**Exhibit10.3**

 

THISJUNIOR NOTE IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT OF EVEN DATEHEREWITH AMONG BANK OF AMERICA, N.A., AS SENIOR LENDER, BEHRINGER HARVARD PALI, LLC, AS JUNIOR LENDER, AND LEND LEASE (US) CAPITAL INC., AS SUBORDINATELENDER, AND NO INTEREST IN THIS JUNIOR LOAN NOTE SHALL BE TRANSFERRED TO ANYPERSON EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH INTERCREDITOR AGREEMENT

 

JuniorLoan Note

 
| $25,000,000 |   | August 14, 2009 |
|-------------|--------|----------------------|

 

FOR VALUE RECEIVED, Rest Easy LLC, a Delaware limitedliability company (“Borrower”), hereby promises to pay to the order of BehringerHarvard PAL I, LLC, a Delaware limited liability company, together with any andall 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) (orthe unpaid balance of all principal advanced against this Junior Note, if thatamount is less), together with interest on the unpaid principal balance of thisJunior Note from day to day outstanding as hereinafter provided.

 

Section 1.               Interest Rate. Subject tothe provisions of Section 18 below, the principal balance of this JuniorNote outstanding from time to time shall bear interest at the rate of eighteenpercent (18.00%) per annum (the “Note Rate”). Except to the extentotherwise required by Section 18 below, interest shall be computedbased on a three hundred sixty (360) day year comprised of twelve (12) monthsof thirty (30) days each.

 

Section 2.               Payment Schedule andMaturity Date. Principal and interest shall be payable in lawfulmoney 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 totime designate in writing, such principal sum and interest to be paid in thefollowing manner:

 

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

 

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

 

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

 

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Section 2(g) below) during the Years 1-2 Period, thenExpedited Payments (as defined in Section 2(g) below) shall thereafterbe made to Lender.

 

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

 

(i)            Borrower shall pay (A) the Minimum MonthlyPayment, and (B) following the payment of the Senior Loan Indebtedness (asdefined in the Lock Box Agreement), accrued and unpaid interest in respect ofthis 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 3-4Period, Lender has previously exercised the Expedited Payment Option, then ExpeditedPayments shall continue to be made to Lender. If Lender exercises the ExpeditedPayment Option in accordance with Section 2(g) below during theYears 3-4 Period, Lender shall thereafter receive Expedited Payments (in additionto the Minimum Monthly Payments).

 

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

 

(d)           The entire remaining principal amount of this JuniorNote, all accrued and unpaid interest, and all other amounts due under theJunior 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 expresslystipulated that, notwithstanding anything to the contrary contained herein orin the Lock Box Agreement, Borrower shall be required to pay the MinimumMonthly Payment on the first day of each calendar month beginning on October 1,2009, and ending on (and including) August 1, 2016 (regardless of theamount of cash flow generated from the Property (as hereinafter defined)) inaddition to all other amounts due and payable under this Junior Note. Further, itis hereby expressly stipulated that Borrower shall be required to pay allamounts payable under the Junior Loan Documents on the Maturity Date regardlessof the amount of cash flow generated from the Property.

 

(f)            Without in any way limiting the obligation ofBorrower to pay at least the Minimum Monthly Payment and other amounts becomingdue under this Junior Note as set forth herein, if at any time during the termof this Junior Note, the payment made by Borrower pursuant to this Junior Noteis 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 interestat the Note Rate compounded on a monthly basis, and (ii) shall be due andpayable 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) pursuantto and at priority Section 4.1(b)(xxi) of the Lock Box Agreement duringthe Years 3-4 Period, to be applied towards payment of the Junior LoanIndebtedness. During the Years 1-2 Period, Lender shall be deemed to haveexercised the Expedited Payment Option if (A) the Senior Loan (as definedin the Junior Loan Agreement) is paid in full but all the First PriorityConditions (as hereinafter defined) are not fulfilled, and (B) Lendersends the Waiver of Payoff Notice defined in Section 3 below.However, in the event of such deemed exercise by Lender, it shall be theresponsibility of Lender to send written notice to Borrower and the CashManagement Agent (as defined in the Lock Box Agreement) that the ExpeditedPayment Option has been exercised and that Lender is thereafter to receiveExpedited Payments. During the Years 3-4 Period, Lender shall have the right,in its sole discretion, to exercise the Expedited Payment Option by sending writtennotice to Borrower and the Cash Management Agent at any time after the SeniorLoan Indebtedness is paid in full. Upon the exercise (or deemed exercise) byLender of the Expedited Payment Option and delivery by Lender to Borrower and theCash Management Agent of the necessary payment information with respect to anyExpedited 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 acopy to Borrower) in writing (which Lender reserves the right to do).

 

(h)           For purposes hereof, the term “First PriorityConditions” means each of the following conditions: (i) the SeniorLoan is paid in full and the liens, assignments and security interests securingthe Senior Loan are no longer in effect, and (ii) the liens, assignmentsand security interests securing the Junior Loan become first and prior to anyother liens, assignments and security interests affecting the Property (exceptfor any liens, assignments or security interests which Lender, in its solediscretion, has voluntarily made superior to its liens, assignments andsecurity interests by execution of an instrument of subordination). Thereasonable judgment of Lender shall be conclusive as to whether the FirstPriority Conditions have been fulfilled.

 

Section 3.               Acceleration of Maturityupon Repayment of Senior Loan. If, at any time prior tothe Maturity Date, Borrower intends to pay the Senior Loan in full by any meansother than payments of cash flow made on the Senior Loan pursuant to the LockBox Agreement or payment resulting from the application of proceeds from aCasualty or a Condemnation, then Borrower shall give Lender not less thantwenty (20) days’ prior written notice (the “Senior Loan Repayment Notice”)before making final payment on the Senior Loan, setting forth the date uponwhich Borrower will make final payment on the Senior Loan and describing thesource of funds for such final payment. Notwithstanding anything containedherein to the contrary, if the Senior Loan is paid in full prior to theMaturity Date but the remaining First Priority Conditions have 

 

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not been fulfilled, then concurrentlywith making final payment on the Senior Loan, Borrower must also pay to Lender (a) theremaining principal amount of this Junior Note, all accrued and unpaid interestin respect of this Junior Note, and all other amounts due under the Junior LoanDocuments; and (b) the Prepayment Premium described in Section 6below, if any, it being agreed that payment of the Junior Loan under thecircumstances described in this Section 3 shall be considered avoluntary prepayment for purposes of calculating the Prepayment Premium.Notwithstanding the preceding sentence, however, Lender shall have the right towaive and decline such prepayment of the Junior Loan by sending written noticeto Borrower (the “Waiver of Payoff Notice”) within ten (10) days afterreceiving the Senior Loan Repayment Notice, in which event Borrower shall paythe Senior Loan in full without paying in full the indebtedness under thisJunior Note and the other Junior Loan Documents. The sending of a Waiver ofPayoff Notice by Lender shall not impair any rights of Lender with respect toany future prepayment of this Junior Note (including, without limitation, theright to collect any Prepayment Premium due under Section 6 hereofin connection with such prepayment).

 

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

 

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

 

Section 6.               Prepayment. Borrower may notprepay the principal balance of this Junior Note except as provided in this Section 6below.

 

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

 

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Date”) upon which the sum of Twenty Five Million andNo/100 Dollars ($25,000,000) has been disbursed by Lender to Borrower pursuantto the Junior Loan Agreement.

 

(b)           During the period beginning on the Full DisbursementDate, Borrower shall have the right to prepay this Junior Note upon fulfillmentof all the following conditions: (i) Lender shall have actually receivedfrom Borrower prior written notice of (A) Borrower’s intent to prepay, (B) theamount of principal which will be prepaid (the “Prepaid Principal”), and(C) the date on which the prepayment will be made; (ii) eachprepayment 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 JuniorNote in full); (iii) each prepayment shall be in the amount of 100% of thePrepaid Principal, plus accrued unpaid interest thereon to the date ofprepayment, plus any other sums which have become due to Lender under theJunior Loan Documents on or before the date of prepayment but have not beenpaid; and (iv) simultaneously with such prepayment, Borrower shall pay toLender the Prepayment Premium (as hereinafter defined). For purposes hereof,the “Prepayment Premium” shall mean an amount payable to Lender for theprivilege of prepaying this Junior Note calculated as follows: (1) if suchprepayment is made before the second (2nd) anniversary of this Junior Note, the PrepaymentPremium shall be equal to five percent (5%) of the Prepaid Principal; (2) ifsuch prepayment is made on or after the second (2nd) anniversary of this Junior Note but before thethird (3rd) anniversaryof 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 thethird (3rd) anniversary of this Junior Note but before the fourth (4th) anniversary of this JuniorNote, the Prepayment Premium shall be equal to three percent (3%) of thePrepaid Principal; and (4) if such prepayment is made on or after thefourth (4th) anniversaryof 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) aboveshall not be applicable to prepayments of principal that result from paymentsmade in respect of the Junior Loan Indebtedness under the Lock Box Agreement(it being expressly agreed that the Prepayment Premium shall be payable withrespect thereto, except as otherwise provided in the definition of PrepaymentPremium in Section 6(b) or in the last sentence of this Section 6(c));provided, however, that Borrower shall give Lender prior written notice ifBorrower 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 theFull Disbursement Date shall be permitted, and no Prepayment Premium shall bepayable by Borrower, if and to the extent (i) such prepayment results fromthe exercise by Lender of the Expedited Payment Option, or (ii) suchprepayment results from the application of proceeds from a Casualty or aCondemnation.

 

(d)           Except as otherwise expressly provided in thedefinition 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 ispaid prior to the scheduled Maturity Date, whether such 

 

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

 

(e)           If this Junior Note is prepaid in full, anycommitment of Lender for further advances shall automatically terminate. NoPrepaid Principal may be reborrowed.

 

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

 

Section 8.               Certain Provisions RegardingPayments. All payments made under this Junior Note shall beapplied, to the extent thereof, to late charges, to accrued but unpaidinterest, to unpaid principal, and to any other sums due and unpaid to Lenderunder the Junior Loan Documents, in such manner and order as Lender may electin its sole discretion, any instructions from Borrower or anyone else to thecontrary notwithstanding. Remittances shall be made without offset, demand,counterclaim, deduction, or recoupment (each of which is hereby waived) andshall be accepted subject to the condition that any check or draft may behandled for collection in accordance with the practice of the collecting bankor banks. Acceptance by Lender of any payment in an amount less than the amountthen due on any indebtedness shall be deemed an acceptance on account only,notwithstanding any notation on or accompanying such partial payment to thecontrary, and shall not in any way (a) waive or excuse the existence of anEvent of Default (as hereinafter defined), (b) waive, impair or extinguishany right or remedy available to Lender hereunder or under the other Junior LoanDocuments, or (c) waive the requirement of punctual payment andperformance 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 anyother Junior Loan Document falls due on a day which is not a Business Day, suchpayment may be made on the next succeeding Business Day.

 

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

 

(a)           Borrower fails to pay when and as due and payableany 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 Noteis not fully and timely performed, observed or kept, subject to any applicable noticegrace and/or cure period set forth in the Junior Loan Agreement;

 

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

 

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

 

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

 

(b)           Lender may set off the amount owed by Borrower toLender, whether or not matured and regardless of the adequacy of any othercollateral securing this Junior Note, against any and all accounts, credits,money, securities or other property now or hereafter on deposit with, held byor 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, powersand remedies under the Junior Loan Documents or at law or in equity.

 

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

 

Section 12.             Costs and Expenses ofEnforcement. Borrower agrees to pay to Lender on demand allcosts and expenses incurred by Lender in seeking to collect this Junior Note orto enforce any of Lender’s rights and remedies under the Junior Loan Documents,including court costs and reasonable attorneys’ fees and expenses, whether ornot suit is filed hereon, or whether in connection with bankruptcy, insolvencyor appeal.

 

Section 13.             Service ofProcess.

 

(a)           Borrower herebyirrevocably designates and appoints Mr. Tom Tether, Actus Lend Lease LLC,700 Lanidex Plaza, Parsippany, New Jersey 07054, as Borrower’s authorized agentto 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, orproceeding instituted in connection with this Junior Note in any state orfederal court sitting in the State of New York. If such agent shall cease so toact, Borrower shall irrevocably designate and appoint without delay anothersuch agent in the State of New York satisfactory to Lender and shall promptlydeliver to Lender evidence in writing of such agent’s acceptance of suchappointment and its agreement that such appointment shall be irrevocable.

 

(b)           Borrower hereby consents to process being served inany suit, action, or proceeding instituted in connection with this Junior Noteby (i) the mailing of a copy thereof by certified mail, postage prepaid,return receipt requested, to Borrower and (ii) serving a copy thereof uponagent, if any, hereinabove designated and appointed by Borrower as Borrower’sagent for service of process. Borrower irrevocably agrees that such serviceshall 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 ofLender to serve process in any manner otherwise permitted by law and nothing inthis Junior Note will limit the right of Lender otherwise to bring proceedingsagainst Borrower in the courts of any jurisdiction or jurisdictions, subject toany provision or agreement for arbitration or dispute resolution set forth inthe Junior Loan Agreement.

 

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

 

Section 15.             General Provisions. Time is ofthe essence with respect to Borrower’s obligations under this Junior Note. Ifmore than one person or entity executes this Junior Note as Borrower, all ofsaid parties shall be jointly and severally liable for payment of theindebtedness evidenced hereby. Borrower and each party executing this Junior Noteas Borrower hereby severally (a) waive demand, presentment for payment,notice of dishonor and of nonpayment, protest, notice of protest, notice ofintent to accelerate, notice of acceleration and all other notices (except anynotices which are specifically required by this Junior Note or any other JuniorLoan Document), filing of suit and diligence in collecting this Junior Note orenforcing any of the security herefor; (b) agree to any substitution,subordination, exchange or release of any such security or the release of anyparty primarily or secondarily liable hereon; (c) agree that Lender shallnot be required first to institute suit or exhaust its remedies hereon againstBorrower or others liable or to become liable hereon or to perfect or enforceits rights against them or any security herefor; (d) consent to anyextensions or postponements of time of payment of this Junior Note for anyperiod or periods of time and to any partial payments, before or aftermaturity, and to any other indulgences with respect hereto, without noticethereof to any of them; (e) submit (and waive all rights to object) to non-exclusivepersonal jurisdiction of any state or federal court sitting in the State of NewYork for the enforcement of any and all obligations under this Junior Note andthe other Junior Loan Documents; (f) waive the benefit of all homesteadand similar exemptions as to this Junior Note; (g) agree that theirliability under this Junior Note shall not be affected or impaired by anydetermination that any title, security interest or lien taken by Lender tosecure this Junior Note is invalid or unperfected; and (h) hereby 

 

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subordinate to the Junior Loanand the Junior Loan Documents any and all rights against Borrower and anysecurity for the payment of this Junior Note, whether by subrogation, agreementor otherwise, until this Junior Note is paid in full. A determination that anyprovision of this Junior Note is unenforceable or invalid shall not affect theenforceability or validity of any other provision and the determination thatthe application of any provision of this Junior Note to any person orcircumstance is illegal or unenforceable shall not affect the enforceability orvalidity of such provision as it may apply to other persons or circumstances. ThisJunior Note may not be amended except in a writing specifically intended forsuch purpose and executed by the party against whom enforcement of theamendment is sought. Captions and headings in this Junior Note are forconvenience only and shall be disregarded in construing it. Whenever a time ofday is referred to herein, unless otherwise specified such time shall be thelocal time of the place where payment of this Junior Note is to be made. Theterm “Business Day” shall mean a day on which Lender is open for theconduct of substantially all of its banking business at its office in the cityin which this Junior Note is payable (excluding Saturdays and Sundays). Whenevera time of day is referred to herein, unless otherwise specified such time shallbe 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 meaningsascribed to such terms in the Junior Loan Agreement. The words “include”and “including” shall be interpreted as if followed by the words “withoutlimitation.” References herein to particular sections of the Lock BoxAgreement shall include references to successor sections if the Lock BoxAgreement is amended after the date hereof.

 

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

 

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

 

Section 18.             No Usury.

 

(a)           As indicated in Section 16 above, Borrowerand 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 theindebtedness evidenced by this Junior Note and the Related Indebtedness (ashereinafter defined). It is expressly stipulated and agreed to be the intent ofBorrower and Lender at all times to comply strictly with the applicable lawgoverning the maximum rate or amount of interest payable on the indebtednessevidenced by this Junior Note and the Related Indebtedness, even if a courtdisregards the agreement of the parties that the laws of the State of New Yorkshall govern such issue. If the applicable law is ever judicially interpretedso as to render usurious any amount (i) contracted for, charged, taken,reserved or received pursuant to this Junior Note, any of the other Junior LoanDocuments or any other communication or writing by or between 

 

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Borrower and Lender related to the transaction or transactions that arethe subject matter of the Junior Loan Documents, (ii) contracted for,charged, taken, reserved or received by reason of Lender’s exercise of theoption to accelerate the maturity of this Junior Note and/or the RelatedIndebtedness, or (iii) Borrower will have paid or Lender will havereceived by reason of any prepayment by Borrower of this Junior Note and/or theRelated Indebtedness, then it is Borrower’s and Lender’s express intent thatall amounts charged in excess of the Maximum Lawful Rate (as hereinafterdefined) shall be automatically canceled, ab initio, and all amounts inexcess of the Maximum Lawful Rate theretofore collected by Lender shall becredited on the principal balance of this Junior Note and/or the RelatedIndebtedness (or, if this Junior Note and all Related Indebtedness have been orwould thereby be paid in full, refunded to Borrower), and the provisions ofthis Junior Note and the other Junior Loan Documents shall immediately bedeemed reformed and the amounts thereafter collectible hereunder and thereunderreduced, without the necessity of the execution of any new document, so as tocomply with the applicable law, but so as to permit the recovery of the fullestamount otherwise called for hereunder and thereunder; provided, however, ifthis Junior Note has been paid in full before the end of the stated term ofthis Junior Note, then Borrower and Lender agree that Lender shall, withreasonable promptness after Lender discovers or is advised by Borrower thatinterest was received in an amount in excess of the Maximum Lawful Rate, eitherrefund such excess interest to Borrower and/or credit such excess interestagainst this Junior Note and/or any Related Indebtedness then owing by Borrowerto Lender. Borrower hereby agrees that as a condition precedent to any claim orcounterclaim (in which event such proceeding shall be abated for such timeperiod) seeking usury penalties against Lender, Borrower will provide writtennotice to Lender, advising Lender in reasonable detail of the nature and amountof the violation and Lender shall have sixty (60) days after receipt of suchnotice in which to correct such usury violation, if any, by either refundingsuch excess interest to Borrower or crediting such excess interest against thisJunior Note and/or the Related Indebtedness then owing by Borrower to Lender. Allsums contracted for, charged, taken, reserved or received by Lender for theuse, forbearance or detention of any debt evidenced by this Junior Note and/orthe Related Indebtedness shall, to the extent permitted by applicable law, beamortized or spread, using the actuarial method, throughout the stated term ofthis Junior Note and/or the Related Indebtedness (including any and all renewaland extension periods) until payment in full so that the rate or amount ofinterest on account of this Junior Note and/or the Related Indebtedness doesnot exceed the Maximum Lawful Rate from time to time in effect and applicableto this Junior Note and/or the Related Indebtedness for so long as debt isoutstanding. Notwithstanding anything to the contrary contained herein or inany of the other Junior Loan Documents, it is not the intention of Lender toaccelerate the maturity of any interest that has not accrued at the time ofsuch acceleration or to collect unearned interest at the time of suchacceleration.

 

(b)           In the event that a court should determine that thelaws of the State of New York will not govern the issue of the maximum rate oramount of interest payable on the indebtedness evidenced by this Junior Noteand the Related Indebtedness, then it is hereby stipulated that such issueshall 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 theProperty 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 themaximum lawful rate of interest which may be contracted for, charged, taken,received or reserved by Lender in accordance with (A) the applicable lawsof the State of New York (or, if a court disregards the choice of laws of theState of New York set forth herein, the laws of such other state as determinedpursuant to Section 18(b) above) or (B) United Statesfederal 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 lawsdescribed in the foregoing clause (A), taking into account all Charges made inconnection with the transaction evidenced by this Junior Note and the other JuniorLoan 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 transactionsrelating to this Junior Note and the other Junior Loan Documents, which aretreated as interest under applicable law.

 

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

 

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

 

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

 

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

 

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

 

Section 22.             Right of Setoff. Borrowerhereby grants to Lender a continuing lien, security interest and right ofsetoff as security for all liabilities and obligations to Lender, whether nowexisting 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 intransit to any of them. At any time, without demand or notice (any such noticebeing expressly waived by Borrower), Lender may setoff the same or any partthereof and apply the same to any liability or obligation of Borrower eventhough unmatured and regardless of the adequacy of any other collateralsecurity for the Junior Loan which is evidenced by this Junior Note. **ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIESWITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE JUNIOR LOAN WHICH ISEVIDENCED BY THIS JUNIOR NOTE PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITHRESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANYGUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.**

 

Section 23.             Waiver of Jury Trial. BORROWER ANDLENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO ATRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR INCONNECTION WITH THIS JUNIOR NOTE OR ANY OTHER JUNIOR LOAN DOCUMENTSCONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANYPARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OFDEALINGS, STATEMENTS OR ACTIONS OF LENDER RELATING TO THE ADMINISTRATION OF THEJUNIOR LOAN EVIDENCED BY THIS JUNIOR NOTE OR ENFORCEMENT OF THE JUNIOR LOANDOCUMENTS EVIDENCING AND/OR SECURING THE JUNIOR LOAN, AND AGREE THAT NEITHERPARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH AJURY 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 ANYLITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANYDAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER CERTIFIES THAT NOREPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OROTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCETHE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDERTO ACCEPT THIS JUNIOR NOTE AND MAKE THE JUNIOR LOAN.

 

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Section 24.             Venue. BORROWERAGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS JUNIORNOTE SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS LOCATED IN THESTATE OF NEW YORK AND COUNTY OF NEW YORK AND EACH PARTY TO THIS JUNIOR NOTEHEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY ANDUNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS ANDIRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY OF THE AFOREMENTIONED COURTS INANY SUCH ACTION OR PROCEEDING. THE PARTIES HERETO EACH HEREBY IRREVOCABLY WAIVEANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUEOF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTIONWITH THIS JUNIOR NOTE BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBYFURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURTTHAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHTIN AN INCONVENIENT FORUM OR LACKS JURISDICTION OVER SUCH PARTY. IT IS THEINTENT OF THE PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1402 OF THEGENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS JUNIORNOTE. HOWEVER, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THEFOREGOING PROVISIONS, LENDER SHALL IN ALL EVENTS HAVE THE RIGHT TO FILE SUIT INA COURT IN ANY JURISDICTION IN WHICH THE PROPERTY IS LOCATED FOR THE PURPOSE OFENFORCING ITS RIGHTS IN RESPECT OF SUCH PROPERTY (INCLUDING, WITHOUTLIMITATION, A SUIT TO FORECLOSE UPON THE PROPERTY OR ANY PART THEREOF).

 

Section 25.             Limited Liability. Except asprovided in that certain Guaranty and Indemnity of even date herewith executedby Actus Lend Lease LLC, a Delaware corporation, the obligations of Borrowerhereunder shall be without recourse to Borrower’ members, shareholders,officers, affiliates, directors, partners, agents, employees or consultants, orany affiliate of any such person, or to the property or assets of any suchperson. Notwithstanding anything to thecontrary herein, nothing herein shall be deemed to be a waiver of any rightwhich Lender may have under Sections 506(a), 506(b), 1111(b) or anyother provision of the Federal Bankruptcy Code or any similar federal or statestatute to file a claim for the full amount of the obligations evidenced andsecured by the Junior Loan Documents or to require that all collateral securingsuch 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 theindebtedness evidenced and secured by the Junior Loan Documents following anEvent of Default or limit the liability under any contract to which any affiliateof Borrower is a party and which has been assigned to Lender as collateral forthe Junior Loan, including but not limited to the Construction Guaranty of LendLease Corporation Limited of even date herewith and any contract assigned as collateralunder the Assignment of Contracts, Permits and Approvals of even date herewithexecuted by Borrower and the other parties thereto and the CollateralAssignment of Lodging Management Agreement.

 

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[Signature page to Junior Loan Note]

 

IN WITNESS WHEREOF, Borrower has duly executed this JuniorNote 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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