Document:

ex10_6.htm

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of January 1, 2011 (the “Effective Date”) by and between Douglas Emmett, Inc. (the “Company”), Douglas Emmett Properties, LP (the “Partnership”), and William Kamer (“Executive”) with respect to the following facts and circumstances:

 

WHEREAS, the Company has been employing Executive as the Chief Financial Officer under an employment agreement dated as of October 2006; and

 

WHEREAS, during the Agreement Term (as defined below), the Company desires to continue to engage Executive as the Chief Financial Officer of the Company on the terms and conditions and for the consideration set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

 

1. Effectiveness; Term of Employment.  Subject to the provisions of Section 8 of this Agreement, Executive shall be employed by the Company on the terms and subject to the conditions set forth in this Agreement for a period commencing on the Effective Date and ending on December 31, 2014.  Commencing on January 1, 2015 and on each January 1 thereafter (each an “Extension Date”), the Agreement Term shall be automatically extended for an additional one-year period unless either the Company or Executive provides the other party hereto sixty (60) days’ prior written notice before the next Extension Date that the Agreement Term shall not be so extended (the “Agreement Term”).

 

2. Position; Duties.  During the Agreement Term, Executive shall serve as Chief Financial Officer of the Company and the Partnership.  In such position, Executive shall have such duties and authority commensurate with such position as shall be determined from time to time by the Board of Directors of the Company (the “Board”) including such duties and responsibilities with respect to any subsidiary, affiliate or joint venture of the Company (each  a “Subsidiary”).   Executive's duties will be principally performed at the Company's headquarters, which will be located within the West Side of Los Angeles, with such travel as may be required to perform his duties hereunder as reasonably requested by the Company.

 

3. Base Salary.  During the Agreement Term, the Company shall pay Executive a base salary at the annual rate of $600,000, payable in regular installments in accordance with the Company's usual payment practices.  Executive's salary shall be reviewed at least annually by the Compensation Committee of the Board (the “Committee”) and Executive shall be entitled to such increases in Executive's base salary, if any, as may be determined from time to time in the sole and absolute discretion of the Committee.  Executive's annual base salary, as in effect from time to time, is hereinafter referred to as the “Base Salary.”

 

4. Annual Bonus.  With respect to each fiscal year during the Agreement Term, Executive shall be eligible to earn an annual bonus award (the “Annual Bonus”) based on the Executive’s individual performance and the Company’s overall performance during the year, as well as the overall annual compensation of executives at a benchmark group of comparable companies, all as reasonably determined by the Committee and consistent with past practices.  The Annual Bonus may be payable in cash or equity grants.  The Company will pay or grant any Annual Bonus earned by Executive with respect to a given fiscal year no later than the earlier of (i) the fifteenth day of the third month following the end of such fiscal year or (ii) the date that other senior executives are paid similar bonuses.

 

5. Long-Term Incentive Compensation.  Executive has been granted 94,843 LTIP Units (the “LTIP Award”) pursuant to a separate written LTIP Unit Award Agreement under the Company’s 2006 Omnibus Stock Incentive Plan (the “Plan”).  The LTIP Award shall be subject to the terms and conditions of that agreement and the Plan.  The LTIP Award represents a multi-year equity grant not tied to annual performance.

 

6. Employee Benefits.  During the Agreement Term, Executive shall be entitled to participate in the Company's employee welfare and retirement benefit plans and perquisite programs as in effect, and subject to such modification as the Company may determine necessary or appropriate, from time to time (collectively “Employee Benefits”), on the same basis as those benefits are generally made available to other senior executives of the Company plus (i) $1,200 per month for the purchase of health insurance benefits during any period in which he is not participating in the Company’s health plan and (ii) a car allowance of $500 per month.  During the Agreement Term, Executive shall have the right (i) to participate in any future compensation plans implemented for executives of the Company on a basis commensurate with his position and (ii) to be indemnified by the Company for all actions taken as an officer, director or agent of the Company or its Subsidiaries to the full extent provided under law or pursuant to Executive’s Indemnification Agreement with the Company.  Subject to the policies and procedures of the Company, in addition to any accrued personal time off (“PTO”) as of the Effective Date, Executive shall be entitled to accrue twenty five (25) paid days of PTO per year during the Agreement Term.

 

7. Business Expenses.  In accordance with the Company’s policies as in effect from time to time, the Company shall reimburse Executive for all reasonable business expenses incurred by Executive in the performance of Executive's duties through the end of the Agreement Term.

 

8. Termination.  Notwithstanding any other provision of this Agreement, the provisions of this Section 8 shall exclusively govern Executive's rights upon termination of employment with the Company.  Following Executive's termination of employment, except as set forth in this Section 8, Executive (and Executive’s legal representative and estate) shall have no further rights to any compensation or any other benefits under this Agreement.

 

8.1. Definitions.

 

“Accrued Rights” means the sum of the following: (i) any accrued but unpaid Base Salary through the date of termination; (ii) a payment in respect of all unpaid, but accrued and unused PTO through the date of termination; (iii) any Annual Bonus earned but unpaid as of the date of termination for any previously completed fiscal year (i.e., not for the year of employment termination); (iv) reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy through the date of termination; (v) such rights, if any, under the Option Award, the LTIP Award and other compensation programs and Employee Benefits to which Executive may be entitled upon termination of employment according to the documents governing such benefits; and (vi) any existing rights to indemnification for prior acts through the date of termination.

 

“Cause” means any of the following: (i) any act or omission by Executive which constitutes intentional misconduct or a willful violation of law; (ii) an act of fraud, conversion, misappropriation or embezzlement by Executive or conviction of, indictment for (or its procedural equivalent) or entering a guilty plea or plea of no contest with respect to a felony, the equivalent thereof or any crime involving any moral turpitude with respect to which imprisonment is a common punishment; or (iii) any other failure (other than any failure resulting from incapacity due to physical or mental illness) by Executive to perform his material and reasonable duties and responsibilities as an employee, director or consultant of the Company or any Subsidiary which continues for ten (10) days following written notice from the Company or any Subsidiary (except in the case of a willful failure to perform his duties or a willful breach, which shall require no notice).  For purposes of the foregoing sentence, no act, or failure to act, on Executive's part shall be considered “willful” unless the Executive acted, or failed to act, in bad faith or without reasonable belief that his act or failure to act was in the best interest of the Company or any Subsidiary.

 

“Change of Control” shall be deemed to have occurred if

 

(i) there shall be consummated (a) any consolidation or merger of the Company, other than a merger or consolidation of the Company in which (1) the holders of the Company's common stock immediately prior to the merger or consolidation have at least fifty one percent (51%) ownership of the total voting power of the surviving entity immediately after the merger or consolidation, and (2) no person (other than an Exempted Holder as defined below) beneficially owns (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, 20% or more of the total voting power of the surviving entity or (b) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or

 

(ii) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company, or

 

(iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than an Exempted Holder (as defined below) shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or more of the Company's common stock.  “Exempted Holder” means (a) the Company or any majority-owned Subsidiary (provided that this exclusion applies solely to the ownership levels of the Company or the majority-owned Subsidiary); (b) any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust sponsored or maintained by the Company or any Subsidiary; (c) any underwriter or placement agent temporarily holding securities pursuant to an offering of such securities or (d) Dan Emmett, Jordan Kaplan or Ken Panzer, their immediate family members and family trusts or family-only partnerships and any charitable foundations, any entities in which they and their families beneficially own a majority of the voting interests, and any “group” (as described in Rule 13d-5(b)(i) under the Exchange Act) including them.  However, a Change in Control shall not be deemed to have occurred if a person’s percentage interest increases over twenty percent (20%) solely as a result of a decrease in the outstanding stock because of an acquisition of securities by the Company; provided, however, that a “Change in Control” shall be deemed to have occurred on any subsequent acquisitions of the Company's common stock by that person (other than pursuant to a stock split, stock dividend, or similar transaction) at a time when that person beneficially owns twenty percent (20%) or more of the Company's outstanding common stock, or

 

(iv) the Board shall cease for any reason to have a majority of Uncontested Directors. “Uncontested Directors” means directors who were initially elected or initially nominated (a) by a vote of at least two-thirds of the then Uncontested Directors and (b) not as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation.

 

“Disability” means physical or mental incapacity whereby Executive is unable with or without reasonable accommodation for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform the essential functions of Executive's duties.

 

“Good Reason” shall be present where Executive gives notice to the Board of his voluntary resignation (a) within one hundred and twenty (120) days after the occurrence of any of the following, without Executive’s written consent:  (i) the failure of the Company to pay or cause to be paid Executive’s Base Salary or Annual Bonus, when due hereunder, subject to a ten (10) day cure period by the Company (except in the case of a willful failure which shall require no notice); (ii) diminution in Executive’s status, including, title, position, duties, authority or responsibility, subject to a thirty (30) day cure period by the Company (except in the case of a willful breach, which shall require no notice); (iii) relocation of the Company's executive offices to a location outside of the West Side of Los Angeles; or (iv) the failure of the Company to obtain the express written assumption of this Agreement pursuant to Section 11.5 hereof (unless such Agreement is assumed by operation of law); (b) within eighteen (18) months after the occurrence of a Change of Control.

 

8.2. Termination by the Company for Cause or By Executive's Resignation without Good Reason.  The Agreement Term and Executive's employment hereunder may be terminated by the Company for Cause and shall terminate upon Executive's resignation without Good Reason, and in either case Executive shall be entitled to receive only his Accrued Rights.

 

8.3. Death/Disability.  The Agreement Term and Executive's employment hereunder shall terminate upon Executive's death or Disability. Upon termination of Executive’s employment hereunder due to death or Disability, Executive's legal representative or estate (as the case may be) shall be entitled to receive (i) the Accrued Rights plus (ii) an amount equal to a pro-rated portion of the Annual Bonus Executive otherwise would have been paid for the fiscal year in which such termination of employment occurs, payable when the Annual Bonus would otherwise have been paid to Executive pursuant to Section 4, based upon (a) actual performance for such fiscal year, as determined at the end of such fiscal year and (b) the percentage of such fiscal year that shall have elapsed through the date of Executive's termination of employment; plus (iii) continued medical benefits for Executive and Executive's spouse and eligible dependents who at the time of Executive's termination are enrolled in the Company’s medical plan.  Such benefits shall be substantially identical to the benefits maintained for other senior executives of the Company and shall be provided for a period of twelve (12) months following Executive's termination of employment.  Executive acknowledges that such benefit continuation is intended, and shall be deemed, to satisfy the obligations of the Company and any of its subsidiaries and affiliates to provide continuation of benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (“COBRA”) for such period and that the Company may satisfy such obligation by paying any applicable COBRA premiums.

 

8.4. Termination by the Company without Cause or Resignation by Executive for Good Reason.  The Agreement Term and Executive's employment hereunder may be terminated by the Company without Cause at any time and for any reason or by Executive's resignation for Good Reason at any time upon thirty (30) days written notice by the terminating party, although the Company may waive services during that period.  If Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, Executive shall be entitled to receive (i) the Accrued Rights, plus (ii) provided that Executive first executes and returns to the Company (and does not revoke) a release of all claims that is in form and substance reasonably satisfactory to the Company, and subject to Executive's continued compliance with the provisions of Section 9 of this Agreement (to the extent expressly applicable after the Agreement Term):

 

8.4.1. an amount, payable in a lump sum without discount within 30 days of the date of termination, equal to two (2) times the average of Executive’s compensation over the last three full calendar years ending prior to the termination date including (i) the Base Salary; (ii) the Annual Bonus and (iii) the value (based on a Black Scholes formula in the case of options and value of the underlying grants in the case of LTIP or outperformance plans) of any equity (including stock, LTIPs and options) or other compensation plans granted or awarded to Executive.

 

8.4.2. continued medical and dental benefits for Executive, Executive's spouse and Executive's eligible dependents, who at the time of Executive's termination are enrolled in the Company’s benefits plans provided for a period of two (2) years following Executive's termination of employment.  Such benefits shall be substantially identical to the benefits maintained for other senior executives of the Company.  Executive acknowledges that such benefit continuation is intended, and shall be deemed, to satisfy the obligations of the Company and any of its subsidiaries and affiliates to provide continuation of benefits under COBRA for such period and that the Company may satisfy such obligation by paying any applicable COBRA premiums or causing such premiums to be paid.

 

8.5. Notice of Termination.  Any purported termination of employment by the Company or by Executive (other than due to Executive's death) shall be communicated by written notice to the other party, which indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated and the date of employment termination.

 

8.6. Employee Termination and Board/Committee/Officer Resignation.  Upon termination of Executive's employment for any reason, Executive's employment with each of the Company and each Subsidiary shall be terminated and Executive shall be deemed to resign, as of the date of such termination and to the extent applicable, from the boards of directors (and any committees thereof) of the Company and any Subsidiary and affiliates and as an officer of the Company and any Subsidiary. Executive shall confirm such resignation(s) in writing to the Company.

 

9. Covenants.

 

9.1. Confidentiality.  Executive acknowledges that, in his employment hereunder, he will occupy a position of trust and confidence with the Company and its Subsidiaries.  Executive agrees that Executive shall not during the Agreement Term and for two (2) years thereafter, except (i) as may be required to perform his duties hereunder or as required by applicable law or (ii) until such information shall have become public other than by Executive’s unauthorized disclosure or (iii) with the prior written consent of the Company, use, disclose or disseminate any trade secrets, confidential information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company and/or any Subsidiary, or their respective businesses, contracts, projects, proposed projects, revenues, costs, operations, methods or procedures.

 

9.2. Non-solicitation.  Executive agrees that, for a period of one (1) year immediately following the end of Executive’s employment with the Company, except acting on behalf of the Company during the Employment Term, Executive shall not, either directly or indirectly, solicit or participate in the solicitation of any employee or consultant of the Company to terminate or materially alter his, her or its relationship with the Company or any Subsidiary.  This restriction shall not apply to Executive’s assistant.

 

9.3. Full time; Non competition. During the Agreement Term, Executive will devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly; except that nothing herein shall preclude Executive from accepting appointment to or continuing to serve on any board of directors or trustees of any business entity, trade organization or any charitable organization or engaging in any activities or managing his investments and affairs so long as such activities in the aggregate do not interfere with the performance of Executive’s duties hereunder or conflict with this Section 9.3 herein.  During the Agreement Term, without the prior approval of the Board, Executive shall not in any city, town, county, parish where the Company and/or any Subsidiaries directly or indirectly engages in business or is actively contemplating engaging in business:  (i) engage in a competing business for Executive’s own account; (ii) enter the employ of, or render any consulting or any other services to, any entity that competes with the Company and/or any of its affiliates; or (iii) become interested in any such competing entity in any capacity, including, without limitation, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; provided, however, Executive may own, directly or indirectly, solely as a passive investment, 5% or less of any class of securities of any entity traded on any national securities exchange and any assets acquired in compliance with this Section.  A business shall not be deemed a “competing business” if it does not invest in or deal with the same basic product type as the Company does from time to time. At this time the basic product type of the Company is large and mid-size office buildings and multi-family properties in Los Angeles County and Hawaii (larger than 50,000 sq. ft. for office properties and 50 units for apartment buildings).

 

9.4. Company Policies.  During the Agreement Term, Executive shall also be subject to and shall abide by all written reasonable policies and procedures of the Company provided to him, including regarding the protection of confidential information and intellectual property and potential conflicts of interest, except to the extent that such policies and procedures conflict with the other provisions of this Agreement, in which case this Agreement shall control. Executive acknowledges that the Company may amend any such policies and guidelines from, time to time, and that Executive remains at all times bound by their most current version to the extent made known to him and reasonable in scope.

 

9.5. Intellectual Property. Except as permitted in Section 9.3 and as provided under Section 2870 of the California Labor Code, the Company shall be the sole owner of all the products and proceeds of Executive’s services hereunder including, without limitation, all materials, ideas, concepts, formats, suggestions, developments, and other intellectual properties that Executive may acquire, obtain, develop or create in connection with his services hereunder and during the Agreement Term, free and clear of any claims by Executive (or anyone claiming under Executive) of any kind or character whatsoever (other than Executive’s rights and benefits hereunder).  Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend the Company’s right, title and interest in and to any such products and proceeds of Executive’s services hereunder.  Notwithstanding the above, Executive shall not be considered to be in breach of this Section 9.5 in connection with any property or other material of a type described in this Section 9.5 which does not become the property of the Company, so long as Executive does not, directly or indirectly, have or obtain any personal interest in such property or material.

 

9.6. General.  Executive and the Company intend that:  (i) this Section 9 concerning (among other things) the exclusive services of Executive to the Company and/or its Subsidiaries shall be construed as a series of separate covenants; (ii) if any portion of the restrictions set forth in this Section 9 should, for any reason whatsoever, be declared invalid by an arbitrator or a court of competent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected; and (iii) Executive declares that the territorial and time limitations set forth in this Section 9 are reasonable and properly required for the adequate protection of the business of the Company and/or its Subsidiaries.  In the event that any such territorial or time limitation is deemed to be unreasonable by an arbitrator or a court of competent jurisdiction, Executive agrees to the reduction of the subject territorial or time limitation to the area or period which such arbitrator or court shall have deemed reasonable.  All of the provisions of this Section 9 are in addition to any other written agreements on the subjects covered herein that Executive may have with the Company and/or any of its Subsidiaries and are not meant to and do not excuse any additional obligations that Executive may have under such agreements.

 

9.7. Specific Performance.  Executive acknowledges and agrees that the confidential information, non-solicitation, intellectual property rights and other rights of the Company referred to in Section 9 of this Agreement are each of substantial value to the Company and/or its subsidiaries and affiliates and that any breach of Section 9 by Executive would cause irreparable harm to the Company and/or its Subsidiaries, for which the Company and/or its Subsidiaries would have no adequate remedy at law.  Therefore, in addition to any other remedies that may be available to the Company and/or any of its Subsidiaries under this Agreement or otherwise, the Company and/or its Subsidiaries shall be entitled to obtain temporary restraining orders, preliminary and permanent injunctions and/or other equitable relief to specifically enforce Executive’s duties and obligations under this Agreement, or to enjoin any breach of this Agreement, without the need to post a bond or other security and without the need to demonstrate special damages.  Furthermore, Executive agrees that any damages suffered by the Company and/or its Subsidiaries as a result of Executive’s breach of Executive’s duties and obligations under this Agreement shall entitle the Company and/or its Subsidiaries to offset such damages against any payments to be made pursuant to this Agreement, to the extent permitted by applicable law.

 

10. Section 280G Payments.  Notwithstanding anything in this Agreement to the contrary , if as a result of change of ownership or effective control covered by Section 280G of the 1986 Internal Revenue Code, as amended (the “Code”) or any successor provision, any Payments due to Executive would be subject to the excise tax imposed by Section 4999 of the Code, Executive shall have the option, exercised in writing within sixty (60) days after the change of control involved, to eliminate or reduce such Payments, in such amounts and such order of priority as Executive may specify in such notice.   “Payment” means any payment, benefit and/or any other amount in the “nature of compensation” to or for the benefit of Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions resulted in that change of ownership or effective control the Code or any person affiliated with the Company or such person).  Notwithstanding any other agreement relating to any Payment, no Payment shall be made until the end of the notice period.

 

11. Miscellaneous.

 

11.1. Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without regard to conflicts of laws principles or rules thereof.

 

11.2. Entire Agreement; Amendment.  This Agreement (and the Option Award and the LTIP Award) represents the entire agreement and understanding between the parties and, except as expressly stated in this Agreement, supersedes any prior agreement, understanding or negotiations respecting such subject.  No change to or modification of this Agreement shall be valid or binding unless it is in writing and signed by Executive and a duly authorized director of the Company.

 

11.3. No Waiver.  Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times.  No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.

 

11.4. Severability; Invalid Provision.  In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.  The parties understand and agree that if any provision of this Agreement shall, for any reason, be adjudged by any court or arbitrator of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair, or invalidate the remainder of this Agreement, but shall be confined in its operation to the provision of this Agreement directly involved in the controversy in which such judgment shall have been rendered.

 

11.5. Assignment.  This Agreement and all of Executive's rights and duties hereunder, shall not be assignable or delegable by Executive.  Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect.  This Agreement may be assigned by the Company to a successor in interest to substantially all of the business operations of the Company.  Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place (except to the extent such assumption would occur by operation of law).  It is anticipated that the Executive’s employer of record and salary and bonus payor may be the Partnership or another Subsidiary, but the Company and the Partnership will be jointly and severally liable for all amounts payable to Executive hereunder.

 

11.6. Set Off.  The Company's obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company or its Subsidiaries to the extent permitted by applicable law.

 

11.7. Successors; Binding Agreement.  This Agreement shall inure to the benefit of and be binding upon the parties' respective personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

11.8. Notice.  Any and all notice given hereunder shall be in writing and shall be deemed to have been duly given when received, if personally delivered; when transmitted, if transmitted by telecopy, or electronic or digital transmission method, upon receipt of telephonic or electronic confirmation; the day after the notice is sent, if sent for next day delivery to a domestic address using a generally recognized overnight delivery service (e.g., FedEx); and upon receipt, if sent by certified or registered mail, return receipt requested.  In each case notice will be sent as follows:

 

	 	If to the Company:	Douglas Emmett, Inc.
	 	 	808 Wilshire Blvd., Suite 200
	 	 	Santa Monica, CA 90401
	 	 	Attention:  Chief Operating Officer
	 	 	Telephone:  (310) 255-7700

 

	 	
If to Executive:

	

William Kamer

	 	 	
808 Wilshire Blvd., Suite 200

	 	 	
Santa Monica, CA 90401

	 	 	
Telephone: 310 255 7700

 

Either party may change its address and/or facsimile number for notice purposes by duly giving notice to the other party pursuant to this Section.

 

11.9. Executive's Representations.  Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of Executive's duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound.  Executive represents and warrants that he is not subject to any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or any other obligation to any former employer or to any other person or entity in any way relating to the right or ability of Executive to be employed by and/or perform services for the Company and its Subsidiaries.  Executive further represents and warrants that he has not brought to or disclosed to the Company or to its Subsidiaries, and covenants that he will not bring to or disclose to the Company or to its Subsidiaries or use in connection with his employment with the Company, any trade secrets or proprietary information from any of his prior employers or from any other person or entity.

 

11.10. Cooperation in Third-Party Disputes.  At the request of the Company, Executive shall cooperate with the Company and/or its Subsidiaries and each of their respective attorneys or other legal representatives (collectively referred to as “Attorneys”) in connection with any claim, litigation, or judicial or arbitral proceeding which is now pending or may hereinafter be brought against the Company and/or any of its Subsidiaries or affiliates by any third party.  Executive’s duty of cooperation shall include, but shall not be limited to, (a) meeting with the Company’s and/or its Subsidiaries’ Attorneys by telephone or in person at mutually convenient times and places in order to state truthfully Executive’s knowledge of the matters at issue and recollection of events; (b) appearing at the Company’s and/or its Subsidiaries’ and/or their Attorneys’ request (and, to the extent possible, at a time convenient to Executive that does not conflict with the needs or requirements of Executive’s then-current employer or personal commitments) as a witness at depositions, trials or other proceedings, without the necessity of a subpoena, in order to state truthfully Executive’s knowledge of the matters at issue; and (c) signing at the Company’s request declarations or affidavits that truthfully state the matters of which Executive has knowledge.  Such services will be without additional compensation if Executive is then employed by the Company or any Subsidiary and for reasonable compensation and subject to his reasonable availability if he is not so employed.  The Company shall promptly reimburse Executive for Executive’s actual and reasonable travel or other out-of-pocket expenses that Executive may incur in cooperating with the Company and/or its Subsidiaries under this Section 11.10.

 

11.11. Withholding Obligations.  The Company, or any other entity making a payment, may withhold and make such deductions from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld or deducted from time to time pursuant to any applicable law, governmental regulation and/or order. The amount of compensation payable to Executive pursuant to this Agreement shall be “grossed up” as necessary (on an after-tax basis) to compensate for any additional social security withholding taxes due as a result of Executive’s shared employment by the any Subsidiary.

 

11.12. Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  A facsimile signature shall be deemed to be the same as an original signature.

 

11.13. Interpretation.  Executive understands that this Agreement is deemed to have been drafted jointly by the parties and that the parties had a reasonable opportunity to retain legal counsel for such purpose.  Any uncertainty or ambiguity shall not be construed for or against any party based on attribution of drafting to any party.

 

11.14. Headings.  Titles or captions of Sections contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provisions hereof.

 

11.15. Survival of Provisions.  All other rights and obligations of the parties hereto, other than those applicable by their express terms only during the Agreement Term, shall survive any termination or expiration of this Agreement or of Executive’s employment with the Company, and shall be fully enforceable thereafter.

 

11.16. Arbitration of Disputes.  Except as is necessary for Executive and the Company to preserve their respective rights under this Agreement by seeking necessary equitable relief (including, but not limited to, the Company’s rights under Section 9 of this Agreement) from a court of competent jurisdiction, the Company and Executive agree that any and all disputes based upon, relating to or arising out of this Agreement (including, but not limited to, any breach or alleged breach of this Agreement, or any dispute concerning the formation of this Agreement, or the validity, scope and/or enforceability of this arbitration provision), Executive’s employment relationship with the Company and/or the termination of that relationship, and/or any other dispute by and between the Company and Executive, including any and all claims Executive may at any time attempt to assert against the Company, shall be submitted to binding arbitration in Los Angeles, California, in accordance with the rules of JAMS, provided that the arbitrator shall allow for discovery sufficient to adequately arbitrate any alleged claims, including access to essential documents and witnesses, and otherwise in accordance with California Code of Civil Procedure § 1283.05.  The party prevailing in any action shall be entitled to its reasonable attorneys’ fees in enforcing its rights hereunder.  In any event, the Company shall pay any expenses that Executive would not otherwise have incurred if the dispute had been adjudicated in a court of law, rather than through arbitration, including the arbitrator’s fee, any administrative fee and any filing fee in excess of the maximum court filing fee in the jurisdiction in which the arbitration is commenced.  Judgment in a court of competent jurisdiction may be had on any decision and award of the arbitrator.  For these purposes, the parties agree to submit to the jurisdiction of the state and federal courts located in Los Angeles County, California.

 

11.17. Section 409A of the Code. This Agreement and all of Executive’s employment arrangements, including bonus, severance, options, equity and other benefits (collectively, Executive’s “Compensation”), whether granted before or after the date hereof,  are intended to comply with, and shall be construed and interpreted in accordance with, Section 409A of the Code (including the related regulations, “Section 409A”).  Each party to this Agreement intends and agrees that Executive’s Compensation shall be interpreted and modified to the minimum extent necessary and to provide as near as possible the same economic benefit to the Executive provided hereunder in the absence of such modification, as mutually agreed by counsel for both parties, so as to avoid the imposition of any excise tax under Section 409A.  Some examples of the effects of Section 409A are set forth on Schedule B.    As a result, Executive will not be deemed to have irrevocably “earned” any Compensation based on the attainment of the pre-established performance goals in relation to the Company’s audited financial statements (even if required to be paid) before the end of the clawback period of Section 954.

 

11.18. Section 954 of the Dodd Frank Act.  This Agreement and all other Compensation of Executive are intended to comply with the “clawback obligations” of Section 954 of the Dodd Frank Act ((including the related regulations, “Section 954”).  If the Company’s financial statements must be restated, to the extent and only to the extent required by Section 954 (if applicable), the Company shall be entitled to recover from Executive, and Executive agrees to promptly repay, any incentive-based compensation which would not have been earned under the restated financial statements.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

 

	 Douglas Emmett, Inc.   	 	Executive	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 By: 	 Jordan L. Kaplan  	 	 William Kamer	 
	 Title: 	 Chief Executive Officer	 	 	 

 

 

	 Douglas Emmett Properties, LP	 	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 By: 	 Jordan L. Kaplan  	 	 
	 Title: 	 Chief Executive Officer	 	 

  

  

 

Schedule A

CALIFORNIA LABOR CODE SECTION 2870

INVENTION ON OWN TIME-EXEMPTION FROM AGREEMENT

(a)           Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1)           Relate at the time of conception or reduction to practice of the invention to the employer's business, or actually or demonstrably anticipated research or development of the employer; or

(2)           Result from any work performed by the employee for the employer.

(b)           To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”

  

 

Schedule B

Examples of Section 409A compliance issues

In determining whether Executive will receive any nonqualified deferred compensation (as defined in Section 409A):

	
·  

	
Any nonqualified deferred compensation which becomes payable as a result of termination of:

 

	
o  

	
Executive’s employment or other service or similar conditions will not be due unless and until that event meets the definition of “Separation from Service” under Section 409A;

 

	
o  

	
Executive’s disability will not be due unless and until that event meets the definition of  “Disability” under Section 409A; and

 

	
o  

	
a change of control or similar event will not be due unless and until that event meets the definition of a “Change of Control Transaction” under Section 409A.

 

	
·  

	
If on the date of Executive’s Termination of Service Executive is a “specified employee” within the meaning of Section 409A and the Company is publicly traded, to the extent required by Section 409A any nonqualified deferred compensation which would otherwise be payable in the six months after Executive’s termination will not be paid until the earlier of (i) the first day of the seventh month following the date of Executive’s termination and (ii) Executive’s death.

 

	
·  

	
Neither party will have any right to accelerate or defer any nonqualified deferred Compensation except in compliance with Section 409A; any provision of Executive’s Compensation which contains an election in violation of Section 409A will be payable on the longer period specified.

 

	
·  

	
If any nonqualified deferred compensation is conditioned on the execution of a release, the payment of such nonqualified deferred compensation must not be made until the 60th day following the payment event.ex10_13.htm

Exhibit 10.13 

ADJUSTABLE RATE MULTIFAMILY NOTE

(1-Month LIBOR Index Structured ARM)

November 1, 2010

 

US $153,630,000.00                                                 

 

FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if more than one) promises to pay to the order of CWCAPITAL LLC, a Massachusetts limited liability company, the principal sum of One Hundred Fifty-Three Million Six Hundred Thirty Thousand and 00/100 Dollars (US $153,630,000.00), with interest on the unpaid principal balance from the Disbursement Date until fully paid at the rates applicable from time to time set forth in this Adjustable Rate Multifamily Note ("Note").

1.            Defined Terms.  In addition to defined terms found elsewhere in this Note, as used in this Note, the following definitions shall apply:

Adjustable Rate.  The initial Adjustable Rate shall be 1.906% per annum until the first Rate Change Date.  From and after each Rate Change Date until the next Rate Change Date, the Adjustable Rate shall be the sum of (i) the Current Index, and (ii) the Margin, which sum is then rounded to three decimal places, subject to the limitations that the Adjustable Rate shall not be less than the Margin.

Amortization Period: Zero (0) months.

Business Day: Any day other than a Saturday, Sunday or any other day on which Lender is not open for business.

Current Index:  The published Index that is effective on the Business Day immediately preceding the applicable Rate Change Date.

Default Rate:  A rate equal to the lesser of 4 percentage points above the then-applicable Adjustable Rate or the maximum interest rate which may be collected from Borrower under applicable law.

Disbursement Date:  The date of disbursement of Loan proceeds hereunder.

First Payment Date:  The first day of December, 2010.

First Principal and Interest Payment Date:  N/A.

Indebtedness:  The principal of, interest on, or any other amounts due at any time under, this Note, the Security Instrument or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instrument under Section 12 of the Security Instrument.

Index:  The British Bankers Association fixing of the London Inter-Bank Offered Rate for 1-month U.S. Dollar-denominated deposits as reported by Reuters through electronic transmission.  If the Index is no longer available, or is no longer posted through electronic transmission, Lender will choose a new index that is based upon comparable information and provide notice thereof to Borrower.

Initial Adjustable Rate:  One and 906/1000 percent (1.906%) per annum until the first Rate Change Date.

Last Interest-Only Payment Date: N/A.

Lender:  The holder of this Note.

 

Loan:  The loan evidenced by this Note.

Loan Year:  The period beginning on the Disbursement Date and ending on the day before the twelfth Rate Change Date and each successive 12-month period thereafter.

Margin: One and 65/100 percent (1.65%).

Maturity Date: The first day of November, 2020, or any earlier date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise.

Payment Change Date:  The first day of each month following the First Payment Date until this Note is repaid in full.

Prepayment Lockout Period:   The first Loan Year of the term of this Note.

Prepayment Premium Term:  The period beginning on the Disbursement Date and ending on the last calendar day of the 4th month prior to the month in which the Maturity Date occurs.

Property Jurisdiction:  The jurisdiction in which the Land is located.

Rate Change Date:  The First Payment Date and the first day of each month thereafter until this Note is repaid in full.

Security Instrument:  A Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California) dated as of the date of this Note.

Servicing Payment Date:  Two (2) Business Days prior to the date each monthly payment is due under this Note.

Event of Default, Key Principal and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Security Instrument.

2.           Address for Payment.  All payments due under this Note shall be payable at 63 Kendrick Street, One Charles River Place, Needham, Massachusetts 02494, or such other place as may be designated by written notice to Borrower from or on behalf of Lender.

3.           Payment of Principal and Interest.  This Note will accrue interest on the outstanding principal balance at the Adjustable Rate.  Principal and interest shall be paid as follows:

(a)           Short Month Interest.  If disbursement of principal is made by Lender to Borrower on any day other than the first day of the month, interest for the period beginning on the Disbursement Date and ending on and including the last day of the month in which such disbursement is made shall be payable simultaneously with the execution of this Note.

(b)           Interest Accrual.   Interest shall accrue on the unpaid principal balance of this Note at the Adjustable Rate and shall be computed on an actual/360 basis.  The amount of interest payable each month by Borrower pursuant to Paragraph 3(d) below will be based on the actual number of calendar days during such month and shall be calculated by multiplying the unpaid principal balance of this Note by the applicable Adjustable Rate, dividing the product by 360 and multiplying the quotient by the actual number of days elapsed during the month.  Borrower understands that the amount of interest payable each month will vary based on the unpaid principal balance of this Note, the Adjustable Rate and the actual number of calendar days during such month.

(c)           Adjustable Rate.  The Initial Adjustable Rate shall be in effect until the first Rate Change Date.  On the first Rate Change Date and each Rate Change Date thereafter,  the Adjustable Rate shall change until the Loan is repaid in full.  From and after each Rate Change Date until the next Rate Change Date, the Adjustable Rate shall be the sum of (i) the Current Index, and (ii) the Margin, which sum is then rounded to three decimal places, subject to the limitations that the Adjustable Rate shall not be less than the Margin.  Accrued interest on this Note shall be paid in arrears.

(d)           Monthly Payments.  Borrower acknowledges and agrees to pay all Required Monthly Payments (defined below) due under this Note to the Lender on the Servicing Payment Date even though such Required Monthly Payments are due on the first day of every month.  Select one only:

	
  

	 	
Amortizing Loan.  If the Loan is an amortizing Loan, consecutive monthly installments of principal and interest, each in the amount of the Required Monthly Payment (defined below), shall be payable on the First Payment Date and on the first day of each month thereafter until the entire unpaid principal balance evidenced by this Note is fully paid.  Any remaining principal and accrued but unpaid interest, if not sooner paid, shall be due and payable on the Maturity Date.  The initial Required Monthly Payment shall be ______________________________________ Dollars (US $_______________).  Thereafter, on each Payment Change Date the Required Monthly Payment shall change based on the then-current unpaid principal balance of this Note, the then-applicable Adjustable Rate and the actual number of calendar days during the applicable month, and shall be in an amount equal to the sum of (i) a principal payment equal to ____________________________________ Dollars (US $______________)  plus (ii) an interest payment calculated utilizing the accrual method stated in Paragraph 3(b) above.

	
  

	
Partial Interest Only Loan.  If the Loan is a partial interest only Loan, consecutive monthly installments of interest only, each in the amount of the Required Monthly Interest Only Payment (defined below), shall be payable on the First Interest Only Payment Date and on each Payment Change Date until and including the Last Interest Only Payment Date.  The initial Required Monthly Interest Only Payment shall be ____________________________________ Dollars (US $_______________________). Thereafter, on each Payment Change Date until and including the Last Interest Only Payment Date, the Required Monthly Interest Only Payment shall change based on the then-applicable Adjustable Rate and the actual number of calendar days during the applicable month.  Commencing on the First Principal and Interest Payment Date and on each Payment Change Date thereafter, consecutive monthly installments of principal and interest, each in the amount of the Required Monthly Principal and Interest Payment (defined below, and together with the Required Monthly Interest Only Payment, the “Required Monthly Payment”), shall be payable until the entire unpaid principal balance evidenced by this Note is fully paid.  Any remaining principal and accrued but unpaid interest, if not sooner paid, shall be due and payable on the Maturity Date. The Required Monthly Principal and Interest Payment shall change based on the then-current unpaid principal balance of this Note, the then-applicable Adjustable Rate and the actual number of calendar days during the applicable month, and shall be in an amount equal to the sum of (i) a principal payment equal to ____________________________________ Dollars (US $______________)  plus (ii) an interest payment calculated utilizing the accrual method stated in Paragraph 3(b) above.

	
  

	 X	
Interest Only Loan.  If the Loan is an interest-only Loan, consecutive monthly installments of interest only, each in the amount of the Required Monthly Payment (defined below), shall be payable on the First Payment Date and on the first day of each month thereafter until the entire unpaid principal balance evidenced by this Note is fully paid.  The entire unpaid principal balance and accrued but unpaid interest, if not sooner paid, shall be due and payable on the Maturity Date.  The initial Required Monthly Payment shall be Two Hundred Forty-Four Thousand Fifteen and 65/100 Dollars (US $244,015.65). Thereafter, on each Payment Change Date the Required Monthly Payment shall change based on the then-applicable Adjustable Rate and the actual number of calendar days during the applicable month.  The amount of each Required Monthly Payment shall be calculated utilizing the interest accrual method stated in Paragraph 3(b) above.

(e)           Conversion Option.  Borrower is simultaneously herewith executing a Conversion Agreement (the "Conversion Agreement") which provides, among other things, that Borrower shall have the right to convert the interest rate on this Note to a fixed rate (the “Fixed Rate Conversion Option”) on a Payment Change Date during the Conversion Period (as defined in the Conversion Agreement) in accordance with the terms thereof.  If Borrower timely exercises the Fixed Rate Conversion Option, the applicable interest rate under this Note, beginning on the Fixed Rate Conversion Effective Date (as defined in the Conversion Agreement) and continuing until the Maturity Date (as the Maturity Date may be modified  as reflected in an amendment to and/or restatement of this Note),shall not be the rate determined in accordance with subsection (c) above, but shall be the fixed rate established in accordance with the terms of the Conversion Agreement.  Such fixed rate shall be reflected in an amendment to and/or restatement of this Note.

(f)           Notice of Change in Required Monthly Payment.  Before each Payment Change Date, Lender shall calculate the Required Monthly Payment due on the next Payment Change Date and shall notify Borrower (in the manner specified in the Security Instrument for giving notices) of the Required Monthly Payment next due.

(g)           Correction to Required Monthly Payment.  If Lender at any time determines, in its sole but reasonable discretion, that it has miscalculated the amount of the Required Monthly Payment (whether because of a miscalculation of the Adjustable Rate or otherwise), then Lender shall give notice to Borrower of the corrected amount of the Required Monthly Payment (and the corrected Adjustable Rate, if applicable) and (i) if the corrected amount of the Required Monthly Payment represents an increase, then Borrower shall, within 30 calendar days thereafter, pay to Lender any sums that Borrower would have otherwise been obligated under this Note to pay to Lender had the amount of the Required Monthly Payment not been miscalculated, or (ii) if the corrected amount of the Required Monthly Payment represents a decrease thereof and Borrower is not otherwise in breach or default under any of the terms and provisions of the Note, the Security Instrument or any other loan document evidencing or securing the Note, then Borrower shall thereafter be paid the sums that Borrower would not have otherwise been obligated to pay to Lender had the amount of the Required Monthly Payment not been miscalculated.

               (h)           Payments Before Due Date.  Any regularly scheduled monthly installment of principal and interest that is received by Lender before the date it is due shall be deemed to have been received on the due date solely for the purpose of calculating interest due.

(i)           Accrued Interest.  Any accrued interest remaining past due for 30 days or more shall be added to and become part of the unpaid principal balance and shall bear interest at the rate or rates specified in this Note.  Any reference herein to "accrued interest" shall refer to accrued interest which has not become part of the unpaid principal balance.  Any amount added to principal pursuant to the Loan Documents shall bear interest at the applicable rate or rates specified in this Note and shall be payable with such interest upon demand by Lender and absent such demand, as provided in this Note for the payment of principal and interest.

4.           Application of Payments.  If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender's discretion.  Borrower agrees that neither Lender's acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender's application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.  If Lender accepts a guaranty of only a portion of the Indebtedness, Borrower hereby waives its right under California Civil Code Section 2822(a) to designate the portion of the Indebtedness which shall be satisfied by any guarantor's partial payment.

5.           Security.  The Indebtedness is secured, among other things, by the Security Instrument, and reference is made to the Security Instrument for other rights of Lender concerning the collateral for the Indebtedness.

6.           Acceleration.  If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower.  Lender may exercise this option to accelerate regardless of any prior forbearance.

7.           Late Charge.  MONTHLY PAYMENTS UNDER THIS NOTE ARE DUE ON THE FIRST DAY OF EACH AND EVERY MONTH UNTIL THIS NOTE IS PAID IN FULL.  BORROWER HEREBY AGREES THAT SUCH PAYMENTS SHALL BE MADE TO THE LENDER ON THE SERVICING PAYMENT DATE.  THERE IS NO "GRACE" PERIOD FOR ANY MONTHLY INSTALLMENTS DUE HEREUNDER.  If any monthly installment due hereunder is not received by Lender on or before the first day of each month or if any other amount payable under this Note or under the Security Instrument or any other Loan Document is not received by Lender before or on the date such amount is due, counting from and including the date such amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5 percent of such monthly installment or other amount due.  Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses.  Borrower agrees that the late charge payable pursuant to this Paragraph represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment.  The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Paragraph 8.

8.           Default Rate.  So long as any monthly installment or any other payment due under this Note remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or other payment due, as applicable, at the Default Rate.  If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate.  Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, that, during the time that any monthly installment or payment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender's ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses.  Borrower also acknowledges that, during the time that any monthly installment or other payment due under this Note is delinquent for more than 30 days, Lender's risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk.  Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower's delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

9.           Limits on Personal Liability.

(a)           Except as otherwise provided in this Paragraph 9, Borrower shall have no personal liability under this Note, the Security Instrument or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents, and Lender's only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender's exercise of its rights and remedies with respect to the Mortgaged Property (as such term is defined in the Security Instrument) and any other collateral held by Lender as security for the Indebtedness.  This limitation on Borrower's liability shall not limit or impair Lender's enforcement of its rights against any guarantor of the Indebtedness or any guarantor of any obligations of Borrower.

(b)           Borrower shall be personally liable to Lender for the repayment of a portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of:

(1)           failure of Borrower to pay to Lender upon demand after an Event of Default, all Rents to which Lender is entitled under Section 3(a) of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence;

(2)           failure of Borrower to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument;

(3)           failure of Borrower to comply with Section 14(d) or (e) of the Security Instrument relating to the delivery of books and records, statements, schedules and reports;

(4)           fraud or written material misrepresentation by Borrower, Key Principal or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender;

(5)           failure to apply Rents, first, to the payment of reasonable operating expenses (other than Property management fees that are not currently payable pursuant to the terms of an Assignment of Management Agreement or any other agreement with Lender executed in connection with the Loan) and then to Debt Service Amounts, except that Borrower will not be personally liable (i) to the extent that Borrower lacks the legal right to direct the disbursement of such sums because of a bankruptcy, receivership or similar judicial proceeding, or (ii) with respect to Rents that are distributed in any calendar year if Borrower has paid all operating expenses and Debt Service Amounts for that calendar year; and/or

(6)           failure by Borrower to comply with the provisions of Section 17(a) of the Security Instrument.

(c)           Borrower shall become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following Events of Default:

(1)           Borrower's acquisition of any property or operation of any business not permitted by Section 33 of the Security Instrument;

(2)           a Transfer that is an Event of Default under Section 21 of the Security Instrument; and/or

(3)           the occurrence of a Bankruptcy Event (but only if the Bankruptcy Event occurs with the consent, encouragement or active participation of Borrower, Key Principal or any Borrower Affiliate).

(d)           To the extent that Borrower has personal liability under this Paragraph 9, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under this Note, the Security Instrument, any other Loan Document or applicable law. If Borrower is a married person, then Borrower agrees that Lender may look to all of Borrower’s community property and separate property to satisfy Borrower’s recourse obligations under this Paragraph 9.  For purposes of this Paragraph 9, the term "Mortgaged Property" shall not include any funds that (1) have been applied by Borrower as required or permitted by the Security Instrument prior to the occurrence of an Event of Default, or (2) Borrower was unable to apply as required or permitted by the Security Instrument because of a bankruptcy, receivership, or similar judicial proceeding.

10.           Lockout; Voluntary and Involuntary Prepayments.

(a)           Subject to the Prepayment Lockout Period and the prepayment provisions of this Note, Borrower may voluntarily prepay all (but not less than all) of the indebtedness evidenced hereby.

(b)           A prepayment premium shall be payable in connection with any prepayment made under this Note as provided below:

(1)           At any time after the expiration of the Prepayment Lockout Period, Borrower may voluntarily prepay all (but not less than all) of the unpaid principal balance of this Note only on the last calendar day of a calendar month(the "Last Day of the Month") and only if Borrower has complied with all of the following:

	
(i)  

	
Borrower must give Lender at least 30 days (if given via U.S. Postal Service) or 20 days (if given via facsimile, email or overnight courier), but not more than 60 days, prior written notice of Borrower's intention to make a prepayment (the "Prepayment Notice"). The Prepayment Notice shall be given in writing (via facsimile, email, U.S. Postal Service or overnight courier) and addressed to Lender.  The Prepayment Notice shall include, at a minimum, the Business Day upon which Borrower intends to make the prepayment (the "Intended Prepayment Date").

	
(ii)  

	
 Borrower acknowledges that the Lender is not required to accept any voluntary prepayment of this Note on any day other than the Last Day of the Month even if Borrower has given a Prepayment Notice with an Intended Prepayment Date other than the Last Day of the Month or if the Last Day of the Month is not a Business Day.  Therefore, even if Lender accepts a voluntary prepayment on any day other than the Last Day of the Month, for all purposes (including the accrual of interest and the calculation of the prepayment premium), any prepayment received by Lender on any day other than the Last Day of the Month shall be deemed to have been received by Lender on the Last Day of the Month and any prepayment  calculation will include interest to and including the Last Day of the Month in which such prepayment occurs.  If the Last Day of the Month is not a Business Day, then the Borrower must make the payment on the Business Day immediately preceding the Last Day of the Month.

	
(iii)  

	
Any prepayment shall be made by paying (A) the amount of principal being prepaid, (B) all accrued interest (calculated to the Last Day of the Month), (C) all other sums due Lender at the time of such prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.

	
  

	
(iv)   

	
If, for any reason, Borrower fails to prepay this Note within five (5) Business Days after the Intended Prepayment Date, then Lender shall have the right, but not the obligation, to recalculate the prepayment premium pursuant to Schedule A based upon the date that Borrower actually prepays this Note.  Notwithstanding the foregoing, if the delayed prepayment occurs in a month other than the month stated in the original Prepayment Notice, then Lender shall (a) have the right, but not the obligation, to recalculate the prepayment premium pursuant to Schedule A based upon the date that Borrower actually prepays this Note and (b) recalculate the amount of interest payable.  In either instance, for purposes of recalculation, such new prepayment date shall be deemed the "Intended Prepayment Date."

	 	
(2)

	
Upon Lender's exercise of any right of acceleration under this Note, Borrower shall pay to Lender, in addition to the entire unpaid principal balance of this Note outstanding at the time of the acceleration, (A) all accrued interest and all other sums due Lender under this Note and the other Loan Documents, and (B) the prepayment premium calculated pursuant to Schedule A.

	 	
(3)

	
Any application by Lender of any collateral or other security to the repayment of any portion of the unpaid principal balance of this Note prior to the Maturity Date and in the absence of acceleration shall be deemed to be a partial prepayment by Borrower, requiring the payment to Lender by Borrower of a prepayment premium.

                (c)           Notwithstanding the provisions of Paragraph 10(b), no prepayment premium shall be payable (1) with respect to any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument, or (2) as provided in subparagraph (c) of Schedule A.

                (d)           Schedule A is hereby incorporated by reference into this Note.

                (e)           Any required prepayment of less than the entire unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless Lender agrees otherwise in writing.

                (f)           Borrower recognizes that any prepayment of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from a default by Borrower, will result in Lender's incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender's ability to meet its commitments to third parties.  Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages.  Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth on Schedule A represents a reasonable estimate of the damages Lender will incur because of a prepayment.

                (g)           Borrower further acknowledges that the prepayment premium provisions of this Note are a material part of the consideration for the loan evidenced by this Note, and acknowledges that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower's voluntary agreement to the prepayment premium provisions.

                11.           Costs and Expenses.  Borrower shall pay on demand all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

                12.           Forbearance.  Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy.  The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender's right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment.  Enforcement by Lender of any security for Borrower's obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

                13.           Waivers.  Presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower, Key Principal, and all endorsers and guarantors of this Note and all other third party obligors.

                14.           Loan Charges.  Borrower agrees to pay an effective rate of interest equal to the sum of the interest rate provided for in this Note and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents.  Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law.  If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation.  The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note.  For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of the Note.  Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note.

                15.           Commercial Purpose.  Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes.

                16.           Counting of Days.  Except where otherwise specifically provided, any reference in this Note to a period of "days" means calendar days, not Business Days.

                17.           Governing Law.  This Note shall be governed by the law of the jurisdiction in which the Land is located.

                18.           Captions.  The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note.

                19.           Notices.  All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 31 of the Security Instrument.

                20.           Consent to Jurisdiction and Venue.   Borrower and Key Principal each agrees that any controversy arising under or in relation to this Note shall be litigated exclusively in the Property Jurisdiction.  The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Note.  Borrower and Key Principal each irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

                21.           WAIVER OF TRIAL BY JURY.  BORROWER, KEY PRINCIPAL AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER, KEY PRINCIPAL AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

ATTACHED SCHEDULES.  The following Schedules are attached to this Note:

	
  

	 X	
  Schedule A

	
Prepayment Premium (required)

	
  

	 X	
  Schedule B-1

	
Modifications to Multifamily Note

 

	
  

	 X	
  Schedule B-2

	

Modifications to Multifamily Note (Waste)

	
(Remainder of this page left intentionally blank.)

 

 

 

           IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has caused this Note to be signed and delivered by its duly authorized representative.

 

	 	 BORROWER:	 
	 	 	 
	 	 BARRINGTON PACIFIC, LLC,
	 	 a California limited liability company
	 	 	 
	 	By:	Douglas Emmett Management, Inc.,
	 	 	a Delaware corporation, its Manager
	 	 	 
	 	 	 
	 	 	By:__________________________
	 	 	Name:  William Kamer
	 	 	Title:  Chief Financial Officer

 

Fannie Mae Commitment/Pool Number:  ______________

  

 

	PAY TO THE ORDER OF   	 	 
	WITHOUT RECOURSE	 

CWCAPITAL LLC,

a  Massachusetts limited liability company

By:                                                      

Name: Paul A. Sherrington

Title: Senior Vice President

Date:   November _____, 2010

Fannie Mae Commitment/Pool Number:  ________________

  

 

ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO

PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY

Key Principal, who has an economic interest in Borrower or who will otherwise obtain a material financial benefit from the Loan, hereby absolutely, unconditionally and irrevocably agrees to pay to Lender, or its assigns, on demand, all amounts for which Borrower is personally liable under Paragraph 9 of the Adjustable Rate Multifamily Note to which this Acknowledgment is attached (the "Note").  The obligations of Key Principal shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instrument.  Lender may pursue its remedies against Key Principal without first exhausting its remedies against the Borrower or the Mortgaged Property. All capitalized terms used but not defined in this Acknowledgment shall have the meanings given to such terms in the Security Instrument.  As used in this Acknowledgment, the term "Key Principal" (each if more than one) shall mean only those individuals or entities that execute this Acknowledgment.

The obligations of Key Principal shall be performed without demand by Lender and shall be unconditional irrespective of the genuineness, validity, or enforceability of the Note, or any other Loan Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or a guarantor.  Key Principal hereby waives any and all benefits and defenses under California Civil Code Section 2810 and agrees that by doing so Key Principal shall be liable even if Borrower had no liability at the time of execution of the Note, the Security Instrument or any other Loan Document, or thereafter ceases to be liable.  Key Principal hereby waives any and all benefits and defenses under California Civil Code Section 2809 and agrees that by doing so Key Principal’s liability may be larger in amount and more burdensome than that of Borrower.  Key Principal hereby waives the benefit of all principles or provisions of law, which are or might be in conflict with the terms of this Acknowledgment, and agrees that Key Principal's obligations shall not be affected by any circumstances which might otherwise constitute a legal or equitable discharge of a surety or a guarantor.  Key Principal hereby waives the benefits of any right of discharge and all other rights under any and all statutes or other laws relating to guarantors or sureties, to the fullest extent permitted by law, diligence in collecting the Indebtedness, presentment, demand for payment, protest, all notices with respect to the Note including this Acknowledgment, which may be required by statute, rule of law or otherwise to preserve Lender's rights against Key Principal under this Acknowledgment, including notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, notice of the incurring by Borrower of any obligation or indebtedness and all rights to require Lender to (a) proceed against Borrower, (b) proceed against any general partner of Borrower, (c) proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy it may have against Borrower, or any general partner of Borrower, including any and all benefits under California Civil Code Sections 2845, 2849 and 2850.

Key Principal understands that the exercise by Lender of certain rights and remedies contained in the Security Instrument (such as a nonjudicial foreclosure sale) may affect or eliminate Key Principal’s right of subrogation against Borrower and that Key Principal may therefore incur a partially or totally nonreimburseable liability under this Acknowledgment.  Nevertheless, Key Principal hereby authorizes and empowers Lender to exercise, in its sole and absolute discretion, any right or remedy, or any combination thereof, which may then be available, since it is the intent and purpose of Key Principal that the obligations under this Acknowledgment shall be absolute, independent and unconditional under any and all circumstances.  Key Principal expressly waives any defense (which defense, if Key Principal had not given this waiver, Key Principal might otherwise have) to a judgment against Key Principal by reason of a nonjudicial foreclosure.  Without limiting the generality of the foregoing, Key Principal hereby expressly waives any and all benefits under (i) California Code of Civil Procedure Section 580a (which Section, if Key Principal had not given this waiver, would otherwise limit Key Principal’s liability after a nonjudicial foreclosure sale to the difference between the obligations of Key Principal under this Acknowledgment and the fair market value of the property or interests sold at such nonjudicial foreclosure sale), (ii) California Code of Civil Procedure Sections 580b and 580d (which Sections, if Key Principal had not given this waiver, would otherwise limit Lender’s right to recover a deficiency judgement with respect to purchase money obligations and after a nonjudicial foreclosure sale, respectively), and (iii) California Code of Civil Procedure Section 726 (which Section, if Key Principal had not given this waiver, among other things, would otherwise require Lender to exhaust all of its security before a personal judgment could be obtained for a deficiency).  Notwithstanding any foreclosure of the lien of the Security Instrument, whether by the exercise of the power of sale contained in the Security Instrument, by an action for judicial foreclosure or by Lender’s acceptance of a deed in lieu of foreclosure, Key Principal shall remain bound under this Acknowledgment.

In accordance with Section 2856 of the California Civil Code, Key Principal also waives any right or defense based upon an election of remedies by Lender, even though such election (e.g., nonjudicial foreclosure with respect to any collateral held by Lender to secure repayment of the Indebtedness) destroys or otherwise impairs the subrogation rights of Key Principal or the right of Key Principal (after payment of the obligations guaranteed by Key Principal under this Acknowledgment) to proceed against Borrower for reimbursement, or both, by operation of Section 580d of the California Code of Civil Procedure or otherwise.

In accordance with Section 2856 of the California Civil Code, Key Principal waives any and all other rights and defenses available to Key Principal by reason of Sections 2787 through 2855, inclusive, of the California Civil Code, including any and all rights or defenses Key Principal may have by reason of protection afforded to Borrower with respect to any of the obligations of Key Principal under this Acknowledgment pursuant to the antideficiency or other laws of the State of California limiting or discharging Borrower’s Indebtedness, including Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure.

In accordance with Section 2856 of the California Civil Code, Key Principal agrees to withhold the exercise of any and all subrogation and reimbursement rights against Borrower, against any other Person, and against any collateral or security for the Indebtedness, including any such rights pursuant to Sections 2847 and 2848 of the California Civil Code, until the Indebtedness has been indefeasibly paid and satisfied in full, all obligations owed to Lender under the Loan Documents have been fully performed, and Lender has released, transferred or disposed of all of its right, title and interest in such collateral or security.

Key Principal acknowledges that Key Principal has received a copy of the Note and all other Loan Documents.  Neither this Acknowledgment nor any of its provisions may be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that agreement.  Key Principal agrees to notify Lender (in the manner for giving notices provided in Section 31 of the Security Instrument) of any change of Key Principal's address within 10 Business Days after such change of address occurs.  Any notices to Key Principal shall be given in the manner provided in Section 31 of the Security Instrument.  Key Principal agrees to be bound by Paragraphs 20 and 21 of the Note.

THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF, THE NOTE.  BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE.

(Remainder of this page intentionally left blank.)

 

 

 

IN WITNESS WHEREOF, Key Principal has signed and delivered this Acknowledgment or has caused this Acknowledgment to be signed and delivered by its duly authorized representative.

 

	 	KEY PRINCIPAL
	 	 	 
	 	DOUGLAS EMMETT PROPERTIES, LP,
	 	a Delaware limited partnership
	 	 	 
	 	 By:  Douglas Emmett Management, Inc.,
	 	 a Delaware corporation, its General Partner
	 	 	 
	 	By:__________________________
	 	Name: William Kamer
	 	Title: Chief Financial Officer
	 	 	 
	 	Address:  	808 Wilshire Boulevard, Suite 200
	 	 	Santa Monica, California 90401
	 	 	Attn: Jordan L. Kaplan and William Kamer

  

  

 

SCHEDULE A

ARM LOAN - GRADUATED PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed as follows:

	
  

	
(a)

	
Borrower shall have no right to make a voluntary prepayment of this Note, in whole or in part, during the Prepayment Lockout Period.  If, during the Prepayment Lockout Period, Lender accelerates the unpaid principal balance of this Note or otherwise applies collateral held by Lender to the repayment of any portion of the unpaid principal balance as permitted in Section 10(b)(3) of the Note (if any), the prepayment premium shall be equal to the following percentage of the amount of principal being prepaid at the time of such acceleration or application:

5.00%

	
  

	
(b)

	
If, during the second through the tenth Loan Years, Borrower makes a voluntary prepayment of this Note, Lender accelerates the unpaid principal balance of this Note, or the Lender applies collateral held by Lender to the repayment of any portion of the unpaid principal balance as permitted in Section 10(b)(3) of the Note (if any), the prepayment premium shall be equal to the following percentage of the amount of principal being prepaid at the time of such prepayment, acceleration or application:

	 	
Second Loan Year

	
4.00%

	 	
Third Loan Year

	
3.00%

	 	
Fourth Loan Year

	
2.00%

	 	
Fifth Loan Year

	
1.00%

	 	
Sixth Loan Year

	
1.00%

	 	
Seventh Loan Year

	
1.00%

	 	
Eighth Loan Year

	
0.00%

	 	
Ninth Loan Year

	
0.00%

	 	
Tenth Loan Year

	
0.00%

 

	 	 	 
	 	 Borrower’s Initials	 

  

 

SCHEDULE B-1

MODIFICATIONS TO MULTIFAMILY NOTE

The following modifications are made to the text of the Note and the Acknowledgement of Key Principal that precede this Schedule:

1.           The following defined term is added to paragraph 1 following the defined term “Current Index”:

 

“Debt Service Amounts:  Amounts payable under this Note, the Security Instrument or any other Loan Document.”

2.            The definition of the term "Prepayment Lockout Period" appearing in Paragraph 1 is hereby modified by adding the words “, which expires on October 31, 2011” immediately following the word “Note”.

3.            The definition of the term "Prepayment Premium Term" appearing in Paragraph 1 is hereby deleted.

4.             Paragraph 3(a) is hereby modified by deleting the words "simultaneously with the execution of this Note" and replacing them with the words "on the Disbursement Date".

5              Paragraph 3(c) is hereby modified by inserting the word "monthly" immediately preceding the words "in arrears" appearing in the third sentence of said subparagraph.

6.             Paragraph 3(e) is hereby deleted in its entirety.

7.             Paragraph 3(f) is hereby modified by deleting the word "Before" and inserting the words "Not less than three (3) Business Days before" in place thereof.

8.             Paragraph 3(g) is hereby modified by inserting the word "promptly" immediately following the word "thereafter" appearing in subparagraph (ii) thereof.

9.             Paragraph 6 is hereby modified by inserting the word "applicable" immediately preceding the words "prepayment premium" appearing in the first sentence thereof.

10.           Paragraph 9(a) is hereby modified by deleting the words "Borrower shall have no" and inserting the following words in place thereof: "neither Borrower, nor its directors, officers, or employees shall have any".

11.           Paragraph 9(b) is hereby modified as follows:

The following words are inserted immediately after the word "Borrower" appearing in the first line of said subparagraph:

", but not its directors, officers or employees ".

The following words are inserted immediately following the word "Rents" appearing in subparagraph (1) of said paragraph 9(b): "received and in the possession of Borrower and not previously applied to payment of Debt Service Amounts and operating expenses,".

Section 9(b)(5) is amended by inserting the words “then due and payable” immediately following the words “Debt Service Amounts” in each instance appearing therein.

The words “and/or” appearing at the end of subsection 5 are deleted, the period appearing at the end of subsection 6 is deleted and replaced with the words “and/or;” and the following new subsection 7 is inserted immediately thereafter:

“7.           The failure of Borrower or Key Principal to purchase a “Subsequent Hedge” as defined in that certain Hedge Security Agreement between Borrower, Key Principal  and Lender of even date herewith, executed by Borrower, Key Principal and Lender in connection with the Loan.

12.           Paragraph 9(c) is hereby modified as follows:

The following words are inserted immediately preceding the word "shall" appearing in the first line of said paragraph:

", but not its directors, officers or employees,".

The following words are inserted immediately following the word "Instrument" appearing in subparagraph (1) of said paragraph 9(c): ", or otherwise consented to by Lender in writing;".

The following words are inserted immediately following the word "Instrument" appearing in subparagraph (2) of said paragraph 9(c): ", unless consented to pursuant to Section 21(c) of the Security Instrument in writing".

Subparagraph (3) is deleted in its entirety and replaced with the following:

"(3) the occurrence of a Bankruptcy Event, provided that (A) with respect to a Bankruptcy Event described in clause (iv) of the definition thereof, Borrower shall only become personally liable to Lender for the repayment of all of the Indebtedness if Borrower, Key Principal or any Borrower Affiliate files or joins in or solicits the filing of such involuntary case, or fails on a timely basis to take appropriate actions that are available to Borrower to oppose the filing of such involuntary case (whether filed by a Borrower Affiliate or any other party), and (B) with respect to a Bankruptcy Event described in clause (v) of the definition thereof, Borrower shall only become personally liable to Lender for the repayment of all of the Indebtedness if Borrower, Key Principal or any Borrower Affiliate consents to, joins in, or fails on a timely basis to take appropriate actions that are available to Borrower to oppose an application for the appointment of such receiver, liquidator, custodian, sequestrator, trustee or other similar officer. For purposes of this provision, clauses (iv) and (v) of the definition of Bankruptcy Event shall not apply to such events if they are initiated, filed, made or appointed by, or on a consensual basis with, one or more creditors that include the Lender. Also for purposes of this provision, the term "Borrower Affiliate" shall exclude limited partners of Key Principal that a) own less than a 25% limited partnership interest in Key Principal and b) are not owned or controlled by the REIT; provided, however, that in no event shall such exclusion apply to any director or officer of the REIT.”

13.           Paragraph 10(b)(1)((ii) is hereby amended by inserting the words "on the amount prepaid" in the second sentence of said subsection immediately following the words "will include interest".

14.           Paragraph 10(b)(1)(iii)(B) is hereby amended by inserting the words "on the amount prepaid"  immediately following the words "accrued interest".

15.           Paragraph 10(b)(1)(iv) is hereby amended by inserting the parenthetical "(unless requested by Borrower)" immediately following the words "but not the obligation" appearing in the first and second sentences of said subparagraph

16.           Paragraph 10(b)(3) is hereby amended by deleting the words "a prepayment premium" appearing therein and inserting the words "the applicable prepayment premium, if any" in place thereof.

17.           Paragraph 10(f) is hereby amended by adding the parenthetical "(and Lender by acceptance of this Note)" immediately following the word "Borrower" appearing in the third sentence of said subparagraph.

18.           Paragraph 14 is hereby modified as follows:

By inserting the words "pursuant to the Loan Documents" in the first sentence thereof immediately preceding the words "in connection".

By adding the words "without prepayment premium to Borrower" to the end of the fourth sentence of said paragraph immediately following the word "Note".

19.           Section 19 is hereby modified by inserting the words ", or Borrower to Lender," immediately following the word "Borrower" appearing therein.

20.           The Acknowledgement of Key Principal is hereby modified as follows:

The following new paragraph is hereby inserted immediately following the fourth paragraph:

"Key Principal's director's, officers and employees shall have no personal liability under this Acknowledgement for the performance of any of the obligations of Key Principal under this Acknowledgement.".

The sixth paragraph is hereby deleted in its entirety and the following new paragraph is hereby inserted in place thereof:

"In accordance with Section 2856 of the California Civil Code, Key Principal agrees to withhold the exercise of any and all subrogation and reimbursement rights against Borrower, against any other person who is a guarantor or surety with respect to the Indebtedness, and against any collateral or security for the Indebtedness, including any such rights pursuant to Sections 2847 and 2848 of the California Civil Code, until the Indebtedness has been indefeasibly paid and satisfied in full and the lien of the Security Instrument has been reconveyed or Lender has otherwise released, transferred or disposed of all of its right, title and interest in such collateral or security."

The eighth paragraph is modified by adding the following words to the end of the fourth sentence of said paragraph immediately following the word "Security Instrument": "at the address of Key Principal set forth below or such other address as to which notice of change of address has been given in accordance with Section 31(b) of the Security Instrument".

 

	 	 	 
	 	 Borrower’s Initials	 

  

 

SCHEDULE B-2

MODIFICATIONS TO MULTIFAMILY NOTE

(Waste)

The following modification is made to the text of the Multifamily Note that precedes this Schedule:

1.           Paragraph 9(b) of the Note is hereby modified by deleting clause (6) in its entirety and inserting the following in lieu thereof:

	
  

	
“(6) waste or abandonment of the Mortgaged Property by Borrower.”

All capitalized terms used but not defined in the Note (including this Schedule B) shall have the meanings given to such terms in the Security Instrument (as that term is defined in this Note).

	 	 	 
	 	 Borrower’s Initials

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00185-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00185-of-00352.parquet"}]]