Exhibit
10.3


 


THIS
JUNIOR NOTE IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT OF EVEN DATE
HEREWITH AMONG BANK OF AMERICA, N.A., AS SENIOR LENDER, BEHRINGER HARVARD PAL
I, LLC, AS JUNIOR LENDER, AND LEND LEASE (US) CAPITAL INC., AS SUBORDINATE
LENDER, AND NO INTEREST IN THIS JUNIOR LOAN NOTE SHALL BE TRANSFERRED TO ANY
PERSON EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH INTERCREDITOR AGREEMENT


 


Junior
Loan Note


 


	
  $25,000,000

  	
   

  	
  August 14, 2009

  



 


FOR VALUE RECEIVED, Rest Easy LLC, a Delaware limited
liability company (“Borrower”), hereby promises to pay to the order of Behringer
Harvard PAL I, LLC, a Delaware limited liability company, together with any and
all of its successors and assigns and/or any other holder of this Junior Loan Note
(this “Junior Note”), as lender (the “Lender”), without offset,
in immediately available funds in lawful money of the United States of America,
the principal sum of Twenty Five Million and No/100 Dollars ($25,000,000) (or
the unpaid balance of all principal advanced against this Junior Note, if that
amount is less), together with interest on the unpaid principal balance of this
Junior Note from day to day outstanding as hereinafter provided.


 


Section 1.               Interest Rate. Subject to
the provisions of Section 18 below, the principal balance of this Junior
Note outstanding from time to time shall bear interest at the rate of eighteen
percent (18.00%) per annum (the “Note Rate”). Except to the extent
otherwise required by Section 18 below, interest shall be computed
based on a three hundred sixty (360) day year comprised of twelve (12) months
of thirty (30) days each.


 


Section 2.               Payment Schedule and
Maturity Date. Principal and interest shall be payable in lawful
money of the United States to Lender at 15601 Dallas Parkway, Suite 600,
Addison, Texas 75001, or at such other place as the Lender may from time to
time designate in writing, such principal sum and interest to be paid in the
following manner:


 


(a)           On the first day of each calendar month during the
period (the “Years 1-2 Period”) beginning on October 1, 2009, and
ending on (and including) September 1, 2011, Borrower shall make payments
on this Junior Note as follows:


 


(i)            Borrower shall make a monthly payment of interest in
arrears calculated at the rate of ten percent (10%) per annum on the
outstanding principal balance of this Junior Note (the “Minimum Monthly
Payment”). For the avoidance of doubt, the phrase “outstanding principal
balance” as used in the immediately preceding sentence does not include accrued
and unpaid interest.


 


(ii)           In addition, if, in accordance with Section 2(g) below,
Lender exercises (or is deemed to exercise) the Expedited Payment Option (as
defined in 


 


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Section 2(g) below) during the Years 1-2 Period, then
Expedited Payments (as defined in Section 2(g) below) shall thereafter
be made to Lender.


 


(b)           On the first day of each calendar month during the
period (the “Years 3-4 Period”) beginning on October 1, 2011, and
ending on (and including) September 1, 2013, payments on this Junior Note shall
be made as follows:


 


(i)            Borrower shall pay (A) the Minimum Monthly
Payment, and (B) following the payment of the Senior Loan Indebtedness (as
defined in the Lock Box Agreement), accrued and unpaid interest in respect of
this Junior Note to the extent of cash flow available at priority Section 4.1(b)(xx)
of the Lock Box Agreement (as hereinafter defined).


 


(ii)           In addition, if as of the beginning of the Years 3-4
Period, Lender has previously exercised the Expedited Payment Option, then Expedited
Payments shall continue to be made to Lender. If Lender exercises the Expedited
Payment Option in accordance with Section 2(g) below during the
Years 3-4 Period, Lender shall thereafter receive Expedited Payments (in addition
to the Minimum Monthly Payments).


 


(c)           On the first day of each calendar month during the
period (the “Final Years Period”) beginning on October 1, 2013, and
ending on (and including) August 1, 2016, Borrower shall pay: (i) the
Minimum Monthly Payment, and (ii) accrued and unpaid interest, the
principal amount of this Junior Note, and all other amounts due under the
Junior Loan Documents to the extent of cash flow available to satisfy the
Junior Loan Indebtedness (as defined in the Lock Box Agreement) pursuant to the
applicable provisions of Section 4.1(c) of the Lock Box Agreement.


 


(d)           The entire remaining principal amount of this Junior
Note, all accrued and unpaid interest, and all other amounts due under the
Junior Loan Documents shall be due and payable in full on September 1,
2016 (the “Maturity Date”).


 


(e)           For the avoidance of doubt, it is hereby expressly
stipulated that, notwithstanding anything to the contrary contained herein or
in the Lock Box Agreement, Borrower shall be required to pay the Minimum
Monthly Payment on the first day of each calendar month beginning on October 1,
2009, and ending on (and including) August 1, 2016 (regardless of the
amount of cash flow generated from the Property (as hereinafter defined)) in
addition to all other amounts due and payable under this Junior Note. Further, it
is hereby expressly stipulated that Borrower shall be required to pay all
amounts payable under the Junior Loan Documents on the Maturity Date regardless
of the amount of cash flow generated from the Property.


 


(f)            Without in any way limiting the obligation of
Borrower to pay at least the Minimum Monthly Payment and other amounts becoming
due under this Junior Note as set forth herein, if at any time during the term
of this Junior Note, the payment made by Borrower pursuant to this Junior Note
is not sufficient to pay all interest accrued under 


 


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this Junior Note at the Note Rate, then all accrued but unpaid interest
(i) shall continue to accrue as interest and shall itself accrue interest
at the Note Rate compounded on a monthly basis, and (ii) shall be due and
payable as provided in this Junior Note.


 


(g)           As used herein, the term “Expedited Payment Option”
means the option of Lender to require payments to Lender of available cash flow
(“Expedited Payments”): (i) pursuant to and at priority Section 4.1(a)(xix)
of the Lock Box Agreement during the Years 1-2 Period, and (ii) pursuant
to and at priority Section 4.1(b)(xxi) of the Lock Box Agreement during
the Years 3-4 Period, to be applied towards payment of the Junior Loan
Indebtedness. During the Years 1-2 Period, Lender shall be deemed to have
exercised the Expedited Payment Option if (A) the Senior Loan (as defined
in the Junior Loan Agreement) is paid in full but all the First Priority
Conditions (as hereinafter defined) are not fulfilled, and (B) Lender
sends the Waiver of Payoff Notice defined in Section 3 below.
However, in the event of such deemed exercise by Lender, it shall be the
responsibility of Lender to send written notice to Borrower and the Cash
Management Agent (as defined in the Lock Box Agreement) that the Expedited
Payment Option has been exercised and that Lender is thereafter to receive
Expedited Payments. During the Years 3-4 Period, Lender shall have the right,
in its sole discretion, to exercise the Expedited Payment Option by sending written
notice to Borrower and the Cash Management Agent at any time after the Senior
Loan Indebtedness is paid in full. Upon the exercise (or deemed exercise) by
Lender of the Expedited Payment Option and delivery by Lender to Borrower and the
Cash Management Agent of the necessary payment information with respect to any
Expedited Payment, Expedited Payments shall be paid to Lender as set forth in,
as applicable, Section 2(a)(ii) and Section 2(b)(ii) above,
unless and until Lender otherwise instructs the Cash Management Agent (with a
copy to Borrower) in writing (which Lender reserves the right to do).


 


(h)           For purposes hereof, the term “First Priority
Conditions” means each of the following conditions: (i) the Senior
Loan is paid in full and the liens, assignments and security interests securing
the Senior Loan are no longer in effect, and (ii) the liens, assignments
and security interests securing the Junior Loan become first and prior to any
other liens, assignments and security interests affecting the Property (except
for any liens, assignments or security interests which Lender, in its sole
discretion, has voluntarily made superior to its liens, assignments and
security interests by execution of an instrument of subordination). The
reasonable judgment of Lender shall be conclusive as to whether the First
Priority Conditions have been fulfilled.


 


Section 3.               Acceleration of Maturity
upon Repayment of Senior Loan. If, at any time prior to
the Maturity Date, Borrower intends to pay the Senior Loan in full by any means
other than payments of cash flow made on the Senior Loan pursuant to the Lock
Box Agreement or payment resulting from the application of proceeds from a
Casualty or a Condemnation, then Borrower shall give Lender not less than
twenty (20) days’ prior written notice (the “Senior Loan Repayment Notice”)
before making final payment on the Senior Loan, setting forth the date upon
which Borrower will make final payment on the Senior Loan and describing the
source of funds for such final payment. Notwithstanding anything contained
herein to the contrary, if the Senior Loan is paid in full prior to the
Maturity Date but the remaining First Priority Conditions have 


 


3

















 


not been fulfilled, then concurrently
with making final payment on the Senior Loan, Borrower must also pay to Lender (a) the
remaining principal amount of this Junior Note, all accrued and unpaid interest
in respect of this Junior Note, and all other amounts due under the Junior Loan
Documents; and (b) the Prepayment Premium described in Section 6
below, if any, it being agreed that payment of the Junior Loan under the
circumstances described in this Section 3 shall be considered a
voluntary prepayment for purposes of calculating the Prepayment Premium.
Notwithstanding the preceding sentence, however, Lender shall have the right to
waive and decline such prepayment of the Junior Loan by sending written notice
to Borrower (the “Waiver of Payoff Notice”) within ten (10) days after
receiving the Senior Loan Repayment Notice, in which event Borrower shall pay
the Senior Loan in full without paying in full the indebtedness under this
Junior Note and the other Junior Loan Documents. The sending of a Waiver of
Payoff Notice by Lender shall not impair any rights of Lender with respect to
any future prepayment of this Junior Note (including, without limitation, the
right to collect any Prepayment Premium due under Section 6 hereof
in connection with such prepayment).


 


Section 4.               Security; Junior Loan
Documents. The security for this Junior Note includes (a) the
Construction Mortgages or Leasehold Deeds of Trust, Assignments, Security
Agreements and Fixture Filings (as the same may from time to time be amended,
restated, modified or supplemented, collectively, the “Mortgages”) of
even date herewith from Borrower to or for the benefit of Lender, conveying and
encumbering Borrower’s interest in certain real and personal property more
particularly described therein (the “Property”), and (b) a Lock
Box, Cash Management and Disbursement Agreement (as the same may from time to
time be amended, restated, modified or supplemented, the “Lock Box Agreement”)
of even date herewith among Borrower, Bank of America, N.A. (in its capacity as
Senior Lender), Lend Lease (US) Capital Inc., Bank of America, N.A. (in
its capacity as Cash Management Agent), and Lender. This Junior Note, the
Mortgages, the Lock Box Agreement and the Junior Loan Agreement between
Borrower and Lender of even date herewith (as the same may from time to time be
amended, restated, modified or supplemented, the “Junior Loan Agreement”)
and all other documents now or hereafter securing, guaranteeing or executed in
connection with the loan evidenced by this Junior Note (the “Junior Loan”),
as the same may from time to time be amended, restated, modified or
supplemented, are herein sometimes called individually a “Junior Loan
Document” and together the “Junior Loan Documents.”


 


Section 5.               Past Due Rate. So long as
any Event of Default (as hereinafter defined) exists hereunder, regardless of
whether or not there has been an acceleration of the indebtedness evidenced
hereby, and at all times after maturity of the indebtedness evidenced hereby
(whether by acceleration or otherwise), interest shall accrue on the
outstanding principal balance of this Junior Note and other amounts due under
the Junior Loan Documents at a rate per annum (the “Past Due Rate”) equal
to the lesser of (a) twenty three percent (23%) per annum, or (b) the
Maximum Lawful Rate (as hereinafter defined).


 


Section 6.               Prepayment. Borrower may not
prepay the principal balance of this Junior Note except as provided in this Section 6
below.


 


(a)           Except as provided in Section 6(c) below,
Borrower shall have no right to prepay the principal balance of this Junior
Note prior to the date (the “Full Disbursement 


 


4

















 


Date”) upon which the sum of Twenty Five Million and
No/100 Dollars ($25,000,000) has been disbursed by Lender to Borrower pursuant
to the Junior Loan Agreement.


 


(b)           During the period beginning on the Full Disbursement
Date, Borrower shall have the right to prepay this Junior Note upon fulfillment
of all the following conditions: (i) Lender shall have actually received
from Borrower prior written notice of (A) Borrower’s intent to prepay, (B) the
amount of principal which will be prepaid (the “Prepaid Principal”), and
(C) the date on which the prepayment will be made; (ii) each
prepayment shall be in the amount of $200,000 or a larger integral multiple of
$200,000 (unless the prepayment retires the outstanding balance of this Junior
Note in full); (iii) each prepayment shall be in the amount of 100% of the
Prepaid Principal, plus accrued unpaid interest thereon to the date of
prepayment, plus any other sums which have become due to Lender under the
Junior Loan Documents on or before the date of prepayment but have not been
paid; and (iv) simultaneously with such prepayment, Borrower shall pay to
Lender the Prepayment Premium (as hereinafter defined). For purposes hereof,
the “Prepayment Premium” shall mean an amount payable to Lender for the
privilege of prepaying this Junior Note calculated as follows: (1) if such
prepayment is made before the second (2nd) anniversary of this Junior Note, the Prepayment
Premium shall be equal to five percent (5%) of the Prepaid Principal; (2) if
such prepayment is made on or after the second (2nd) anniversary of this Junior Note but before the
third (3rd) anniversary
of this Junior Note, the Prepayment Premium shall be equal to four percent (4%)
of the Prepaid Principal; (3) if such prepayment is made on or after the
third (3rd) anniversary of this Junior Note but before the fourth (4th) anniversary of this Junior
Note, the Prepayment Premium shall be equal to three percent (3%) of the
Prepaid Principal; and (4) if such prepayment is made on or after the
fourth (4th) anniversary
of this Junior Note, no Prepayment Premium shall be payable.


 


(c)           Notwithstanding the foregoing provisions of this Section 6,
the conditions set forth in clauses (i), (ii) and (iii) of Section 6(b) above
shall not be applicable to prepayments of principal that result from payments
made in respect of the Junior Loan Indebtedness under the Lock Box Agreement
(it being expressly agreed that the Prepayment Premium shall be payable with
respect thereto, except as otherwise provided in the definition of Prepayment
Premium in Section 6(b) or in the last sentence of this Section 6(c));
provided, however, that Borrower shall give Lender prior written notice if
Borrower elects to expedite the repayment of principal under Section 4.1(a)(xix)
or Section 4.1(b)(xxi) of the Lock Box Agreement. Furthermore,
notwithstanding anything contained herein to the contrary, prepayment prior to the
Full Disbursement Date shall be permitted, and no Prepayment Premium shall be
payable by Borrower, if and to the extent (i) such prepayment results from
the exercise by Lender of the Expedited Payment Option, or (ii) such
prepayment results from the application of proceeds from a Casualty or a
Condemnation.


 


(d)           Except as otherwise expressly provided in the
definition of Prepayment Premium in Section 6(b) or in Section 6(c) above,
the Prepayment Premium shall be due, to the extent permitted by applicable law,
under any and all circumstances where all or any portion of this Junior Note is
paid prior to the scheduled Maturity Date, whether such 


 


5

















 


prepayment is voluntary or involuntary, even if such prepayment results
from Lender’s exercise of its rights upon an Event of Default and acceleration
of the Maturity Date of this Junior Note (irrespective of whether foreclosure
proceedings have been commenced), and shall be in addition to any other sums
due hereunder or under any of the other Junior Loan Documents. No tender of a
prepayment of this Junior Note with respect to which a Prepayment Premium is
due (whether by Borrower, its successors or assigns or by anyone on behalf of
Borrower) shall be effective unless such prepayment is accompanied by the
Prepayment Premium.


 


(e)           If this Junior Note is prepaid in full, any
commitment of Lender for further advances shall automatically terminate. No
Prepaid Principal may be reborrowed.


 


Section 7.               Late Charges. If Borrower
shall fail to make any payment under the terms of this Junior Note (other than
the payment due at maturity) within fifteen (15) days after the date such
payment is due, Borrower shall pay to Lender on demand a late charge equal to
four percent (4%) of the amount of such payment. Such fifteen (15) day period
shall not be construed as in any way extending the due date of any payment. The
late charge is imposed for the purpose of defraying the expenses of Lender
incident to handling such delinquent payment. This charge shall be in addition
to, and not in lieu of, any other amount that Lender may be entitled to receive
or action that Lender may be authorized to take as a result of such late
payment.


 


Section 8.               Certain Provisions Regarding
Payments. All payments made under this Junior Note shall be
applied, to the extent thereof, to late charges, to accrued but unpaid
interest, to unpaid principal, and to any other sums due and unpaid to Lender
under the Junior Loan Documents, in such manner and order as Lender may elect
in its sole discretion, any instructions from Borrower or anyone else to the
contrary notwithstanding. Remittances shall be made without offset, demand,
counterclaim, deduction, or recoupment (each of which is hereby waived) and
shall be accepted subject to the condition that any check or draft may be
handled for collection in accordance with the practice of the collecting bank
or banks. Acceptance by Lender of any payment in an amount less than the amount
then due on any indebtedness shall be deemed an acceptance on account only,
notwithstanding any notation on or accompanying such partial payment to the
contrary, and shall not in any way (a) waive or excuse the existence of an
Event of Default (as hereinafter defined), (b) waive, impair or extinguish
any right or remedy available to Lender hereunder or under the other Junior Loan
Documents, or (c) waive the requirement of punctual payment and
performance or constitute a novation in any respect. Payments received after 5:00 p.m.
(Eastern time) shall be deemed to be received on, and shall be posted as of,
the following Business Day. Whenever any payment under this Junior Note or any
other Junior Loan Document falls due on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day.


 


Section 9.               Events of Default. The
occurrence of any one or more of the following shall constitute an “Event of
Default” under this Junior Note:


 


(a)           Borrower fails to pay when and as due and payable
any amounts payable by Borrower to Lender under the terms of this Junior Note;


 


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(b)           Any covenant, agreement or condition in this Junior Note
is not fully and timely performed, observed or kept, subject to any applicable notice
grace and/or cure period set forth in the Junior Loan Agreement;


 


(c)           An Event of Default (as therein defined) occurs
under the Junior Loan Agreement or any of the other Junior Loan Documents other
than this Junior Note (subject to any applicable grace or cure period).


 


Section 10.             Remedies. Upon the
occurrence and during the continuance of an Event of Default, Lender may at any
time thereafter exercise any one or more of the following rights, powers and
remedies:


 


(a)           Lender may accelerate the Maturity Date and declare
the unpaid principal balance and accrued but unpaid interest on this Junior Note,
and all other amounts payable hereunder and under the other Junior Loan
Documents, at once due and payable, and upon such declaration the same shall at
once be due and payable.


 


(b)           Lender may set off the amount owed by Borrower to
Lender, whether or not matured and regardless of the adequacy of any other
collateral securing this Junior Note, against any and all accounts, credits,
money, securities or other property now or hereafter on deposit with, held by
or in the possession of Lender to the credit or for the account of Borrower,
without notice to or the consent of Borrower.


 


(c)           Lender may exercise any of its other rights, powers
and remedies under the Junior Loan Documents or at law or in equity.


 


Section 11.             Remedies Cumulative. All of the
rights and remedies of Lender under this Junior Note and the other Junior Loan
Documents are cumulative of each other and of any and all other rights at law
or in equity, and the exercise by Lender of any one or more of such rights and
remedies shall not preclude the simultaneous or later exercise by Lender of any
or all such other rights and remedies. No single or partial exercise of any
right or remedy shall exhaust it or preclude any other or further exercise
thereof, and every right and remedy may be exercised at any time and from time
to time. No failure by Lender to exercise, nor delay in exercising, any right
or remedy shall operate as a waiver of such right or remedy or as a waiver of
any Event of Default.


 


Section 12.             Costs and Expenses of
Enforcement. Borrower agrees to pay to Lender on demand all
costs and expenses incurred by Lender in seeking to collect this Junior Note or
to enforce any of Lender’s rights and remedies under the Junior Loan Documents,
including court costs and reasonable attorneys’ fees and expenses, whether or
not suit is filed hereon, or whether in connection with bankruptcy, insolvency
or appeal.


 


Section 13.             Service of
Process.


 


(a)           Borrower hereby
irrevocably designates and appoints Mr. Tom Tether, Actus Lend Lease LLC,
700 Lanidex Plaza, Parsippany, New Jersey 07054, as Borrower’s authorized agent
to accept and acknowledge on Borrower’s behalf service of 


 


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any and all process that may be served in any suit, action, or
proceeding instituted in connection with this Junior Note in any state or
federal court sitting in the State of New York. If such agent shall cease so to
act, Borrower shall irrevocably designate and appoint without delay another
such agent in the State of New York satisfactory to Lender and shall promptly
deliver to Lender evidence in writing of such agent’s acceptance of such
appointment and its agreement that such appointment shall be irrevocable.


 


(b)           Borrower hereby consents to process being served in
any suit, action, or proceeding instituted in connection with this Junior Note
by (i) the mailing of a copy thereof by certified mail, postage prepaid,
return receipt requested, to Borrower and (ii) serving a copy thereof upon
agent, if any, hereinabove designated and appointed by Borrower as Borrower’s
agent for service of process. Borrower irrevocably agrees that such service
shall be deemed to be service of process upon Borrower in any such suit,
action, or proceeding. Nothing in this Junior Note shall affect the right of
Lender to serve process in any manner otherwise permitted by law and nothing in
this Junior Note will limit the right of Lender otherwise to bring proceedings
against Borrower in the courts of any jurisdiction or jurisdictions, subject to
any provision or agreement for arbitration or dispute resolution set forth in
the Junior Loan Agreement.


 


Section 14.             Heirs, Successors and
Assigns. The terms of this Junior Note and of the other Junior Loan Documents
shall bind and inure to the benefit of the heirs, devisees, representatives,
successors and assigns of the parties. The foregoing sentence shall not be
construed to permit Borrower to assign the Junior Loan except as otherwise
permitted under the Junior Loan Documents.


 


Section 15.             General Provisions. Time is of
the essence with respect to Borrower’s obligations under this Junior Note. If
more than one person or entity executes this Junior Note as Borrower, all of
said parties shall be jointly and severally liable for payment of the
indebtedness evidenced hereby. Borrower and each party executing this Junior Note
as Borrower hereby severally (a) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest, notice of
intent to accelerate, notice of acceleration and all other notices (except any
notices which are specifically required by this Junior Note or any other Junior
Loan Document), filing of suit and diligence in collecting this Junior Note or
enforcing any of the security herefor; (b) agree to any substitution,
subordination, exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (c) agree that Lender shall
not be required first to institute suit or exhaust its remedies hereon against
Borrower or others liable or to become liable hereon or to perfect or enforce
its rights against them or any security herefor; (d) consent to any
extensions or postponements of time of payment of this Junior Note for any
period or periods of time and to any partial payments, before or after
maturity, and to any other indulgences with respect hereto, without notice
thereof to any of them; (e) submit (and waive all rights to object) to non-exclusive
personal jurisdiction of any state or federal court sitting in the State of New
York for the enforcement of any and all obligations under this Junior Note and
the other Junior Loan Documents; (f) waive the benefit of all homestead
and similar exemptions as to this Junior Note; (g) agree that their
liability under this Junior Note shall not be affected or impaired by any
determination that any title, security interest or lien taken by Lender to
secure this Junior Note is invalid or unperfected; and (h) hereby 


 


8

















 


subordinate to the Junior Loan
and the Junior Loan Documents any and all rights against Borrower and any
security for the payment of this Junior Note, whether by subrogation, agreement
or otherwise, until this Junior Note is paid in full. A determination that any
provision of this Junior Note is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that
the application of any provision of this Junior Note to any person or
circumstance is illegal or unenforceable shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances. This
Junior Note may not be amended except in a writing specifically intended for
such purpose and executed by the party against whom enforcement of the
amendment is sought. Captions and headings in this Junior Note are for
convenience only and shall be disregarded in construing it. Whenever a time of
day is referred to herein, unless otherwise specified such time shall be the
local time of the place where payment of this Junior Note is to be made. The
term “Business Day” shall mean a day on which Lender is open for the
conduct of substantially all of its banking business at its office in the city
in which this Junior Note is payable (excluding Saturdays and Sundays). Whenever
a time of day is referred to herein, unless otherwise specified such time shall
be the local time of the place where payment of this Junior Note is to be made.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Junior Loan Agreement. The words “include”
and “including” shall be interpreted as if followed by the words “without
limitation.” References herein to particular sections of the Lock Box
Agreement shall include references to successor sections if the Lock Box
Agreement is amended after the date hereof.


 


Section 16.             Governing Law.  THIS JUNIOR NOTE AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ANY
PRINCIPLES OF CONFLICTS OF LAWS) AND APPLICABLE UNITED STATES FEDERAL LAW. IT
IS THE INTENT AND PURPOSE OF THE PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS
JUNIOR NOTE.


 


Section 17.             Notices. Any notice,
request, or demand to or upon Borrower or Lender shall be deemed to have been
properly given or made when delivered in accordance with the terms of the Junior
Loan Agreement regarding notices.


 


Section 18.             No Usury.


 


(a)           As indicated in Section 16 above, Borrower
and Lender have agreed that the laws of the State of New York will govern,
among other issues, the maximum rate or amount of interest payable on the
indebtedness evidenced by this Junior Note and the Related Indebtedness (as
hereinafter defined). It is expressly stipulated and agreed to be the intent of
Borrower and Lender at all times to comply strictly with the applicable law
governing the maximum rate or amount of interest payable on the indebtedness
evidenced by this Junior Note and the Related Indebtedness, even if a court
disregards the agreement of the parties that the laws of the State of New York
shall govern such issue. If the applicable law is ever judicially interpreted
so as to render usurious any amount (i) contracted for, charged, taken,
reserved or received pursuant to this Junior Note, any of the other Junior Loan
Documents or any other communication or writing by or between 


 


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Borrower and Lender related to the transaction or transactions that are
the subject matter of the Junior Loan Documents, (ii) contracted for,
charged, taken, reserved or received by reason of Lender’s exercise of the
option to accelerate the maturity of this Junior Note and/or the Related
Indebtedness, or (iii) Borrower will have paid or Lender will have
received by reason of any prepayment by Borrower of this Junior Note and/or the
Related Indebtedness, then it is Borrower’s and Lender’s express intent that
all amounts charged in excess of the Maximum Lawful Rate (as hereinafter
defined) shall be automatically canceled, ab initio, and all amounts in
excess of the Maximum Lawful Rate theretofore collected by Lender shall be
credited on the principal balance of this Junior Note and/or the Related
Indebtedness (or, if this Junior Note and all Related Indebtedness have been or
would thereby be paid in full, refunded to Borrower), and the provisions of
this Junior Note and the other Junior Loan Documents shall immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if
this Junior Note has been paid in full before the end of the stated term of
this Junior Note, then Borrower and Lender agree that Lender shall, with
reasonable promptness after Lender discovers or is advised by Borrower that
interest was received in an amount in excess of the Maximum Lawful Rate, either
refund such excess interest to Borrower and/or credit such excess interest
against this Junior Note and/or any Related Indebtedness then owing by Borrower
to Lender. Borrower hereby agrees that as a condition precedent to any claim or
counterclaim (in which event such proceeding shall be abated for such time
period) seeking usury penalties against Lender, Borrower will provide written
notice to Lender, advising Lender in reasonable detail of the nature and amount
of the violation and Lender shall have sixty (60) days after receipt of such
notice in which to correct such usury violation, if any, by either refunding
such excess interest to Borrower or crediting such excess interest against this
Junior Note and/or the Related Indebtedness then owing by Borrower to Lender. All
sums contracted for, charged, taken, reserved or received by Lender for the
use, forbearance or detention of any debt evidenced by this Junior Note and/or
the Related Indebtedness shall, to the extent permitted by applicable law, be
amortized or spread, using the actuarial method, throughout the stated term of
this Junior Note and/or the Related Indebtedness (including any and all renewal
and extension periods) until payment in full so that the rate or amount of
interest on account of this Junior Note and/or the Related Indebtedness does
not exceed the Maximum Lawful Rate from time to time in effect and applicable
to this Junior Note and/or the Related Indebtedness for so long as debt is
outstanding. Notwithstanding anything to the contrary contained herein or in
any of the other Junior 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.


 


(b)           In the event that a court should determine that the
laws of the State of New York will not govern the issue of the maximum rate or
amount of interest payable on the indebtedness evidenced by this Junior Note
and the Related Indebtedness, then it is hereby stipulated that such issue
shall be governed by the laws of the State of Virginia or, 


 


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if Lender elects, the laws of such other state in which any part of the
Property is located as specified by written notice from Lender to Borrower.


 


(c)           As used in this Junior Note:


 


(i)            The term “Maximum Lawful Rate” shall mean the
maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lender in accordance with (A) the applicable laws
of the State of New York (or, if a court disregards the choice of laws of the
State of New York set forth herein, the laws of such other state as determined
pursuant to Section 18(b) above) or (B) United States
federal law to the extent that such law permits Lender to contract for, charge,
take, receive or reserve a greater amount of interest than under the laws
described in the foregoing clause (A), taking into account all Charges made in
connection with the transaction evidenced by this Junior Note and the other Junior
Loan Documents.


 


(ii)           The term “Charges” shall mean all fees,
charges and/or any other things of value, if any, contracted for, charged,
taken, received or reserved by Lender in connection with the transactions
relating to this Junior Note and the other Junior Loan Documents, which are
treated as interest under applicable law.


 


(iii)          The term “Related Indebtedness” shall mean
any and all indebtedness paid or payable by Borrower to Lender pursuant to the Junior
Loan Documents or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject matter
of the Junior Loan Documents, except such indebtedness which has been paid or
is payable by Borrower to Lender under this Junior Note.


 


(d)           Borrower agrees to pay an effective rate of interest
which is the stated rate provided in this Junior Note plus any additional rate
of interest resulting from any charges of interest or in the nature of interest
paid or to be paid in connection with the Junior Loan Indebtedness evidenced by
this Junior Note.


 


Section 19.             Lost Junior Note. Upon receipt
of an affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of this Junior Note or any other security document which is not of
public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of this Junior Note or other security document,
Borrower will issue, in lieu thereof, a replacement note or other security
document in the same principal amount thereof and otherwise of like tenor.


 


Section 20.             Method of Payment. All payments
due under this Junior Note shall be made by Borrower to Lender as provided in
the Junior Loan Agreement and Lock Box Agreement or such other place as Lender
may from time to time specify in writing in lawful currency of the
United States of America in immediately available funds, without
counterclaim or setoff and free and clear of, and without any deduction or
withholding for, any taxes or other payments.


 


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Section 21.             Pledge to the Federal
Reserve. Lender may at any time pledge or assign all or any portion of its
rights under the Junior Loan Documents, which evidence and/or secure the Junior
Loan, including any portion of this Junior Note, to any of the twelve (12)
Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or assignment or
enforcement thereof shall release Lender from its obligations under any of the Junior
Loan Documents.


 


Section 22.             Right of Setoff. Borrower
hereby grants to Lender a continuing lien, security interest and right of
setoff as security for all liabilities and obligations to Lender, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Lender and its successors and/or assigns or in
transit to any of them. At any time, without demand or notice (any such notice
being expressly waived by Borrower), Lender may setoff the same or any part
thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral
security for the Junior Loan which is evidenced by this Junior Note. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE JUNIOR LOAN WHICH IS
EVIDENCED BY THIS JUNIOR NOTE PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.


 


Section 23.             Waiver of Jury Trial. BORROWER AND
LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS JUNIOR NOTE OR ANY OTHER JUNIOR LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF LENDER RELATING TO THE ADMINISTRATION OF THE
JUNIOR LOAN EVIDENCED BY THIS JUNIOR NOTE OR ENFORCEMENT OF THE JUNIOR LOAN
DOCUMENTS EVIDENCING AND/OR SECURING THE JUNIOR LOAN, AND AGREE THAT NEITHER
PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW,
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER
TO ACCEPT THIS JUNIOR NOTE AND MAKE THE JUNIOR LOAN.


 


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Section 24.             Venue. BORROWER
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS JUNIOR
NOTE SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS LOCATED IN THE
STATE OF NEW YORK AND COUNTY OF NEW YORK AND EACH PARTY TO THIS JUNIOR NOTE
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING. THE PARTIES HERETO EACH HEREBY IRREVOCABLY WAIVE
ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS JUNIOR NOTE BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM OR LACKS JURISDICTION OVER SUCH PARTY. IT IS THE
INTENT OF THE PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS JUNIOR
NOTE. HOWEVER, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE
FOREGOING PROVISIONS, LENDER SHALL IN ALL EVENTS HAVE THE RIGHT TO FILE SUIT IN
A COURT IN ANY JURISDICTION IN WHICH THE PROPERTY IS LOCATED FOR THE PURPOSE OF
ENFORCING ITS RIGHTS IN RESPECT OF SUCH PROPERTY (INCLUDING, WITHOUT
LIMITATION, A SUIT TO FORECLOSE UPON THE PROPERTY OR ANY PART THEREOF).


 


Section 25.             Limited Liability. Except as
provided in that certain Guaranty and Indemnity of even date herewith executed
by Actus Lend Lease LLC, a Delaware corporation, the obligations of Borrower
hereunder shall be without recourse to Borrower’ members, shareholders,
officers, affiliates, directors, partners, agents, employees or consultants, or
any affiliate of any such person, or to the property or assets of any such
person. Notwithstanding anything to the
contrary herein, nothing herein shall be deemed to be a waiver of any right
which Lender may have under Sections 506(a), 506(b), 1111(b) or any
other provision of the Federal Bankruptcy Code or any similar federal or state
statute to file a claim for the full amount of the obligations evidenced and
secured by the Junior Loan Documents or to require that all collateral securing
such obligations shall continue to secure same under the Junior Loan Documents.
The foregoing will in no way limit Lender’s recourse to the collateral for the
indebtedness evidenced and secured by the Junior Loan Documents following an
Event of Default or limit the liability under any contract to which any affiliate
of Borrower is a party and which has been assigned to Lender as collateral for
the Junior Loan, including but not limited to the Construction Guaranty of Lend
Lease Corporation Limited of even date herewith and any contract assigned as collateral
under the Assignment of Contracts, Permits and Approvals of even date herewith
executed by Borrower and the other parties thereto and the Collateral
Assignment of Lodging Management Agreement.


 


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[Signature page to Junior Loan Note]


 


IN WITNESS WHEREOF, Borrower has duly executed this Junior
Note as of the date first above written.


 


	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  REST EASY LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RE MANAGING MEMBER LLC,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ACTUS LEND LEASE HOLDINGS LLC, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Marc Sierra

  
	
   

  	
   

  	
   

  	
   

  	
  Marc Sierra

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Vice President

  



 


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