BORROWER EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE
SECTION 2954.10 OR ANY OTHER APPLICABLE LAW TO PREPAY THIS NOTE, IN WHOLE OR IN
PART, WITHOUT FEE OR PENALTY, UPON ACCELERATION OF THE MATURITY DATE OF THIS
NOTE, AND (B) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF THIS NOTE IS MADE,
UPON OR FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER
ON ACCOUNT OF ANY DEFAULT BY BORROWER UNDER ANY LOAN DOCUMENT, INCLUDING BUT NOT
LIMITED TO ANY TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION WHICH IS PROHIBITED
OR RESTRICTED BY THE DEED OF TRUST, THEN BORROWER SHALL BE OBLIGATED TO PAY
CONCURRENTLY THE PREPAYMENT FEE SPECIFIED IN SECTION 9. BY INITIALING THIS
PROVISION IN THE SPACE PROVIDED BELOW, BORROWER AGREES THAT HOLDER’S AGREEMENT
TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET FORTH IN THIS NOTE
CONSTITUTES ADEQUATE CONSIDERATION FOR THIS WAIVER AND AGREEMENT.

BORROWER’S INITIALS: /s/ JRS

11. Liability of Borrower. Upon the occurrence of an Event of Default, except as
provided in this Section 11, Holder will look solely to the Property and the
security under the Loan Documents for the repayment of the Loan and will not
enforce a deficiency judgment against Borrower. However, nothing contained in
this section shall limit the rights of Lenders to proceed against Borrower and
the general partners, if any, of Borrower and/or the Liable Parties, if any,
(i) to enforce any Leases entered into by Borrower or its Affiliates as tenant;
(ii) to recover damages for fraud, material misrepresentation, material breach
of warranty or intentional physical waste of the Property; (iii) to recover any
Condemnation Proceeds or Insurance Proceeds or other similar funds which have
been misapplied by Borrower or which, under the terms of the Loan Documents,
should have been paid to Lenders; (iv) to recover any tenant security deposits,
tenant letters of credit or other deposits or fees paid to Borrower of any of
its Affiliates or prepaid rents for a period of more than 30 days which have not
been delivered to Lenders; (v) to recover Rents and Profits received by Borrower
or any of its Affiliates after the first day of the month in which an Event of
Default occurs and prior to the date Lenders acquire title to the Property which
have not been applied to the Loan or in accordance with the Loan Documents to
operating and maintenance expenses of the Property; (vi) to recover damages,
costs and expenses arising from, or in connection with Article VI of the Deed of
Trust pertaining to hazardous materials or the Unsecured Indemnity Agreement;
(vii) to recover all amounts due and payable pursuant to Sections 11.06 and
11.07 of the Deed of Trust, and any amount expended by Lenders in connection
with foreclosure of the Deed of Trust; (viii) to recover costs and damages
arising from Borrower’s failure to pay Premiums or Impositions in the event that
Borrower is not required to deposit such amounts with Lenders pursuant to
Section 2.05 of the Deed of Trust; (ix) to recover damages arising from
Borrower’s failure to comply with Section 8.01 of the Deed of Trust pertaining
to ERISA; (x) to recover any damages, costs, expenses or liabilities, including
attorneys’ fees, incurred by Lenders and arising from any breach or enforcement
of any “environmental provision”

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(as defined in California Code of Civil Procedure Section 736, as such Section
may be amended from time to time) relating to the Property or any portion
thereof; and/or (xi) in accordance with California Code of Civil Procedure
Section 726.5, as such Section may be amended from time to time, to waive the
security of the Deed of Trust as to any parcel of Real Property that is
“environmentally impaired” or is an “affected parcel” (as such terms are defined
in such Section), and as to any Personal Property attached to such parcel, and
thereafter to exercise against Borrower, to the extent permitted by such
Section 726.5, the rights and remedies of an unsecured creditor, including,
without limitation, reduction of Lenders’ claim against Borrower to judgment,
and any other rights and remedies permitted by law. If Lenders exercise the
rights and remedies of an unsecured creditor in accordance with clause
(xi) above, Borrower promises to pay to Lenders, on demand by Lenders following
such exercise, all amounts owed to Lenders under any Loan Document, and Borrower
agrees that it and the Liable Parties, if any, will be personally liable for the
payment of all such sums.

The limitation of liability set forth in this Section 11 shall not apply and the
Loan shall be fully recourse to Borrower in the event that Borrower commences a
voluntary bankruptcy or insolvency proceeding or an involuntary bankruptcy or
insolvency proceeding is commenced against Borrower by any person or entity
(other than by either or both of the entities that comprise Lenders, and other
than by any successor holder of all or any portion of this Note, the Other Note,
or either of them) and is not dismissed within 90 days of filing. In addition,
this agreement shall not waive any rights which Lenders would have under any
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Secured Indebtedness or to require that the Property shall continue to
secure all of the Secured Indebtedness.

Notwithstanding the foregoing, the limitation of liability set forth in this
Section 11 shall not apply and the Loan shall be fully recourse to Borrower in
the event that there is a Transfer or Secondary Financing except as permitted in
the Loan Documents or otherwise approved in writing by Lenders.

12. Waiver by Borrower. Borrower and others who may become liable for the
payment of all or any part of this Note, and each of them, waive diligence,
demand, presentment for payment, notice of nonpayment, protest, notice of
dishonor and notice of protest, notice of intent to accelerate and notice of
acceleration and specifically consent to and waive notice of any amendments,
modifications, renewals or extensions of this Note, including the granting of
extension of time for payment, whether made to or in favor of Borrower or any
other person or persons.

13. Exercise of Rights. No single or partial exercise by Holder, or delay or
omission in the exercise by Holder, of any right or remedy under the Loan
Documents shall waive or limit the exercise of any such right or remedy. Holder
shall at all times have the right to proceed against any portion of or interest
in the Property in the manner that Holder may deem appropriate, without waiving
any other rights or remedies. The release of any party under this Note shall not
operate to release any other party which is liable under this Note and/or under
the other Loan Documents or under the Unsecured Indemnity Agreement.

14. Fees and Expenses. If Borrower defaults under this Note, Borrower shall be
personally liable for and shall pay to Holder, in addition to the sums stated
above, the costs and expenses of enforcement and collection, including, without
limitation, a reasonable sum as an attorney’s fee. This obligation is not
limited by Section 11.

15. No Amendments. This Note may not be modified or amended except in a writing
executed by Borrower and Holder. No waivers shall be effective unless they are
set forth in a writing signed by the party which is waiving a right. This Note
and the other Loan Documents constitute the complete and final expression of the
lending relationship between Borrower and Holder. All prior agreements are of no
further force or effect. Borrower acknowledges that there is no unwritten
agreement binding on Holder with respect to the Loan or the Property.

16. Governing Law. This Note is to be construed and enforced in accordance with
the laws of California.

17. Construction. The words “Borrower” and “Holder” shall be deemed to include
their respective heirs, representatives, successors and assigns, and shall
denote the singular and/or plural, and the masculine and/or feminine, and
natural and/or artificial persons, as appropriate. The provisions of this Note
shall remain in full force and effect notwithstanding any changes in the
shareholders, partners or members of Borrower. If more than one

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party is Borrower, the obligations of each party shall be joint and several. The
captions in this Note are inserted only for convenience of reference and do not
expand, limit or define the scope or intent of any section of this Note.

18. Notices. All notices, demands, requests and consents permitted or required
under this Note shall be given in the manner prescribed in the Deed of Trust.

19. Time of the Essence. Time shall be of the essence with respect to all of
Borrower’s obligations under this Note.

20. Severability. If any provision of this Note should be held unenforceable or
void, then that provision shall be deemed separable from the remaining
provisions and shall not affect the validity of this Note, except that if that
provision relates to the payment of any monetary sum, then Holder may, at its
option, declare the Indebtedness (together with the Prepayment Fee) immediately
due and payable.

[Signature on next page]

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IN WITNESS WHEREOF, Borrower has executed this Note as of the Execution Date.

 

515/555 FLOWER ASSOCIATES, LLC,

a Delaware limited liability company

By:  

/s/ John R. Sischo

  John R. Sischo, Vice President

[BORROWER ALSO TO INITIAL SECTION 10.]