Unassociated Document


    EXHIBIT
10.26

     

    
 

    PROMISSORY NOTE

     

    
      	U.S. $127,250,000.00	
              January 4,
2007

            


    

    New York,
New York

     

    FOR VALUE RECEIVED, 1407
BROADWAY REAL ESTATE LLC, a Delaware limited liability company, having its
principal place of business at c/o The Lightstone Group, 326 Third Street,
Lakewood, New Jersey 08701 (“Borrower”)
absolutely and unconditionally promises to pay to the order of LEHMAN BROTHERS
HOLDINGS INC., a Delaware corporation (individually and as lead arranger and
administrative agent for itself and certain co-lenders), at Lender’s offices at
399 Park Avenue, 8th Floor, New York, New York 10022 (“Lender”), the
principal sum of ONE HUNDRED TWENTY-SEVEN MILLION TWO HUNDRED FIFTY THOUSAND AND
NO/100 Dollars (U.S. $127,250,000.00), with interest on the unpaid principal
balance to be computed from the date of this Promissory Note (this “Note”) on
funds advanced from time to time at the Applicable Interest Rate (defined
below), in lawful money of the United States of America, in immediately
available funds, which shall at the time of payment be legal tender for payment
of all debts and dues, public and private. This Note is secured by, among other
things, that certain Leasehold Mortgage Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement dated of even date herewith,
executed by Borrower in favor of Lender (as amended, restated, supplemented or
otherwise modified from time to time, the “Security
Instrument”). All
capitalized terms used in the Note and not otherwise defined in Section
1.10 hereof
or elsewhere in this Note shall have the meanings assigned to such terms in the
Loan Agreement (as hereinafter defined), all of the terms of the Loan Agreement
being hereby incorporated into and made a part of this Note by reference for all
purposes.

     

    1.  PAYMENT OF PRINCIPAL AND
INTEREST.

     

    1.1  Payments. The
principal, interest and all other sums due under this Note shall be payable at
the office of Lender as set forth above, or at such other place as Lender may
from time to time designate in writing, as follows:

     

    (a)  Commencing
on the ninth (9th) day of February, 2007 and continuing on the ninth (9th) day
of each and every successive month thereafter or, if such day is not a Business
Day, the immediately preceding Business Day (each, a “Payment Date”)
through and including the Maturity Date, Borrower shall pay (i) monthly
installments of interest on the outstanding principal balance of this Note as of
such Payment Date at the Applicable Interest Rate for the Interest Period in
which such Payment Date occurs. Notwithstanding the foregoing, interest on the
outstanding principal amount of this Note for the period from the date hereof
through and including January 14, 2007 shall be paid by Borrower on the date
hereof.

     

    (b)  Subject
to Section
1.11 hereof,
the entire outstanding principal balance of this Note, together with accrued and
unpaid interest and any other amounts due under this Note and the other Loan
Documents shall be due and payable on the Maturity Date and after a
Securitization shall include, without limitation, all interest that would have
accrued on the outstanding principal balance of this Note through the end of the
Interest Period during which the Maturity Date occurs (even if such period
extends beyond the Maturity Date).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)  All
amounts due under this Note shall be payable without setoff, counterclaim or any
other deduction whatsoever.

     

    (d)  Additionally,
payments shall be made on this Note as required by the Loan Agreement and the
other Loan Documents.

     

    1.2  Interest.
Interest on the outstanding principal balance of this Note shall accrue at the
Applicable Interest Rate from the date hereof to the Maturity Date and after a
Securitization through the end of the Interest Period in which the Maturity Date
occurs; provided, however, notwithstanding anything to the contrary contained
herein or in any other Loan Document, any principal payments made on this Note
from and including any Payment Date through and including the last day of the
Interest Period in which such Payment Date occurs (each, a “Gap Period”) shall
be disregarded for purposes of determining the interest payment due and payable
on such Payment Date with respect to interest accruing during the corresponding
Gap Period and shall be treated as if such principal payments were made on the
first day of the next Interest Period. Adjustments to the Applicable Interest
Rate in connection with changes in the LIBOR Rate (or the Treasury Rate, if
applicable) shall be made on the first day of each Interest Period
(“Interest Rate Adjustment Date”).

     

    1.3  Computation.
Interest on the outstanding principal balance of this Note shall be calculated
by multiplying (a) the actual number of days elapsed in the period for which the
calculation is being made by (b) a daily rate equal to the Applicable Interest
Rate divided by three hundred sixty (360) by (c) the outstanding principal
balance of this Note. In computing the number of days during which interest
accrues, the day on which funds are advanced shall be included regardless of the
time of day such advance is made, and the day on which funds are repaid shall be
included unless repayment is credited prior to Lender's close of business. The
amount of interest shall be rounded up to the nearest one eighth percent
(.125%).

     

    1.4  Determination. Each
determination of an Applicable Interest Rate by Lender pursuant to any provision
of this Note shall be conclusive and binding on Borrower absent manifest error.
Payments under this Note or any other Loan Document made in federal funds
immediately available in the place designated for payment which are received by
Lender prior to 2:00 p.m. local time at said place of payment shall be
considered by Lender as having been received prior to close of business, while
other payments may, at the option of Lender, not be credited until immediately
available to Lender in federal funds in the place designated for payment prior
to 2:00 p.m. local time at said place of payment on a day on which Lender is
open for business.

     

    1.5  Making of
Payments. Each
payment by Borrower hereunder or under the Loan Agreement or any other Loan
Document shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender on the
date such payment is due to Lender, without presentment, demand, protest or
notice of any kind, all such notices being hereby waived and without setoff,
counterclaim or other deduction of any nature. Whenever any payment hereunder or
under the Loan Agreement or any other Loan Document shall be stated to be due on
a day which is not a Business Day such payment shall be made on the next
following Business Day.

     

    
      
        
        

      

      
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    1.6  Application. Prior
to an Event of Default and except as otherwise expressly provided herein or in
the Loan Agreement or any other Loan Document, payments under this Note shall be
applied first, to the
payment of late fees and other costs and charges due in connection with this
Note, as Lender determines in its sole discretion, second to the
payment of interest on the outstanding principal balance of this Note through
the prepayment date; provided, however that after a Securitization interest
shall be paid through the end of the Interest Period in which such payment is
made and, if applicable, through the end of the Succeeding Interest Period,
notwithstanding that such Interest Period or Succeeding Interest Period extends
beyond the date of such payment, and third, to the
reduction of the outstanding principal balance (in inverse order of maturity
whether or not then due). After an Event of Default, payments under this Note
shall be applied as Lender may determine in Lender's sole discretion. No
principal amount repaid may be reborrowed.

     

    1.7  Additional Costs; Alternate
Interest Rate.
Anything herein to the contrary notwithstanding, if (i) on any date on
which the LIBOR Rate would otherwise be set, Lender shall have determined in
good faith (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the LIBOR Rate, or
(ii) at any time Lender shall have determined in good faith (which determination
shall be conclusive absent manifest error) that the making, maintenance or
funding of any part of the Loan based on the LIBOR Rate has been made
impracticable or unlawful by compliance by Lender in good faith with any law or
guideline or interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration thereof or with any
request or directive of any such Governmental Authority (whether or not having
the force of law); then and in any such event, Lender may notify Borrower of
such determination (any such notice being referred to herein as a “Treasury Rate
Notice”) which
Treasury Rate Notice shall be given to Borrower by telephone at least one (1)
Business Day prior to the last day of the related Interest Period, with a
written confirmation of such determination promptly thereafter. If Lender gives
Borrower a Treasury Rate Notice, the obligation of Lender to charge interest to
Borrower at the LIBOR Rate shall be suspended until Lender shall have later
notified Borrower of Lender's determination in good faith (which determination
shall be conclusive absent manifest error) that the circumstances giving rise to
such previous determination no longer exist as provided below. If Lender gives
Borrower a Treasury Rate Notice, the LIBOR Rate shall automatically be converted
to the sum of the Treasury Rate plus the LIBOR To Treasury Spread (such sum
being the “Adjusted Treasury
Rate”), and
commencing on the first day of the next succeeding Interest Period, this Note
shall bear interest at a rate of interest per annum equal to the greater of (i)
the Adjusted Treasury Rate from time to time, as determined by Lender, plus the
Margin, and (ii) the Eurodollar Rate in effect at the time Lender delivers the
Treasury Rate Notice (in either case, rounded up, if necessary, to the nearest
one eighth percent (.125%)) (such rate being referred to herein as the
“Alternate Interest
Rate”). This
Note shall continue to bear interest at the Alternate Interest Rate until Lender
determines that the Eurodollar Rate can be determined in accordance with the
provisions of this Note and gives notice to the Borrower by telephone of such
determination, confirmed in writing, as soon as reasonably practical, but in no
event later than one (1) Business Day prior to the last day of the then current
Interest Period. If such notice is given, this Note shall bear interest at such
Eurodollar Rate commencing on the first day of the next succeeding Interest
Period. Notwithstanding anything to the contrary contained herein, in no event
shall the Borrower have the right to elect to have the Loan bear interest at
either the Eurodollar Rate or the Alternate Interest Rate.

     

    
      
        
        

      

      
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    1.8  Capital
Adequacy. If
Lender determines that compliance with any law or regulation or with any
guideline or request from any central bank or other governmental agency (whether
or not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by Lender, or any corporation controlling
Lender, as a consequence of, or with reference to, Lender's or such
corporation's commitments or its making or maintaining advances below the rate
which Lender or such corporation controlling Lender could have achieved but for
such compliance (taking into account the policies of Lender or such corporation
with regard to capital), then Borrower shall, from time to time, within thirty
(30) days after written demand by Lender, pay to Lender additional amounts
sufficient to compensate Lender or such corporation controlling Lender to the
extent that Lender determines such increase in capital is allocable to Lender's
obligations hereunder. A certificate as to such amounts, submitted to Borrower
by Lender shall be conclusive and binding for all purposes, absent manifest
error. 

     

    1.9  Indemnification.
Borrower agrees to indemnify Lender and to hold Lender harmless from any actual
loss or expense which Lender sustains or incurs as a consequence of (I) any
default by Borrower in payment of the principal of or interest on this Note
while bearing interest at the Eurodollar Rate, including, without limitation,
any such loss or expense arising from interest or fees payable by Lender to
lenders of funds obtained by it in order to maintain the Eurodollar Rate, (II)
any prepayment (whether voluntary or mandatory) of this Note on a day that (A)
is not a Payment Date or (B) is a Payment Date if Borrower did not give the
prior written notice of such prepayment required pursuant to the terms of this
Note or the Loan Agreement, including, without limitation, such loss or expense
arising from interest or fees payable by Lender to lenders of funds obtained by
it in order to maintain the Eurodollar Rate hereunder and (III) the conversion
of the Applicable Interest Rate from the Eurodollar Rate to the Alternate
Interest Rate pursuant to Section
1.7 on a
date other than a Payment Date, including, without limitation, such loss or
expenses arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain the Eurodollar Rate hereunder (the amounts
referred to in clauses (I), (II) and (III) are herein referred to collectively
as the “Breakage Costs”). This
provision shall survive payment of the Note and the satisfaction of all other
obligations of Borrower hereunder and under the Loan Agreement and the other
Loan Documents.

     

    1.10  Definitions. In
addition to other terms defined elsewhere in this Note, as used herein, the
following terms shall have the following meanings:

     

    “Applicable Interest
Rate” shall
mean an interest rate per annum equal to (i) the Eurodollar Rate or (ii) the
Alternate Interest Rate, if the Loan begins bearing interest at the Alternate
Interest Rate in accordance with the provisions of Section
1.7
hereof.

     

    “Assumed Note Rate” shall
mean an interest rate equal to the sum of one percent (1.00%) plus the LIBOR
Rate as determined on the preceding LIBOR Determination Date plus three percent
(3.00%).

     

    
      
        
        

      

      
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    “Business Day” shall
mean a day on which commercial banks are not authorized or required by law to
close in the State of New York.

     

    “Eurodollar Rate” shall
mean, with respect to any Interest Period, an interest rate equal to the LIBOR
Rate plus three percent (3.00%) per annum.

     

    “Interest Period” shall
mean, in connection with the calculation of interest accrued with respect to any
specified Payment Date, the period from and including the fifteenth (15th)
calendar day of the prior calendar month to and including the fourteenth (14th)
day of the calendar month in which the applicable Payment Date occurs. Each
Interest Period shall be a full month and shall not be shortened by reason of
any payment of the Loan prior to the expiration of such Interest
Period.

     

    “LIBOR Business Day” shall
mean any day upon which United States dollar deposits may be dealt in on the
London and the New York interbank markets and on which commercial banks and
foreign exchange markets are open in London and New York City.

     

    “LIBOR Rate” shall
mean with respect to each Interest Period, the quoted offered rate for one-month
United States dollar deposits with leading banks in the London interbank market
that appears on Dow Jones Market Services (formerly Telerate) page 3750 (or the
successor thereto) (“Page 3750”)
(provided that at least two offered rates appear on Page 3750)) as of 11:00
a.m., London time, on the date which is two (2) LIBOR Business Days prior to the
relevant Interest Rate Adjustment Date (“LIBOR Determination
Date”)
(rounded upward, if necessary, to the nearest one-sixteenth of one percent
(1/16%)). If as of such time on any LIBOR Determination Date, no quotation is
given on such Page 3750, then the Lender shall establish LIBOR on such LIBOR
Determination Date by requesting four Reference Banks meeting the criteria set
forth herein to provide the quotation offered by its principal London office for
making one-month United States dollar deposits with leading banks in the London
interbank market as of 11:00 a.m., London time, on such LIBOR Determination
Date. If two or more Reference Banks provide such offered quotations, then the
LIBOR Rate for the next Interest Period shall be the arithmetic mean of such
offered quotations (rounded upward if necessary to the nearest whole multiple of
1/1,000%. If only one or none of the Reference Banks provides such offered
quotations, then the LIBOR Rate for the next Interest Period shall be the
Reserve Rate. If on any LIBOR Determination Date, Lender is required but is
unable to determine the LIBOR Rate in the manner provided in the immediately two
preceding sentences, the LIBOR Rate for the next Interest Period shall be
determined in accordance with the provisions of Section
1.7
hereof.

     

    “LIBOR To Treasury
Spread” shall
mean the difference, if positive, between the LIBOR Rate and the Treasury Rate
on the date of any Treasury Rate Notice. If such difference is negative, the
LIBOR To Treasury Spread shall be deemed to be equal to zero.

     

    “Loan Agreement” shall
mean that certain Loan Agreement dated as of even date herewith between Borrower
and Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

     

    “Margin” shall
mean three percent (3.00%).

     

    
      
        
        

      

      
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    “Maturity Date” shall
mean (i) January 9, 2010, or
upon the valid exercise of the First Extension Option, January 9, 2011, or upon
the valid exercise of the Second Extension Option, January 9, 2012 or (ii) any
earlier date on which this Note is required to be paid in full, by acceleration
or otherwise. 

     

    “Reference Bank” shall
mean a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market that has an established place of business in
London. If any such Reference Bank should be removed from Page 3750 or in any
other way fail to meet the qualifications of a Reference Bank, Lender may in its
reasonable discretion designate alternative Reference Banks meeting the criteria
specified above. 

     

    “Reserve Rate” shall
mean the rate per annum which Lender determines to be the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/1,000%) of the
one-month United States dollar lending rates that at least three major New York
City banks selected by Lender are quoting, at 11:00 a.m. (New York time) on the
relevant LIBOR Determination Date, to the principal London offices of at least
two of the Reference Banks. In the event that at least two such rates are not
obtained, Reserve Rate shall mean the lowest one-month United States dollar
lending rate which New York City banks reasonably selected by Lender are quoting
as of 11:00 a.m. (New York time) on such LIBOR Determination Date to leading
European banks.

     

    “Treasury Rate” shall
mean with respect to each Interest Rate Adjustment Date, the weekly average
yield on United States Treasury Securities adjusted to a constant maturity of
six months last published by the Federal Reserve Board prior to such Interest
Rate Adjustment Date.

     

    1.11  Payment on Maturity
Date.
Borrower shall pay to Lender on the Maturity Date the outstanding principal
balance of this Note, all accrued and unpaid interest hereon and all other
amounts due hereunder and under the Agreement and the other Loan Documents,
including, without limitation, all interest that would have accrued on the
outstanding principal balance of this Note through and including the Maturity
Date; provided, however, that after a Securitization, interest shall be paid
through the end of the Interest Period in which the Maturity Date occurs (even
if such Interest Period extends beyond the Maturity Date).

     

    2.  DEFAULT.

     

    2.1  Late Fee. If any
sum payable under this Note or any other Loan Document is not paid on or before
the date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5.0%) of such unpaid sum or, if prohibited
or restricted by Legal Requirements, the maximum amount permitted by applicable
law to defray 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 Security Instrument
and the other Loan Documents.

     

    2.2  Remedies. The
entire outstanding principal sum of this Note, together with all interest
accrued and unpaid thereon and all other sums due under this Note, the Security
Instrument, or any of the other Loan Documents, or any portion thereof,
including without limitation, any amounts described in Section
12.9 of the
Loan Agreement shall without notice become immediately due and payable at the
option of Lender upon the occurrence of any Event of Default including without
limitation, an Event of Default resulting from a Transfer in violation of the
terms of the Loan Agreement. Time is of the essence in this Note, the Security
Instrument and the other Loan Documents. All of the terms, covenants and
conditions contained in the Security Instrument and the other Loan Documents are
hereby made part of this Note to the same extent and with the same force as if
they were fully set forth herein. If Borrower’s obligations under this Note or
any of the other Loan Documents are enforced by Lender through an
attorney-at-law, or any payment due under this Note or the other Loan Documents
is collected by or through an attorney-at-law or collection agency, Borrower
agrees to pay all out of pocket costs incurred by Lender in connection
therewith, including, but not limited to, reasonable fees and disbursements of
legal counsel (whether with respect to a retained firm or Lender’s in-house
staff), collection agency costs, whether or not suit be brought, and any and all
costs or fees arising as a result of the filing of or during the course of any
case under any Bankruptcy Laws with respect to any of the Borrower
Parties.

     

    
      
        
        

      

      
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    2.3  Default
Rate. Upon
the occurrence of an Event of Default, Lender shall be entitled to receive and
Borrower shall pay interest on the entire unpaid principal sum at the Applicable
Interest Rate plus five percent (5.0%) (the “Default Rate”). The
Default Rate shall be automatically computed from the occurrence of the Event of
Default until the actual receipt and collection of this Note in full or, if
permitted by Lender or otherwise provided in the Loan Documents, the date such
Event of Default is cured. This charge shall be added to this Note, and shall be
deemed secured by the Security Instrument and the other Loan Documents. This
clause, however, shall not be construed as an agreement or privilege to extend
the date of the payment of this Note or any other sums payable under the Loan
Documents, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default. In the event the Default Rate
would otherwise exceed the maximum rate permitted by applicable law, the Default
Rate shall be the maximum rate permitted by applicable law.

     

    2.4  Post-Judgment.
Interest shall accrue on any judgment obtained by Lender in connection with the
enforcement or collection of this Note or the other Loan Documents (including
foreclosure of the Security Instrument) until such judgment amount is
irrevocably paid in full at a rate equal to the greater of (a) the Default
Rate or (b) the highest legal rate applicable to judgments within such
jurisdiction; provided, however, that interest shall not accrue at a rate in
excess of the maximum rate of interest, if any, which may be charged by Lender
or collected from Borrower under applicable law.

     

    2.5  Remedies
Cumulative. The
remedies available to Lender under this Note and in the other Loan Documents, or
at law or in equity, shall be cumulative and concurrent, and may be pursued
singly, successively or together in Lender’s sole discretion and as often as
occasion therefor shall arise.

     

    
      
        
        

      

      
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    3.  PREPAYMENT.

     

    3.1  Prepayment.
Provided no Event of Default exists, the principal balance of this Note may be
prepaid in whole or in part at any time provided (i) written notice of such
prepayment specifying the intended date of prepayment is received by Lender not
more than sixty (60) days and not less than thirty (30) days prior to the date
of such prepayment, (ii) such prepayment is accompanied by all interest accrued
hereunder and all other sums due hereunder or under the other Loan Documents
through the date of prepayment, (iii) in addition to the payment required in
clause (ii) above, if a Securitization has occurred, such prepayment includes an
amount equal to the interest that would have accrued at the Applicable Interest
Rate on the amount of principal being prepaid through the end of the Interest
Period in which such prepayment occurs, notwithstanding that such Interest
Period extends beyond the date of prepayment, (iv) in addition to the payments
required in clauses (ii) and (iii) above, if a Securitization has occurred and
if such prepayment is made during the period from and including the first day
after a Payment Date through and including the last day of the Interest Period
in which such prepayment occurs, such prepayment includes all interest on the
principal amount being prepaid which would have accrued from the first day of
the Interest Period immediately following the Interest Period in which the
prepayment occurs (the “Succeeding Interest
Period”)
through and including the end of the Succeeding Interest Period, calculated at
(1) the Applicable Interest Rate if such prepayment occurs on or after the LIBOR
Determination Date for the Succeeding Interest Period or (2) the Assumed Note
Rate if such prepayment occurs before the LIBOR Determination Date for the
Succeeding Interest Period (the sums due under clauses (ii), (iii) and (iv) of
this Section
3.1
hereinafter collectively referred to as the “Interest Shortfall”), (v)
such prepayment includes all Breakage Costs, if any, without duplication of any
sums paid pursuant to the preceding clause (iv); and (vi) such prepayment
includes all other sums then due under this Note, the Loan Agreement or the
other Loan Documents. Notwithstanding anything to the contrary in this Note, the
Security Instrument or the other Loan Documents, any notice of prepayment
pursuant to this Section shall be irrevocable and the principal balance of the
Note shall be absolutely and unconditionally due and payable on the date
specified in any notice given pursuant to this Section
3.1 unless
Borrower (i) revokes such notice of prepayment in writing at least two (2) days
prior to the date designated as the prepayment date in such notice of
prepayment, and (ii) pays all of Lender's costs and expenses incurred related to
such prospective prepayment, including, without limitation, any Breakage Costs.
Notwithstanding the foregoing or anything to the contrary contained herein or in
any other Loan Document, Borrower shall not be permitted to prepay the principal
balance of this Note in whole or in part at any time prior to the Lockout Date
except for and to the extent of prepayments of principal resulting from the
application of any Casualty/Condemnation Involuntary Prepayments. No principal
amount repaid may be reborrowed. 

     

    If the
Interest Shortfall (or any portion thereof) was calculated based upon the
Assumed Note Rate, upon determination of the LIBOR Rate on the LIBOR
Determination Date for the Succeeding Interest Period, (i) if the Applicable
Interest Rate for such Succeeding Interest Period is less than the Assumed Note
Rate, Lender shall promptly refund to Borrower the amount of such Interest
Shortfall paid, calculated at a rate equal to the difference between the Assumed
Note Rate and the Applicable Interest Rate, or (ii) if the Applicable Interest
Rate for such Succeeding Interest Period is greater than the Assumed Note Rate,
Borrower shall promptly (and in no event later than the ninth (9th) day of the
following month) pay Lender, without additional interest or other late charges
or penalties, the amount of such additional Interest Shortfall calculated at a
rate equal to the excess of the Applicable Interest Rate over the Assumed Note
Rate.

     

    
      
        
        

      

      
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    3.2  Mandatory Prepayments
Resulting From Casualty and Condemnation. The
Loan is subject to mandatory prepayment (unless otherwise agreed to by Lender)
in certain instances of Casualty and Condemnation (each, a “Casualty/Condemnation Involuntary
Prepayment”), in
the manner and to the extent set forth in the Loan Agreement. Each
Casualty/Condemnation Involuntary Prepayment shall be made in accordance with
the Loan Agreement. On the Payment Date immediately following the date on which
Borrower actually receives any Insurance Proceeds and/or Condemnation Proceeds
or sooner, if requested by Borrower, if and to the extent Lender is not
obligated to or does not otherwise agree to make such Insurance Proceeds and/or
Condemnation Proceeds available to Borrower for the Restoration of the Property,
Borrower shall prepay (without Prepayment Premium) the outstanding principal
balance of this Note in an amount equal to one hundred percent (100%) of such
Insurance Proceeds and/or Condemnation Proceeds. Provided no Event of Default
has occurred and is continuing, such prepayment shall be applied, (a)
first, to
interest on the outstanding principal balance of this Note accrued at the
Applicable Interest Rate on the amount prepaid through and including the date of
prepayment and, if a Securitization has occurred, to interest on the outstanding
principal balance of the Loan that would have accrued at the Applicable Interest
Rate on the amount prepaid through the end of the Interest Period in which such
prepayment occurs, notwithstanding that such Interest Period extends beyond the
date of prepayment, (b) second, to
Breakage Costs, if any, and any other sums due under this Note, the Loan
Agreement or the other Loan Documents and (c) third, toward
the outstanding principal balance of this Note.

     

    3.3  Prepayment Upon
Default. If
following the occurrence of any Event of Default, Lender shall accelerate the
Loan, Borrower shall pay all amounts payable under this Note or any of the other
Loan Documents (which amounts shall include all amounts payable under
Section
3.1). If
Borrower shall tender payment of an amount sufficient to satisfy the Debt at any
time prior to a sale of the Property or any part thereof, either through
foreclosure or the exercise of the other remedies available to Lender under the
Loan Documents, such tender by Borrower shall be deemed to be voluntary and
Borrower shall pay all amounts due and payable under the Loan Documents and any
other amounts described in this Section 3.

     

    4.  SECURITY. The
indebtedness evidenced by this Note is governed by the Loan Agreement and the
obligations created hereby (including without limitation the amounts authorized
by Section 2 to be
collected by Lender) are secured by, among other things, the Security Instrument
and other Loan Documents.

     

    5.  EXCULPATION.
Notwithstanding anything to the contrary contained in this Note, the liability
of Borrower to pay this Note and for the performance of the other agreements,
covenants and obligations contained herein and in the other Loan Documents shall
be limited as set forth in Article IX of the
Loan Agreement, the terms of which are incorporated herein by this
reference.

     

    6.  GENERAL.

     

    6.1  Written Amendment
Only. 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 Borrower and
Lender.

     

    
      
        
        

      

      
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    6.2  Certain
Waivers. Except
for any notices specifically required by the Loan Agreement, Borrower and all
others who may become liable for the payment of all or any part of the Debt do
hereby severally waive presentment and demand for payment, notice of dishonor,
protest and notice of protest, notice of non-payment and notice of intent to
accelerate the maturity hereof (and of such acceleration). No release of any
security for the Loan or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note or the other Loan Documents made by agreement between Lender and any
other Person shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of Borrower, or any other Person who may
become liable for the payment of all or any part of the Debt, under this Note
and the other Loan Documents. Lender may release any guarantor or indemnitor of
the Loan from liability, in every instance without the consent of Borrower
hereunder, and without waiving any rights the Lender may have hereunder, the
other Loan Documents or by virtue of the laws of the State in which the Property
is located or any other state of the United States.

     

    6.3  Severability. If any
provision or obligation under this Note and the other Loan Documents shall be
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable, that provision shall be deemed severed from the Loan Documents
and the validity, legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the invalid, illegal, or
unenforceable provision had never been a part of the Loan
Documents.

     

    6.4  Notices. All
notices or other written communications hereunder shall be given and become
effective as provided Section
12.5 of the
Loan Agreement.

     

    6.5  Set-Off
Preference.
Borrower is and shall be obligated to pay principal, interest, and any and all
other amounts which become payable hereunder or under the other Loan Documents
absolutely and unconditionally and without any abatement, postponement,
diminution or deduction and without any reduction for counterclaim or setoff. In
the event that at any time any payment received by Lender hereunder shall be
deemed by a court of competent jurisdiction to have been a voidable preference
or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief
law, then the obligation to make such payment shall survive any cancellation or
satisfaction of this Note or return thereof to Borrower and shall not be
discharged or satisfied with any prior payment thereof or cancellation of this
Note, but shall remain a valid and binding obligation enforceable in accordance
with the terms and provisions hereof, and such payment shall be immediately due
and payable upon demand.

     

    6.6  Successors and
Assigns. The
terms and provisions hereof shall be binding upon and inure to the benefit of
Borrower and Lender and their respective heirs, executors, legal
representatives, successors, successors-in-title and permitted assigns, whether
by voluntary action of the parties or by operation of law. As used in this Note
and the other Loan Documents, the terms “Borrower” and
“Lender” shall
be deemed to include their respective heirs, executors, legal representatives,
successors, successors-in-title and permitted assigns (no right to assign on the
part of Borrower being implied hereby), whether by voluntary action of the
parties or by operation of law.

     

    
      
        
        

      

      
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    6.7  Interpretation.
Section
1.2 of the
Loan Agreement is hereby incorporated into this Note by reference for all
purposes.

     

    6.8  WAIVER OF TRIAL BY
JURY. BORROWER AND LENDER BY ACCEPTING
THIS NOTE HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY
SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE. 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 TRIAL BY JURY WOULD OTHERWISE ACCRUE OR ARISE. EACH
PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.

     

    6.9  GOVERNING
LAW. THIS NOTE WAS NEGOTIATED IN WHOLE
OR IN PART IN THE STATE OF NEW YORK AND ACCEPTED BY LENDER IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM
THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND
ANY LEGAL REQUIREMENTS OF THE UNITED STATES OF AMERICA. AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED ACCORDING TO THE LAW OF THE STATE OF NEW YORK. THIS CHOICE OF
GOVERNING LAW IS MADE PURSUANT TO NEW YORK GENERAL OBLIGATION LAW SECTION
5-1401.

     

    
      
        
        

      

      
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    ANY SUIT, ACTION OR PROCEEDING
AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER’S OPTION
BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF
NEW YORK, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY BORROWER ARISING OUT OF OR RELATING TO THIS NOTE OR THE OTHER LOAN
DOCUMENTS OR THE LENDER-BORROWER RELATIONSHIP CREATED THEREBY (WHETHER IN
CONTRACT OR IN TORT) SHALL ONLY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
THE CITY OF NEW YORK, COUNTY OF NEW YORK, AND BORROWER WAIVES ANY OBJECTIONS
WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF
ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER
DOES HEREBY DESIGNATE AND APPOINT HERRICK, FEINSTEIN LLP, 2 PARK
AVENUE, NEW YORK, NEW YORK 10016, ATTENTION: SHELDON CHANALES,
ESQ. AS ITS AUTHORIZED AGENT TO ACCEPT
AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED
IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED IN THE LOAN AGREEMENT SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. 

     

    BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.

     

    6.10  COUNTERPARTS. This
Note may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one and the same
instrument.

     

    [SIGNATURE
PAGE FOLLOWS]

     

    


    
      
        
        

      

      
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    IN
WITNESS WHEREOF, Borrower has duly executed this Note the day and year first
above written.


     

    
      	 	 	 
	 	
              1407 BROADWAY REAL ESTATE
      LLC,

              a
      Delaware limited liability company

            
	 
 	 
 	 
 
	 	By:  	/s/
      David Lichtenstein
	 	
              
      Name: David Lichtenstein
	 	
              Title:
      President