Exhibit
10.18


 


DEED OF
TRUST NOTE


 


	
  $40,000,000

  	
   

  	
  June 13, 2003

  



 


                FOR VALUE RECEIVED, RKB WILLOWWOOD LLC, a Delaware limited
liability company having its principal place of business at 1280 Maryland
Avenue, SW, Suite 280, Washington D.C. 20024 (hereinafter referred to as “Borrower”), promises to pay to the order of ARCHON FINANCIAL, L.P., a Delaware limited partnership, at
its principal place of business at 600 East Las Colinas Boulevard, Suite 450,
Irving, Texas 75039 (hereinafter referred to as “Lender”),
or at such place as the holder hereof may from time to time designate in
writing, the principal sum of Forty Million and No/100
Dollars ($40,000,000), in lawful money
of the United States of America, with interest thereon to be computed on the
unpaid principal balance from time to time outstanding at the Contract Rate (as
hereinafter defined), and to be paid in installments as provided herein:


 


1.     Payment Terms.   Borrower
shall pay to Lender a payment of interest only for the period from and
including the first date on which principal is advanced to Borrower on this
Note to and including the last day of that same month, which amount will be
reserved and paid to Lender on the first date on which principal is advanced to
Borrower on this Note. Interest shall thereafter be due and payable monthly, in
arrears, commencing on August 1, 2003, and continuing on the first day of each
calendar month thereafter up to and including June 1, 2008. The outstanding
principal balance of this Note, together with all accrued but unpaid interest
thereon, shall be due and payable on July 1, 2008, or upon earlier maturity
hereof whether by acceleration or otherwise (the “Maturity
Date”). Interest on the principal sum of this Note shall be
calculated on the basis of the actual number of days elapsed in the related
interest accrual period over a three-hundred-sixty (360) day year. The first
interest accrual period hereunder shall commence on and include the date that
principal is advanced hereunder and shall end on and include the last day of
such calendar month; unless principal is advanced on the last day of a month,
in which case the first interest accrual period shall consist of only such last
day. Each interest accrual period thereafter shall commence on the first day of
each calendar month during the term of this Note and shall end on and include
the last day of the calendar month. All amounts due under this Note shall be
payable without setoff, counterclaim or any other deduction whatsoever. THIS IS A BALLOON NOTE REQUIRING NO SCHEDULED INSTALLMENT PAYMENTS OF
PRINCIPAL.


 


2.     Interest.   The term “Contract Rate” as used in this Note means a rate of four and
fifty one-hundredths percent (4.50%) per annum.


 


3.     Security.   This Note is
evidence of that certain loan made by Lender to Borrower contemporaneously
herewith (the “Loan”). This Note is secured by
(a) a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
of even date herewith in the amount of this Note given by Borrower for the use
and benefit of Lender covering the fee estate of Borrower in certain premises
as more particularly described therein (the “Deed of
Trust”), (b) an Assignment of Leases and Rents of even date herewith
executed by Borrower in favor of Lender (the “Assignment
of Leases”), and (c) the other Loan Documents (as hereinafter
defined). The term “Loan Documents”
as used in this Note means collectively this Note, the Deed of Trust, the
Assignment of Leases and any and all other documents securing, evidencing, or
guaranteeing all or any portion of the Loan or otherwise executed and/or
delivered in connection with this Note and the Loan.


 





















 


4.     Late Charge.   If any sum
payable under this Note is not paid within five (5) days of (and including) the
date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid sum or the maximum
amount permitted by applicable law in order to defray a portion of the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment, and such
amount shall be secured by the Loan Documents. If the day when any payment
required under this Note is due is not a Business Day (as hereinafter defined),
then payment shall be due on the first Business Day thereafter. The term “Business Day” shall mean a day other than (i) a Saturday or Sunday,
or (ii) any day on which banking and savings and loan institutions in New York
are authorized or obligated by law or executive order to be closed.


 


5.     Default and Acceleration.   The
whole of the principal sum of this Note, together with all interest accrued and
unpaid thereon and all other sums due under the Loan Documents (all such sums
hereinafter collectively referred to as the “Debt”),
or any portion thereof, shall without notice become immediately due and payable
at the option of Lender if any payment required in this Note is not paid within
five (5) days after the date on which it is due or upon the happening of any
other “Event of Default” (as defined in the
Deed of Trust). In the event that it should become necessary to employ counsel
to collect or enforce the Debt or to protect or foreclose the security therefor
or to defend against any claims asserted by Borrower arising from or related to
the Loan Documents, Borrower also shall pay on demand all such costs incurred
by Lender, including reasonable attorneys’ fees and costs incurred for the
services of counsel whether or not suit be brought.


 


6.     Default Interest.   Borrower
does hereby agree that upon the occurrence and during the continuance of an
Event of Default (including upon the failure of Borrower to pay the Debt in
full on the Maturity Date), Lender shall be entitled to receive and Borrower
shall pay interest on the entire unpaid principal sum and any other amounts due
at a rate (the “Default Rate”) equal to the lesser
of (a) the maximum rate permitted by applicable law, or (b) five percent (5%)
above the Contract Rate. The Default Rate shall be computed from the occurrence
of the Event of Default until the date Borrower cures the Event of Default and
such cure is accepted by Lender. This charge shall be added to the Debt and
shall be secured by the Deed of Trust. This paragraph, however, shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default.


 


7.     Defeasance.   The principal
balance of this Note may not be prepaid in whole or in part (except with
respect to the application of Involuntary Payments (as defined below)) prior to
the Maturity Date; provided, however, Borrower shall have the right and option
to release the “Trust Property” (as defined in the
Deed of Trust) from the lien of the Deed of Trust in accordance with the terms
and provisions set forth in the Deed of Trust (“Defeasance”).
Notwithstanding the foregoing sentence, Borrower shall have the privilege to
prepay the entire amount of the outstanding Debt on the first (1st) day of any
of the three (3) calendar months preceding the month in which the scheduled
Maturity Date occurs without Defeasance or the payment of the Yield Maintenance
Premium (as defined in the Deed of Trust) or any other premium or penalty.
Notwithstanding the foregoing, if prior to the scheduled Maturity Date
(excluding, however, during the three (3) months preceding the scheduled
Maturity Date) and during the existence of any Event of Default, Borrower shall
tender payment of an amount sufficient to satisfy the Debt at any time prior to
a sale of the Trust Property either through foreclosure or the exercise of the
other remedies available to Lender under the Deed of Trust, such tender by
Borrower shall be deemed to be voluntary and Borrower shall pay, in addition to
the Debt, the greater of (a) the Yield Maintenance


 


 


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Premium, if any, that would be payable in
connection with a Defeasance, or (b) three percent (3%) of the unpaid principal
balance of this Note. In addition to the foregoing, Borrower shall not be
required to pay any fee or consideration if, in accordance with the terms and
conditions of the Deed of Trust, Lender receives (i) insurance proceeds or
other payments as a result of fire or other casualties, or (ii) awards or other
payments made in any condemnation or eminent domain proceedings (collectively, “Involuntary Prepayments”), and such Involuntary Prepayments
are applied by Lender toward reduction of the Debt; provided, however, if an
Event of Default, or an event with notice and/or the passage of time would
constitute an Event of Default, exists, then the Borrower shall pay to the
Lender an additional amount equal to the greater of (A) the Yield Maintenance
Premium, if any, that would be required if such Involuntary Prepayment had been
Defeased, or (B) three percent (3%) of the Involuntary Prepayment.


 


8.     Savings Clause.   It is
expressly stipulated and agreed to be the intent of Borrower and Lender at all
times to comply with applicable state law or applicable United States federal
law (to the extent that United States federal law permits Lender to contract
for, charge, take, reserve, or receive a greater amount of interest than under
state law) and that this paragraph shall control every other covenant and
agreement in this Note and the other Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Lender’s exercise of the option to accelerate the Maturity Date, or if
any prepayment or the exercise of any Defeasance by Borrower results in
Borrower having paid any interest in excess of that permitted by applicable
law, then it is Lender’s express intent that all excess amounts theretofore
collected by Lender shall be credited on the principal balance of this Note and
all other Debt and the provisions of this Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on
account of the Debt does not exceed the maximum lawful rate from time to time
in effect and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents, it is not the intention of Lender to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.


 


9.     No Oral Change; Successors and Assigns; Liability.   This
Note may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought. Whenever used, the singular number shall
include the plural, the plural the singular, and the words “Lender” and “Borrower” shall
include their respective successors, assigns, heirs, executors and
administrators. If Borrower consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.


 


10.  Waivers.   Except as
specifically provided in the Loan Documents, Borrower and any endorsers,
sureties or guarantors hereof jointly and severally waive presentment and
demand for payment, notice of intent to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and non-payment, all
applicable exemption rights, valuation and appraisement, notice of demand, and
all


 


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other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of
this Note and the bringing of suit and diligence in taking any action to
collect any sums owing hereunder or in proceeding against any of the rights and
collateral securing payment hereof. Borrower and any surety, endorser or
guarantor hereof agree (i) that the time for any payments hereunder may be
extended from time to time without notice and consent, (ii) to the acceptance
by Lender of further collateral, (iii) the release by Lender of any existing
collateral for the payment of this Note, (iv) to any and all renewals, waivers
or modifications that may be granted by Lender with respect to the payment or
other provisions of this Note, and/or (v) that additional Borrowers, endorsers,
guarantors, or sureties may become parties hereto all without notice to them
and without in any manner affecting their liability under or with respect to
this Note. No extension of time for the payment of this Note or any installment
hereof shall affect the liability of Borrower under this Note or any endorser
or guarantor hereof even though the Borrower or such endorser or guarantor is
not a party to such agreement. Failure of Lender to exercise any of the options
granted herein to Lender upon the happening of one or more of the events giving
rise to such options shall not constitute a waiver of the right to exercise the
same or any other option at any subsequent time in respect to the same or any
other event. The acceptance by Lender of any payment hereunder that is less
than payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of the right to exercise any of the options
granted herein to Lender at that time or at any subsequent time or nullify any
prior exercise of any such option without the express written acknowledgement
of the Lender.


 


11.  Authority.   Borrower (and the
undersigned representative of Borrower, if any) represents that Borrower has
full power, authority and legal right to execute, deliver and perform its
obligations pursuant to this Note, the Deed of Trust and the other Loan
Documents and that this Note, the Deed of Trust and the other Loan Documents
constitute valid and binding obligations of Borrower.


 


12.  Notices.   All notices or other
communications required or permitted to be given pursuant hereto shall be given
in the manner specified in the Deed of Trust directed to the parties at their
respective addresses as provided therein.


 


13.  Exculpation.   Subject to the
qualifications below, Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in this Note, the
Deed of Trust or in any of the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower, except that Lender may
bring a foreclosure action, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
its interests under this Note, the Deed of Trust and the other Loan Documents,
or in the Trust Property, the Rents (as defined in the Deed of Trust), or any
other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower’s interest in the Trust Property, in the Rents and in any
other collateral given to Lender. By accepting this Note, the Deed of Trust and
the other Loan Documents, Lender agrees that it shall not except as otherwise
herein provided, sue for, seek or demand any deficiency judgment or other
monetary judgment against Borrower in any such action or proceeding under or by
reason of or under or in connection with this Note, the Deed of Trust or the
other Loan Documents. The provisions of this paragraph shall not, however, (a)
constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents; (b) impair the right of Lender to name
Borrower as a party defendant in any action or suit for foreclosure and sale
under the Deed of Trust; (c) affect the validity or enforceability of any
guaranty or indemnity made in connection with the Loan or any of the rights and
remedies of the Lender thereunder; (d) impair


 


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the right of Lender to obtain the appointment
of a receiver; (e) impair the enforcement of the Assignment of Leases; or (f)
constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the extent of, but only to the extent of, any loss, damage, cost, expense,
liability, claim or other obligation incurred by Lender (including attorneys’
fees and costs reasonably incurred) arising out of or in connection with the
following:


 


(i)            Actual fraud and intentional
misrepresentation by Borrower or any of its partners, officers, principals,
members, any guarantor or any other person authorized to make statements or
representations, or act, on behalf of Borrower in connection with the Loan;


 


(ii)           Affirmative acts of physical waste
committed on the Trust Property; damage to the Trust Property as a result of
the intentional misconduct of Borrower or any of its principals, officers,
general partners or members, or any agent or employee of any such persons; or
the removal of any portion of the Trust Property in violation of the terms of
the Loan Documents following and during the continuance of an Event of Default;


 


(iii)          subject to any right to contest such
matters, as provided in the Deed of Trust, failure to pay any valid taxes and
assessments, mechanic’s liens, materialmen’s liens or other liens which could
create liens on any portion of the Trust Property which would be superior to
the lien or security title of the Deed of Trust or the other Loan Documents, to
the full extent of the amount claimed by any such lien claimant;


 


(iv)          all legal costs and expenses
(including attorneys’ fees) reasonably incurred by Lender in connection with
litigation or other legal proceedings involving the collection or enforcement
of the Loan or preservation of Lender’s rights under the Loan Documents,
including any costs incurred by Lender arising from or relating to the filing
of a petition under the U.S. Bankruptcy Code by or against Borrower, other than
those customarily incurred by a lender in realizing upon its lien in an
uncontested foreclosure sale after an undisputed default; provided,
however, that no liability for any such
costs and expenses shall arise in connection with a bona fide good faith
litigation;


 


(v)           the breach in any material respect of
any representation, warranty, covenant or indemnification provision in that
certain Environmental and Hazardous Substance Indemnification Agreement of even
date herewith given by Borrower to Lender or in the Deed of Trust concerning
environmental laws, hazardous substances or asbestos;


 


(vi)          the misapplication or conversion by
Borrower of (A) any insurance proceeds paid by reason of any loss, damage or destruction
to the Trust Property, (B) any awards or other amounts received in connection
with the condemnation of all or a portion of the Trust Property, or (C) any
Rents following and during the continuance of an Event of Default;


 


(vii)         any security deposits or other
refundable deposits collected with respect to the Trust Property which are not
delivered to Lender upon a sale or foreclosure of the Trust Property or other
action in lieu thereof, except to the extent any such security


 


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deposits were applied in
accordance with the terms and conditions of any of the Leases (as defined in
the Deed of Trust) prior to the occurrence of the Event of Default that gave
rise to such sale or foreclosure or action in lieu thereof; and


 


(viii)        failure to maintain any Policies
required under Paragraph 2 of the Deed of Trust, or to pay or provide the
amount of any insurance deductible, to the extent of the applicable deductible,
following a Casualty (as defined in the Deed of Trust) or other insured event
(other than a circumstance of non-conformity arising by reason of a change in
insurance market circumstance subsequent to the origination of the Loan which
prevents such maintenance).


 


With respect to liability
arising under clause (iii) and (viii) above, such liability shall not arise to
the extent, but only the extent, the required amounts had been paid by Borrower
to Lender pursuant to the Deed of Trust or the failure to pay, maintain or
provide in any such case is due to the operation of the Trust Property failing
to generate revenues sufficient, on a first priority basis, for the payment or
maintenance thereof.


 


Notwithstanding anything to
the contrary in this Note or any of the Loan Documents, (A) Lender shall not be
deemed to have waived any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a
claim for the full amount of the Debt secured by the Deed of Trust or to
require that all collateral shall continue to secure all of the Debt owing to
Lender in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrower in the event that: (i) the Trust Property or any part
thereof becomes an asset in a voluntary bankruptcy or voluntary insolvency
proceeding under the U.S. Bankruptcy Code; (ii) Borrower engages in any
business activities other than those related to the Trust Property or violates
the restrictions on indebtedness set forth in the Deed of Trust; (iii) Borrower
fails to obtain Lender’s prior written consent to any subordinate financing or
other voluntary lien encumbering the Trust Property or any interests in Borrower;
(iv) Borrower fails to obtain Lender’s prior written consent to any assignment,
transfer, or conveyance of the Trust Property or any interest therein as
required by the Deed of Trust; or (v) there is an intentional breach of, or
deliberate failure to perform, any of the representations, covenants and
agreements of Section 1(I) of the Deed of Trust occurs.


 


14.  WAIVER OF JURY TRIAL.   BORROWER AND LENDER HEREBY EACH AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND EACH WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION
ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER AND BORROWER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER AND LENDER.


 


15.  Transfer.   Lender shall have
the unrestricted right at any time or from time to time to sell this Note and
the loan evidenced by this Note and the Loan Documents or participation
interests therein.


 


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Borrower shall execute, acknowledge and
deliver any and all instruments requested by Lender to satisfy such purchasers
or participants that the unpaid indebtedness evidenced by this Note is
outstanding upon the terms and provisions set out in this Note and the other
Loan Documents. To the extent, if any, specified in such assignment or
participation, such assignee(s) or participant(s) shall have the rights and
benefits with respect to this Note and the other Loan Documents as such
assignee(s) or participant(s) would have if they were the Lender hereunder.


 


16.  APPLICABLE LAW; JURISDICTION AND VENUE.   THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE IN WHICH THE LAND (AS DEFINED IN THE DEED OF TRUST) IS
LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER AND
LENDER, TO THE FULL EXTENT PERMITTED BY LAW, EACH HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE WHERE THE LAND IS LOCATED
OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO
THIS NOTE, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN EITHER THE
CITY OR THE COUNTY WHERE THE LAND IS LOCATED, (C) SUBMITS TO THE JURISDICTION
OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT
BORROWER AND LENDER WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM AND BORROWER AND LENDER EACH FURTHER CONSENTS AND AGREES TO SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO BORROWER
OR LENDER, AS THE CASE MAY BE, AT THE ADDRESS FOR NOTICES DESCRIBED ON THE
FIRST PAGE HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT
THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED
BY LAW).


 


17.  Special State Provisions.


 


(a)           In
the event of any conflict between the terms and provisions of this paragraph
and any other provision of this Note, the terms and provisions of this
paragraph shall govern and control.


 


(b)           Any
action, suit or proceeding arising out of or relating to this Note or any of
the other Loan Documents may be instituted in the Circuit Court of the city or
county in which the Trust Property is located or in the United States District
Court for the district in which the Trust Property is located (assuming such
Court has jurisdiction), at the option of Lender, and Borrower waives all
objections it may have to such venue and irrevocably submits to the
jurisdiction of either of such Courts in any such action, suit or proceeding.
Nothing herein shall affect the right of Lender to proceed in any other court
having jurisdiction over any such action, suit or proceeding.


 


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18.  Notices.   All notices required
or permitted to be given under this Note shall be delivered in the manner set
forth in Section 37 of the Deed of Trust.


 


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Signature
page(s) follow


 


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Borrower has duly executed
this Note to be effective as of the date first above written.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RKB WILLOWWOOD LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  RKB Willowwood Manager LLC

  
	
   

  	
   

  	
  Its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


 


Signature
Page to Deed of Trust Note