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PROMISSORY NOTE
$10,000,000.00 _____________, 2000
New York, New York
FOR VALUE RECEIVED, OAK INVESTORS, LLC, a Delaware limited
liability company ("Borrower"), hereby promises to pay to CREDIT SUISSE FIRST
BOSTON MORTGAGE CAPITAL LLC, a Delaware limited liability company having an
address at 11 Madison Avenue, New York, New York 10010 and its successors and
assigns ("Lender"), by wire transfer to Bankers Trust NYC, ABA No. 021-001-033,
for the account of Credit Suisse First Boston Mortgage Capital LLC, Account No.
01-001-355, Reference No.___________________/Michael J. Arman, or to order or in
such other manner, to such other account or at such other place as Lender may
from time to time designate to Borrower in writing, the principal sum of Ten
Million and 00/100 Dollars ($10,000,000.00) or such lesser amount as may have
been advanced hereunder (the "Principal Sum"), in lawful money of the United
States of America, together with interest on said Principal Sum, or so much
thereof as shall be outstanding hereunder from time to time, to be computed from
the date hereof at the rates and in the amounts hereinafter set forth. The
Principal Sum shall be reduced by any payments in reduction of principal made by
Borrower from time to time.
Borrower hereby covenants with Lender as follows:
SECTION 1. As used in this Note the following terms
shall have the meanings provided for below:
"Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in the City of New York are authorized or obligated by law or
executive order to close.
"Event of Default" shall have the meaning
ascribed thereto in Section 17.
"Gross Revenues" shall mean for any
calendar month, the gross amount of all revenues actually received by
Borrower during such calendar month for or with respect to its operations and
assets, including, without limitation, amounts released from Permitted
Reserves and which are not applied toward satisfying the cost or contingency
for which the same had been reserved. Gross Revenues shall exclude the
capital contributions and loans made by the members of Borrower pursuant to
the LLC Agreement.
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"LLC Agreement" shall mean that certain
Operating Agreement of Borrower, by and between PTG Holdings, Inc., a
Delaware corporation, and Arlen Capital, LLC, a California limited liability
company.
"Loan Documents" shall have the meaning
ascribed thereto in Section 5 below.
"Loan Rate" shall mean ten percent (10%)
per annum, but in no event in excess of the maximum permissible interest rate
then in effect in the State of New York.
"Maturity Date" shall have the meaning
ascribed thereto in Section 3 below.
"Net Revenues" shall mean for any
calendar month, the amount by which (i) the sum of (x) Gross Revenues and (y)
cash on hand, exceeds (ii) Operating Expenses for, or on account of, such
calendar month.
"Operating Expenses" shall mean for any
calendar month, all of the reasonable direct costs and expenses of Borrower's
operations (including, without limitation, due diligence expenses and
organizational expenses of Borrower); provided, however, that such amounts
shall not exceed the amounts set forth in a budget approved by Lender,
without the prior written consent of Lender. Operating Expenses shall exclude
all payments of interest, additional interest, principal and other sums due
under this Note.
"Permitted Reserves" shall mean all
reserves approved by Lender which, if paid currently, would constitute
Operating Expenses.
"Sale Date" shall mean the date the
entirety of the Units are sold by Borrower.
"Subordinate Note" shall mean those certain
Promissory Notes dated June 8, 1998 and November 16, 1998, as amended, made by
Borrower to the order of Lender in the original principal amount of $500,000.00
and $8,000,000 respectively.
"Units" shall mean the partnership
interests or other economic interests of the Target (as defined in the LLC
Agreement) which have been acquired by Borrower from time to time.
SECTION 2. INTEREST RATE. Borrower shall pay to
Lender, monthly in arrears, base interest on the unpaid balance of the
Principal Sum calculated on the basis of a year of 360 days for the actual
number of days elapsed (i) from the date hereof through and until the
Maturity Date, at the Loan Rate, and (ii) from and after the Maturity Date
and until the Principal Sum and all other sums then due and payable under
this Note have been paid in full, at a rate equal to the lesser of (x) six
hundred (600) basis points per annum above the Loan Rate and (y) the maximum
lawful non-usurious contract rate of interest allowed by applicable law (the
"Default Rate").
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SECTION 3. MATURITY DATE. The entire unpaid balance
of the Principal Sum, together with all interest accrued and unpaid thereon
(including the aggregate Monthly Shortfall, and interest thereon), and all
other sums then due and payable to Lender under this Note and under the Loan
Documents (as hereinafter defined) shall be due and payable in full on April
30, 2001; PROVIDED, HOWEVER, that mandatory prepayment of all or a portion of
this Note may be required under certain circumstances as provided herein; and
PROVIDED, FURTHER, that upon the occurrence of an Event of Default (as
hereinafter defined), at the option of Lender, the entire unpaid balance of
the Principal Sum, together with all interest accrued and unpaid thereon
(including the aggregate Monthly Shortfall, and interest thereon) and all
other sums then due and payable hereunder or under the Loan Documents, shall
become immediately due and payable (April 30, 2001, or such earlier date to
which the maturity of this Note is accelerated following the occurrence of an
Event of Default or otherwise, shall be referred to as the "Maturity Date").
SECTION 4. INTEREST AND PRINCIPAL PAYMENTS; FUNDING
LOSSES; CHANGES IN LAW. The Principal Sum and interest thereon shall be paid
by Borrower to Lender in accordance with the further provisions of this
Section 4.
4.1 (a) On the eleventh day of the month
immediately following the date of this Note, and on the eleventh day of each
of the succeeding months thereafter to and including the Maturity Date (each,
a "Payment Date"), Borrower shall pay to Lender interest on the Principal Sum
at the rate set forth in Section 2 hereof. Borrower covenants and agrees that
it shall use and apply an amount equal to the Net Revenues to pay interest at
the interest rate due in accordance with the terms hereof, PROVIDED, HOWEVER,
that if and to the extent that, in any calendar month, the Net Revenues are
insufficient to pay in full the installment of interest then due under this
Note (the "Monthly Debt Service") in accordance with the terms of the first
sentence of this Section 4.1 (the amount of such deficiency being hereinafter
referred to as the"Monthly Shortfall"), then Borrower's failure to pay the
Monthly Shortfall on the due date therefor shall not constitute an Event of
Default hereunder or under the Loan Documents; PROVIDED, FURTHER, that
Borrower shall in no event be relieved of its obligation to pay (i) so much
of the scheduled installment of interest at the interest rate then payable
hereunder which is equal to the available Net Revenues, and (ii) the Monthly
Shortfall, it being understood and agreed that such Monthly Shortfall shall
be aggregated with the Monthly Shortfall, if any, for all prior months and
such sum shall itself, together with the Monthly Shortfall for all such prior
months, bear interest at the interest rate then payable hereunder, compounded
monthly. In the event that Net Revenues for a particular month exceed
interest at the interest rate then due hereunder for such month on the sum of
(x) the Principal Sum plus (y) the aggregate Monthly Shortfall (the amount of
such excess, the "Monthly Excess") and there exists a Monthly Shortfall for
any prior month(s), Borrower shall pay to Lender the amount of such Monthly
Excess in reduction of the aggregate Monthly Shortfall remaining unpaid,
together with accrued and unpaid interest thereon at the interest rate then
due hereunder, compounded monthly. On the Maturity Date, or any earlier date
of acceleration pursuant to this Note or any of the Loan Documents, Borrower
shall pay the aggregate unpaid Monthly Shortfall and interest thereon,
together with all then unpaid principal and other sums due under this Note.
(b) In addition to the monthly payments
required to be made by Borrower to Lender under the provisions of Section
4.1(a) above, commencing
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on the eleventh day of the month immediately following the date of this Note,
and on the eleventh day of each of the succeeding months thereafter, to and
including the Maturity Date, Borrower shall pay to Lender, on account of and in
reduction of the Principal Sum and all other sums then due and payable to Lender
under this Note and under the Loan Documents, until paid, all Net Revenues for
the immediately preceding calendar month remaining after payment in full of all
sums required to be paid under Section 4.1(a) above and under Section 4.1(a) of
the Subordinate Note. Each such monthly payment shall be accompanied by a
certificate showing Borrower's calculation of Net Revenues, as aforesaid, with
appropriate back-up documentation.
4.2 For purposes of making payments
hereunder, but not for purposes of calculating interest accrual periods, if
the eleventh (11th) day of a given month is not a Business Day, the amounts
due on the Payment Date for such month shall be due on the next succeeding
Business Day. All amounts due under this Note shall be payable without
setoff, counterclaim or any other deduction whatsoever.
4.3 On the Maturity Date, Borrower shall pay to
Lender the entire unpaid balance of the Principal Sum, together with all accrued
and unpaid interest thereon (including, without limitation, the aggregate
Monthly Shortfall, and interest thereon).
SECTION 5. SECURITY. This Note is secured by, INTER
ALIA, (i) a certain Security and Pledge Agreement of even date herewith by
and between Borrower, as Pledgor, and Lender, as Pledgee (the "Security
Agreement"), (ii) a certain Pledge and Security Agreements dated June 18,
1998 by and between PTG Holdings, Inc. ("PTG") and Arlen Capital, LLC
("Arlen"), as Pledgors, and Lender, as Pledgee, as amended by First Amendment
to Pledge Agreement dated November 16, 1998 by and among said parties (as so
amended, the "Pledge"), (iii) a certain Pledge and Security Agreement dated
November 16, 1998 by and among said parties, and (iv) one or more UCC-1
financing statements naming Lender as the secured party thereunder (the
Security Agreement, the Pledge and all other loan agreements, documents and
instruments executed and delivered by Borrower, PTG or Arlen in connection
with this Note, if any, as the same may be modified, amended, supplemented,
restated or replaced, collectively, the "Loan Documents").
SECTION 6. OPTIONAL ACCELERATION BY LENDER.
Notwithstanding any provision in this Note to the contrary, the entire unpaid
balance of the Principal Sum, together with all interest accrued and unpaid
thereon and all other sums, if any, then due and payable by Borrower to
Lender hereunder or under the Loan Documents, shall become due and payable,
at Lender's election (i) upon the Sale of the Units, or any portion thereof,
without the prior written consent of Lender, (ii) upon the dissolution of
Borrower, and/or (iii) upon the occurrence of any other Event of Default.
SECTION 7. PREPAYMENT BY BORROWER. The outstanding
Principal Sum evidenced by this Note may be prepaid in whole, but not in
part, only upon and simultaneously with a sale of the Units for which the
prior written consent of Lender shall have been received by Borrower (an
"Approved Sale"), upon at least ten (10) days' prior written notice to
Lender, provided that Borrower pays to Lender at the same time (i) all
interest accrued and unpaid on the Principal Sum to and including the date of
such payment, (ii) all other sums, if any, then due and payable by Borrower
to Lender
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hereunder and under the Loan Documents. Any prepayment prior to April 30,
2001 on a date other than a Payment Date shall, in all events, include
interest through the following Payment Date.
SECTION 8. LATE CHARGE. If payments of principal and/or
interest, or any other amounts due under this Note are not timely made or remain
overdue (determined, in the case of the Monthly Shortfall, if any, only after
taking into consideration the provisions of Section 4.1(a) above), Borrower
shall pay to Lender, promptly on demand, in order to compensate Lender for
expenses incurred by reason of such late payment (and in addition to all other
sums payable hereunder), a late payment fee equal to four percent (4%) of each
delinquent payment. Such late payment fee shall be in addition to, and shall in
no way limit, any and all other rights and remedies provided for in this Note or
in the Loan Documents which secure this Note, as well as any and all remedies
provided by law.
SECTION 9. BORROWER'S WAIVERS. Borrower, for itself
and its successors and assigns and any endorsers and guarantors of this Note
from time to time, hereby waives presentment for payment, demand, notice of
dishonor, protest, notice of protest and any other notice Borrower may
lawfully waive and any and all lack of diligence or delays in the collection
or enforcement hereof, and waives and renounces all rights to the benefits of
any statute of limitations and any moratorium, appraisal, exemption and
homestead rights now provided or which may hereafter be provided by any
federal or state statute, including, but not limited to, exemptions provided
or allowed under the Bankruptcy Reform Act of 1978, as amended, both as to
itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any
and all extensions, renewals and modifications hereof. Borrower consents to
any extension of time of payment hereof, release of all or any part of the
security for the payment of this obligation, and release of any party liable
for payment of this obligation, by Lender, from time to time, and any such
extension or release may be made without notice to any party and without
discharging any party's liability hereunder.
SECTION 10. NO WAIVER BY LENDER. No failure on the
part of Lender to exercise, and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
SECTION 11. WAIVER OF TRIAL BY JURY. BORROWER WAIVES AND
COVENANTS THAT BORROWER WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ACTION
BROUGHT ON, UNDER OR BY VIRTUE OF THIS NOTE OR IN ANY WAY CONNECTED TO THIS
NOTE.
SECTION 12. GOVERNING LAW. The provisions of this
Note shall be governed by and construed and interpreted in accordance with
the substantive laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
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SECTION 13. SEVERABILITY. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.
SECTION 14. NOTICES. Any notice, demand, consent,
approval, request, direction or other communication (any "Notice") required
or permitted hereunder or under any other documents in connection herewith
shall be in writing and shall be directed as follows:
If to Borrower: OAK INVESTORS, LLC
c/o Arlen Capital, LLC
1650 Hotel Circle North, Suite 200
San Diego, CA 92108
Attn: Don Augustine
Telephone No.: 619-686-2002
Facsimile No.: 619-686-2056
with a copy to:
PTG Holdings, Inc.
11 Madison Avenue
New York, NY 10010-3629
Attention: Mr. David Loo
Telephone No.: (212) 325-3974
Facsimile No.: (212) 325-8064
If to Lender: CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC
11 Madison Avenue
New York, New York 10010
Attn: Richard Ortiz
Telephone No.: (212) 325-3042
Facsimile No. (212) 325-8064
or to such changed address or changed telephone or facsimile number as a party
hereto shall designate to the other parties hereto from time to time in writing,
provided, however, that notices of change of address, or telephone or facsimile
number shall only be effective upon receipt.
Notices shall be (i) personally delivered (including delivery by
Federal Express or other comparable nation-wide overnight courier service) to
the offices set forth above, in which case they shall be deemed delivered on the
date of delivery (or the first Business Day thereafter if delivered on Saturday,
Sunday or a legal holiday) to said offices; (ii) sent by certified mail, return
receipt requested, in which case they shall be deemed delivered three (3) days
after the date of deposit in the U.S. Mail; or (iii) sent by means of a
facsimile transmittal machine, in which case they shall be deemed delivered (x)
on the Business Day so sent, if so sent prior to 4:00 p.m. (based upon the
recipient's time) of the Business Day so sent, and (y) on the Business Day
following the day so sent, if so sent on a non-Business Day or on or after 4:00
p.m. (based upon the recipient's time) of the Business Day so sent (unless
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actually received by the addressee on the day so sent), provided that any notice
sent by facsimile shall be accompanied by a confirmatory notice sent within 48
hours by one of the other methods for the giving of notice set forth in this
Section 14.
SECTION 15. SUCCESSORS AND ASSIGNS. The provisions of
this Note shall bind Borrower and its successors and assigns and inure to the
benefit of Lender and its successors and assigns.
SECTION 16. MISCELLANEOUS.
16.1 This Note may not be changed, amended,
modified or discharged orally, but only by an instrument signed by Borrower
and Lender, and may be waived only by an instrument in writing signed by the
party waiving compliance.
16.2 If any attorney is engaged: (i) to
collect or attempt to collect the Principal Sum, the interest thereon or any
other payment due Lender hereunder or under the Loan Documents, whether or
not legal proceedings are thereafter instituted by Lender; (ii) to represent
Lender in any bankruptcy, reorganization, receivership or other proceedings
affecting creditors' rights and involving a claim under this Note; (iii) to
protect the lien of the Loan Documents; (iv) to represent Lender in any other
proceedings whatsoever in connection with this Note or the Loan Documents
following an Event of Default, including post judgment proceedings to enforce
any judgment; or (v) in connection with seeking an out-of-court workout or
settlement of any of the foregoing, then Borrower shall pay to Lender all
reasonable costs, attorneys' fees and expenses in connection therewith, in
addition to all other amounts due hereunder.
16.3 Anything in this Note to the contrary
notwithstanding, in no event shall Borrower be obligated to make any payment of
interest or late charges, and in no event shall Lender be entitled to receive
payment of any such interest or charges, if and to the extent that such payment
would violate any usury laws of the State of New York applicable to this Note.
If payment of any such interest or charges is made by Borrower and received by
Lender and such payment is in violation of such usury laws, the portion of such
payment which exceeds the maximum allowable by or under such usury laws shall
not be or be deemed to be interest or late charges, but instead shall be applied
in reduction of the Principal Sum.
SECTION 17. EVENTS OF DEFAULT. Any of the following
shall constitute an "Event of Default" under this Note: (i) if Borrower shall
fail to make any payment under this Note as and when due hereunder, (ii) the
occurrence of any default under the Pledge or the Security Agreement or (iii)
the occurrence of any other default under the Loan Documents, after giving
effect to any applicable grace or cure period.
SECTION 18. EXCULPATION OF LENDER. Borrower agrees
that the obligations, if any, of Lender under or with respect to this Note do
not constitute personal obligations of the members, officers or employees of
Lender (collectively, the "Released Parties"), and shall not create or
involve any claim against, or any personal liability on the part of, any of
the Released Parties and that Borrower or any persons claiming by or under
Borrower shall look solely to the assets of Lender for satisfaction of any
liability of the Released Parties or any of them to Borrower.
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SECTION 19. EXCULPATION OF BORROWER'S MEMBERS. Lender
agrees that the obligations of Borrower under or with respect to this Note do
not constitute personal obligations of the members, managers, officers or
employees of Borrower or any members, managers, officers or employees of
Borrower's Manager (collectively, the "Borrower Released Parties"), and shall
not create or involve any claim against, or any personal liability on the
part of, any of the Borrower Released Parties and that Lender or any persons
claiming by or under Lender shall look solely to the assets of Borrower for
satisfaction of any liability of the Borrower Released Parties or any of them
to Lender. The provisions of this Section shall not, however, (i) constitute
a waiver, release or impairment of any obligation evidenced or secured by
this Note, or (ii) affect the validity or enforceability of any guaranty
securing this Note or any rights or remedies of Lender thereunder.
SECTION 20. CONSENT TO JURISDICTION; PROCESS.
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
OR FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE. LENDER MAY IN ITS SOLE
DISCRETION, ELECT THE STATE OF NEW YORK, NEW YORK COUNTY, OR THE UNITED
STATES OF AMERICA, FEDERAL DISTRICT COURT HAVING JURISDICTION OVER NEW YORK
COUNTY, AS THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM. IN
ANY SUIT, ACTION OR PROCEEDING AGAINST BORROWER, SERVICE OF PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH IN SECTION 14 HEREOF. NOTHING IN THIS SECTION SHALL AFFECT LENDER'S
RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW, OR LIMIT LENDER'S
RIGHT TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
IN WITNESS WHEREOF, Borrower has executed and delivered this
Note as of the day and year first set forth above.
OAK INVESTORS, LLC,
a Delaware limited liability company
By: Arlen Capital, LLC, Manager
By:-------------------
Name: Don Augustine
Title: Manager
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STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN DIEGO )
On the _________ day of ________________ , 2000, before me
personally came Don Augustine, to me known, who, being by me duly sworn, did
depose and say that he has an address at 1650 Hotel Circle North - Suite 200,
San Diego, California 92108, that he is the Manager of Arlen Capital, LLC, a
California limited liability company which is the Manager for Oak Investors,
LLC, the Delaware limited liability company described in and which executed the
foregoing instrument; that the execution of the foregoing instrument by Arlen
Capital, LLC was duly authorized according to the Limited Liability Company
Agreement of Oak Investors, LLC; and that he has the authority to and did
execute the foregoing instrument as the act and deed of Arlen Capital, LLC, as
Manager of said limited liability company.
[notary stamp] ---------------
Notary Public
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