exv10w42






EXHIBIT 10.42




PROMISSORY NOTE




	 	 	 

	$5,300,000

	 	Tucson, Arizona
	 

	 	July 10, 2002





FOR VALUE RECEIVED, the undersigned, CRESTLINE INVESTMENTS, L.L.C., an Arizona limited liability
company (hereinafter called “Maker”), promises to pay to the order of THRIVENT FINANCIAL FOR
LUTHERANS, a Wisconsin corporation (hereinafter called “Holder”), by preauthorized Automated
Clearinghouse transaction (“ACH”) or such other reasonable method as Holder directs, to its
account at Bank One, Milwaukee, Wisconsin, Attention: Thrivent Financial for Lutherans, Account
No. 510100001 (Thrivent Loan No. 86070), or at such other place as Holder may from time to time
designate in writing, the principal sum of FIVE MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS
($5,300,000.00) plus interest calculated on a daily basis (based on a 360-day year) from the date
that Holder disburses the principal sum on the principal balance from time to time outstanding as
hereinafter provided, principal, interest and all other sums payable hereunder to be paid in
lawful money of the United States of America as follows:





	A.	 	Initially, interest shall accrue at the rate of 6.25% per annum.
	 
	B.	 	All interest accruing during the period commencing on the date of this Promissory Note
(this “Note”) through and including the fourteenth (14th) day of July, 2002,
shall be due
and payable on the date of this Note; such interest payment shall be deducted by Holder
from the commitment fee delivered to Holder by Maker. Thereafter, interest and
principal shall be due and payable in consecutive, equal monthly installments of Thirty-
Four Thousand Nine Hundred Sixty-Three and No/100 Dollars ($34,963.00) each,
commencing on the fifteenth (15th) day of August, 2002 (hereinafter the
“Commencement Date”) and continuing on the fifteenth (15th) day of each and every
month thereafter until this Note shall be paid in full or until the interest rate is reset
pursuant to Paragraph C.
	 
	C.	 	Holder has the option, upon ninety (90) days prior written notice, to increase or
decrease the interest rate at the end of the third loan year, at the end of the sixth loan
year and at the end of the ninth loan year (each a “Reset Date”). Holder may, on any Reset
Date, reset the interest rate to Holder’s then-current interest rate for similar loans. In
the event Holder elects to exercise its option to reset the interest rate on any Reset Date,
the principal and interest payment shall be recalculated by Holder based on the principal
balance outstanding on the Reset Date and an amortization period calculated by subtracting
the number of months elapsed under this Note from 300. Payments will be due in the amount
calculated by Holder commencing on the next regularly scheduled payment date and on the
fifteenth (15th) day of each and every month thereafter until this Note shall be
paid in full or until the interest rate is reset on a subsequent Reset Date pursuant to this
paragraph.





05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070




 









 






	D.	 	If not sooner paid, the entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable hereunder shall be due and payable in full on the
fifteenth (15th) day of July, 2027.




Maker agrees to an effective rate of interest that is the rate stated above plus any additional
rate of interest resulting from any other charges in the nature of interest paid or to be paid in
connection with this Note.



If any payment required under this Note is not paid when due, then, at the option of Holder,
Maker shall pay a “late charge” equal to the greater of three percent (3%) of the amount of that
payment or Five Hundred and No/100 Dollars ($500.00), to compensate Holder for administrative
expenses and other costs of delinquent payments. This late charge may be assessed without notice,
shall be immediately due and payable or, at the option of Holder, added to principal, and shall
be in addition to all other rights and remedies available to Holder.



Acceptance by Holder of any payment which is less than payment in full of all amounts due and
payable at the time of such payment shall not constitute a waiver of Holder’s right to demand
payment of the balance due, or any other rights of the Holder at that time or any subsequent
time.



All payments on this Note shall be applied first to the payment of any costs, fees or other
charges incurred in connection with the indebtedness evidenced hereby, next to the payment of
accrued interest and then to the reduction of the principal balance.



This Note is secured by, among other things, a Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing (“Deed of Trust”) of even date herewith, executed by Maker, as
trustor, in favor of the Holder, as beneficiary, encumbering property situate in Pima County,
Arizona. Such Deed of Trust and all other documents or instruments securing the indebtedness
evidenced by this Note or executed or delivered in connection with the indebtedness evidenced by
this Note are hereinafter called the “Loan Documents.” If Holder is made a party to any
litigation by reason of this Note or any of the Loan Documents, Maker agrees to pay all expenses
of Holder and such expenses shall bear interest at the rate of fifteen percent (15%) from the
date such expenses are actually paid by Holder. Maker specifically waives trial by jury for any
matter involving this Note or the Loan Documents.



Time is of the essence of this Note.



Upon the occurrence of any of the following events (“Events of Default”), Holder may, at its sole
option, to be exercised at any time thereafter, with notice to Maker of such option being hereby
expressly waived, declare the entire unpaid principal balance of this Note and all unpaid,
accrued interest thereon, immediately due and payable:





	(a)	 	The failure of Maker to make any payment of principal and/or interest on this Note
within ten (10) days of its due date;
	 
	(b)	 	The failure of Maker to comply with any provisions, obligations, or other representations
contained in this Note or any of the Loan Documents and such failure is not cured by the
performance so required, and the remediation of any consequences the delay in such





05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070




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	 	 	performance may have caused, within fifteen (15) days after notice of such
failure is given to Maker, provided, however, any failure shall be deemed an Event of
Default upon the occurrence thereof (for which no notice shall be required and no cure
period shall be available to Maker) if such failure (i) is the third (3rd) to occur within
any period of twelve (12) consecutive months (and notice of the first two (2) failures has
been sent to Maker), regardless of whether the same or different failures are involved and
notwithstanding that Maker may have cured within any applicable cure period any previous
failures occurring within such twelve (12) month period, or (ii) in the reasonable
discretion of Holder, constitutes or creates a clear and present emergency or threat to
property described in the Deed of Trust or the lien or security interest created in any of
the Loan Documents. In the event the fifteen (15) days cure period applies to a failure
under this subparagraph (b) and such failure cannot, in the sole discretion of Holder,
reasonably be cured within said fifteen (15) day period, Maker shall have an additional
thirty (30) days to cure such failure so long as Maker is diligently pursuing said cure.
In no event shall the cure period exceed the total of forty-five (45) days.




The failure of Holder to exercise the foregoing option or any other right or remedy available
hereunder, under any Loan Document, at law, or in equity, shall not constitute a waiver of, or
impair, the right to exercise said option or any other right or remedy in the event of any
continuing or subsequent such failure.



After maturity of any installment of the Note (and such failure to pay such installment continues
for ten (10) days) or after maturity of this Note, including maturity upon acceleration, the
amount of the installment or the unpaid principal balance, all accrued and unpaid interest and all
other amounts payable hereunder, as applicable, shall bear interest, until paid at the rate of
fifteen percent (15%) from and after maturity until paid. Maker shall pay all costs and expenses,
including actual and reasonable attorneys’ fees and court costs, incurred in the collection or
enforcement of all or any part of this Note. All such costs and expenses shall be secured by the
Deed of Trust and by all other Loan Documents. In the event of a dispute between Maker and Holder
regarding the interpretation of the Note or the Loan Documents the prevailing party shall be
entitled to court costs and reasonable attorneys’ fees incurred resolving the interpretation and
such court costs and attorneys’ fees shall be set by the court and not by jury (trial by jury
being waived) and shall be included in any judgment.



Notwithstanding the above, Maker agrees that in the Event of Default, followed by acceleration of
the maturity of this Note, a tender of an amount necessary to satisfy the entire indebtedness
shall be deemed a voluntary prepayment, and to the extent permitted by law, shall include the
following prepayment privilege fee; provided further that if such tender occurs during the (i)
loan year one through the first six months of the second loan year; (ii) loan year four through
the first six months of the fifth loan year; (iii) loan year seven through the first six months of
the eighth loan year; and (iv) loan year ten through the first six months of the eleventh loan
year, Maker shall pay a prepayment fee equal to the greater of (i) eight percent (8%) of the
outstanding principal balance or (ii) the amount prepaid times the privilege rate (defined below).
A loan year is each twelve (12) month period starting one month prior to the Commencement Date.




05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070




3









 




Except as provided below, Maker shall have no right to prepay the principal balance of
this Note during (i) loan year one through the first six months of the second loan year; (ii) loan
year four through the first six months of the fifth loan year; (iii) loan year seven through the
first six months of the eighth loan year; and (iv) loan year ten through the first six months of
the eleventh loan year (the “Prohibited Prepayment Periods”). Commencing with the (a) last six
months of the second loan year through the first nine months of the third loan year; (b) last six
months of the fifth loan year through the first nine months of the sixth loan year; (c) last six
months of the eighth loan year through the first nine months of the ninth loan year; and (d) last
six months of the eleventh loan year through the first nine months of the
twelfth loan year (each a “premium prepayment period”), Maker shall have the right, following the
giving of not less than sixty (60) days prior written notice to Holder, to prepay all (and not
less than all) of the then outstanding principal balance of this Note, together with all interest
accrued, but unpaid thereon to the date of prepayment, plus a premium equal to the greater of (i)
one percent (1%) of the outstanding principal balance of this Note or (ii) the amount prepaid
times the privilege rate. The privilege rate shall be equal to the product obtained by taking the
difference between (1) six and one-quarter percent (6.25%) or the interest rate in effect at the
time of such calculation in the event that Holder has exercised its option to reset the interest
rate and (2) the market yield of U.S. Treasury issues as quoted daily in The Wall Street
Journal which have the closest maturity date (month and year) to the date this Note can be
prepaid at par and multiplying this difference by the remaining term of the premium prepayment
period (the remaining term to be expressed as a fraction equal to the number of days remaining in
the premium prepayment period over 365). The prepayment privilege fee will be reduced to a present
value on a per period basis discounted at the above Treasury issues rate. During the last three
months of (A) the third loan year; (B) the sixth loan year; (C) the ninth loan year; and (D) the
twelfth loan year, Maker shall have the right to prepay this Note in full, upon sixty (60) days
prior written notice to Holder, without premium.



UPON AT LEAST SIX (6) MONTHS PRIOR WRITTEN NOTICE, HOLDER HAS THE OPTION TO DECLARE THE ENTIRE
UNPAID PRINCIPAL BALANCE OF THE NOTE AND ALL UNPAID, ACCRUED INTEREST THEREON, IMMEDIATELY DUE
AND PAYABLE AT THE END OF THE TWELFTH (12TH) LOAN YEAR OR ANY TIME THEREAFTER.



Enforcement of Maker’s liability hereunder shall be limited to the secured property, and any
other collateral Holder may hold to secure payment of this Note, and Holder shall not be entitled
to seek or obtain any deficiency judgment against Maker, except that Maker shall be and remain
fully personally liable for the following:





	(i)	 	tenant security deposits with respect to each lease to the extent not used to satisfy
tenant arrearages of rent or to satisfy damages caused by tenant default;
	 
	(ii)	 	rents paid more than one (1) month in advance of its due date;
	 
	(iii)	 	rents and other similar sums received by Maker from the secured property after Maker has
failed to pay Holder any sum then due and payable or after an Event of Default unless
applied to (A) normal and necessary operating expenses of the secured property or (B) the
indebtedness evidenced by this Note (It is understood and agreed that all revenues





05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070




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	 	 	derived from the secured property are to be held by Maker as a trust fund to
be used first for the payments due under this Note and the then due and payable legitimate
operating expenses of the secured property and only after such payments shall the revenues
be used for Maker’s personal use and/or distribution.);
	 
	(iv)	 	insurance or condemnation proceeds used for purposes other than those set forth in Section
5 of the Deed of Trust, or as otherwise approved in writing by Holder;
	 
	(v)	 	amounts necessary to pay taxes, assessments or any other charges by a governmental entity
which are a lien upon the secured property at the time Holder takes actual possession of the
secured property or has a receiver appointed;
	 
	(vi)	 	amounts necessary to pay any construction lien, mechanics’ liens, materialmen’s liens or
similar type lien against the secured property arising out of the acts or omissions of
Maker, provided, however, that Maker shall have the right to contest the amount or validity
of any such lien, by appropriate legal proceedings if: (x) the legal proceedings shall
operate to prevent the collection of such lien and (y) Maker shall deposit with Holder or
with the appropriate court or other governmental authority or title insurance company
satisfactory to Holder an amount, with such subsequent additions thereto as may be necessary
or sufficient in Holder’s opinion to pay such liens, together with all estimated interest
and penalties in connection therewith;
	 
	(vii)	 	taxes and fees required to be paid to any government entity for the transfer of title;
	 
	(viii)	 	damages suffered by Holder due to material misrepresentation or waste committed by Maker,
its agents or employees; and
	 
	(ix)	 	all actual and reasonable attorneys’ fees and other costs (including interest accrued as
provided herein on any delinquent payments) incurred by Holder in order to recover from
Maker any amounts for which Maker remains personally liable as provided in subparagraphs (i)
through (viii) above.




Further, Maker shall remain personally liable for the prompt payment of the Loan, to the extent
of the then outstanding principal amount of the Loan, plus accrued but unpaid interest thereon
and any other sums due pursuant to this Note or the Loan Documents, and actual and reasonable
attorneys’ fees and all other costs of collection, upon the occurrence of any of the following:





	(i)	 	Maker used fraud to induce Holder to make the Loan evidenced by this Note;
	 
	(ii)	 	Holder is prevented from acquiring title to the secured property following an Event of
Default and Holder is unsuccessful in collecting on any title insurance policy that it holds
in connection with the secured property because of forfeiture of Maker’s title under
federal, state or local laws;
	 
	(iii)	 	Maker voluntarily files a petition or commences any case or proceeding under any
provision or chapter of the United States Bankruptcy Code or any member of Maker files an
involuntary petition against Maker;





05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070




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	(iv)	 	There is an unconsented transfer of interest in the secured property as
defined in Section 6.4 of the Deed of Trust.




Maker, sureties, guarantors and endorsers hereof: (a) agree to be jointly and severally bound,
(b) severally waive any homestead or exemption right against said debt, (c) severally waive
demand, diligence, presentment for payment, protest and demand, and notice of extension,
dishonor, protest, demand and nonpayment of this Note, (d) consent that Holder may extend the
time of payment or otherwise modify the terms of payment of any part or the whole of the debt
evidenced by this Note, at the request of any other person primarily liable hereon, and such
consent shall not alter nor diminish the liability of any person, and (e) agree that Holder may
setoff at any time any sums or property owed to any of them by Holder.



This Note shall be binding upon Maker and its successors and assigns and shall inure to the
benefit of the Holder hereof, and any subsequent holders of this Note, and their successors and
assigns.



All notices required or permitted in connection with this Note shall be given at the place and in
the manner provided in the Deed of Trust for the giving of notices.



In the event of any inconsistency between the provisions of this Note and those of the Loan
Documents, the provisions of this Note shall control over those of the Loan Documents.



This Note shall in all respects be governed and construed in accordance with the laws of the State
of Arizona. Venue shall be appropriate only in Tucson, Arizona. The Maker recognizes that a
Court may find that certain provisions of this Note may test and/or exceed the limits imposed by
law with respect to notice and/or waivers of rights. However, the Maker intends for the law to be
interpreted as broadly as possible to support the enforcement of this Note in accordance with its
terms. If any provision of this Note is found by a court of law to be illegal, unenforceable, or
contrary to public policy, then it is the intent of Maker that such provision be given force to
the fullest possible extent permitted by law, and that the remainder of the Note be construed as
if such illegal provision were not contained therein, and that the rights, obligations, and
interests of Maker and Holder under the remainder of the Note shall continue in full force and
effect. For example, if from any circumstances whatsoever, fulfillment of any provision in this
Note or the Loan Documents, would result in an amount paid or agreed to be paid which exceeds the
highest lawful rate permissible under applicable usury laws, then the obligation to be fulfilled
shall be reduced to the limit of such validity, and if Holder shall receive as interest an amount
which would exceed the highest lawful rate, such amount shall be applied to the reduction of the
unpaid principal balance due hereunder in the inverse order of maturity without the application of
a prepayment privilege fee, and not to the payment of interest.




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070




6









 




IN WITNESS WHEREOF, these presents are executed as of the date first written above.




	 	 	 	 	 

	CRESTLINE INVESTMENTS, L.L.C.,	 	 
	an Arizona limited liability company	 	 
	 
	 	 	 	 
	By: 

Name:
Its:

	 	/s/ Alvin Kivel
 

Alvin Kivel
 

Manager
	 	  






05-115863.03

Promissory Note

Crestline Investments, L.L.C.

Tucson, Arizona

Thrivent Loan No. 86070