Document:

Exhibit
10.36

 

CONSENT, ASSUMPTION, AND MODIFICATION AGREEMENT WITH RELEASE

 

This
Consent, Assumption, and Modification Agreement With Release (this “Agreement”)
is entered into as of October 20, 2010, by and among WAIPOULI OWNER, LLC,
a Delaware limited liability company (“Seller”), with an address of c/o
RREEF Global Opportunities Fund II, LLC, c/o Deutsche Investment Management
Americas Inc., 280 Park Avenue, 40th Floor, New York, New York 10017, KAUAI
COCONUT BEACH, LLC, a Delaware limited liability company (“Buyer”),
KAUAI COCONUT BEACH OPERATOR, LLC, a Delaware limited liability company (“Operating
Tenant”), JMI REALTY LLC, a Delaware limited liability company (“JMI”),
and BEHRINGER HARVARD OPPORTUNITY REIT II, INC., a Maryland corporation (“Behringer”
and together with JMI, “Buyer Principal”), all having an address of c/o
Behringer Harvard Kauai Hotel, LLC 15601 Dallas Parkway, Suite 600,
Addison, Texas 75001, and WELLS FARGO BANK, N.A., AS TRUSTEE FOR THE MORGAN
STANLEY CAPITAL I INC. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES
2006-XLF (collectively referred to herein as “Lender”), with an address
of c/o Midland Loan Services, Inc., 10851 Mastin, Suite 300, Overland
Park, Kansas 66210.

 

RECITALS

 

A.                                    Seller is the
owner of certain real property located in the Island and County of Kauai,
Hawaii, commonly known as 650 Aleka Loop, Kaapaa, Hawaii, which real property
is more particularly described in Exhibit A attached hereto and
incorporated herein by reference.  Such
real property, together with all improvements, fixtures and personal property
located thereon is collectively referred to as the “Property.”

 

B.                                    Lender is the
owner and holder of certain documents (the “Original Loan Documents”)
evidencing and securing a loan (the “Loan”) made by Morgan Stanley
Mortgage Capital, Inc., a New York corporation (“Original Lender”)
to Seller, including, without limitation, the:

 

(i)                                     Amended and Restated
Promissory Note (the “Original Note”) dated as of August 15, 2006
(the “Original Closing Date”), in the original principal amount of
$43,200,000.00, executed by Seller, as maker, in favor of Original Lender.

 

(ii)                                  Leasehold
Mortgage, Assignment of Leases and Rents, Security Agreement, Financing
Statement and Fixture Filing dated as of the Original Closing Date, executed by
Seller in favor of Original Lender, filed for record on June 20, 2006, as
Land Court Document No. 3442321 (“Original Security Instrument”),
as amended by that certain Spreader Agreement by and between Seller and
Original Lender dated October 20, 2006 and filed for record on October 20,
2006, as Land Court Document No. 3501709 (the “Spreader Agreement”,
and together with the Original Security Instrument, the “Security Instrument”).

 

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(iii)                               Assignment of
Leases and Rents dated as of the Original Closing Date, executed by Seller in
favor of Original Lender, filed for record on June 20, 2006, as Document No. 2006-113369
(the “Assignment of Leases”)

 

(iv)                              Loan Agreement
dated of the Original Closing Date between Seller and Original Lender, as
amended by that certain letter agreement dated August 15, 2006 by and
among Seller, Original Lender, Waipouli Senior Mezzanine, LLC and Waipouli
Junior Mezzanine, LLC (as amended, the “Original Loan Agreement”).

 

(iv)                              Guaranty of Recourse
Obligations dated as of the Original Closing Date, executed by RREEF Global
Opportunities Fund II, LLC (“Original Guarantor”) in favor of Original
Lender (“Guaranty”).

 

(v)                                 Cash Management Agreement
dated as of the Original Closing Date, executed by, among others, Seller and
Lender in favor of Original Lender, as modified by Modification Agreement to
Cash Management Agreement dated as of September 29, 2006, by and among
Seller, Original Lender, Lender and Lender’s Servicer (as amended, the “CMA”).

 

(vi)                              Clearing Account Agreement
dated as of the Original Closing Date, executed by, among others, Seller and
Original Lender (“CAA”).

 

(vii)                           Assignment of Agreements,
Licenses, Permits and Contracts dated as of the Original Closing Date, executed
by Seller in favor of Original Lender (“Assignment of Agreements”).

 

C.                                    Midland Loan
Services, Inc. services the Loan for Lender, as master servicer, pursuant
to that certain Pooling and Servicing Agreement (the “Pooling and Servicing
Agreement”) dated as of August 16, 2006.

 

D.                                    Seller and
Buyer are the current parties to a Purchase and Sale Agreement: Aston Kauai
Beach at Makaiwa dated June 17, 2010, as amended by the First Amendment to
Purchase and Sale Agreement dated as of July 19, 2010 (collectively, and
as may have been further amended to extend the closing date thereunder, the “Purchase
Agreement”), pursuant to which the Property is to be transferred to Buyer
and Buyer is to assume the Loan under the Loan Documents (as defined below)
(the “Transfer and Assumption”), and Seller and Buyer have requested
that Lender consent to the Transfer and Assumption.

 

E.                                     Buyer has
agreed to Lease the Property to Operating Tenant and Operating Tenant has
agreed to operate a hotel thereon, pursuant to that certain lease agreement
dated on or about the date hereof between Buyer and Operating Tenant (the “Operating
Lease”).

 

F.                                      Subject to the
terms and conditions of this Agreement, Lender has agreed to consent to the
Transfer and Assumption and the Operating Lease (collectively, the “Transaction”).

 

G.                                    With respect to
Seller, the term “Loan Documents” as used hereinafter shall mean the
Original Loan Documents.  With respect to
Buyer, Operating Tenant and Buyer Principal, the 

 

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term
“Loan Documents” as used hereinafter shall mean collectively (i) that
certain Amended and Restated Promissory Note dated the date hereof in the
original principal amount of $38,000,000.00 between Buyer and Lender (“Note”);
(ii) that certain Amended and Restated Loan Agreement dated the date
hereof between Buyer and Lender (“Loan Agreement”); (iii) the
Security Instrument; (iv) the Assignment of Leases; (v) this
Agreement, and (v) all other documents, instruments and agreements listed
in Exhibit B attached hereto and incorporated herein by reference.

 

AGREEMENT

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree to the above recitals and as
follows:

 

1.                                      Consent to
Transfer.  Subject to
satisfaction of all of the conditions contained herein, Lender consents to the
Transaction.  This consent is strictly
limited to the Transaction described in this Agreement.  This Agreement shall not constitute a waiver
or modification of any requirement of obtaining Lender’s consent to any future
transfer of the Property or any portion thereof or interest therein, nor shall
it constitute a modification of the terms, provisions, or requirements in the
Loan Documents in any respect except as expressly provided herein.  Buyer specifically acknowledges that any
subsequent transfer of any interest in any of the Property or interest in Buyer
in violation of the Loan Documents shall be a default thereunder.

 

2.                                      Conditions.  In addition to any other conditions set forth
herein or required by Lender, the following are conditions precedent that must
be satisfied prior to the closing of the Transaction (the “Closing”):

 

(a)                                 The execution,
acknowledgment, delivery and recordation of this Agreement by all of the
parties concurrently with the Closing, and the execution, acknowledgement and
delivery of all other agreements, instruments and documents reasonably required
by Lender hereunder concurrently with and in connection with the Closing, including
but not limited to (i) replacements for the Guaranty, CAA, CMA and
Assignment of Agreements; (ii) from Operating Tenant, an Assignment and
Subordination of Management Agreement, an Assignment of Leases and Rents, and a
Security Agreement; (iii) a Comfort Letter/Tri-Party Agreement; (iv) the
Loan Agreement; (v) the Note; (vi) a First Amendment of Mortgage and (vii) a
First Amendment of Assignment of Leases.

(b)                                 The delivery and recordation
or filing, as applicable, of one more new financing statements, or amendments
to existing financing statements as required by Lender at Closing, with respect
to Buyer and Operating Tenant.

(c)                                  Buyer’s delivery to Lender
of satisfactory evidence that all insurance over the Property required by the
Loan Documents (the “Required Insurance”) is in full force and effect as
of the Closing, with all required premiums paid, and contains a mortgagee’s
clause (the “Mortgagee’s Clause”) satisfactory to Lender in favor of
Lender, its successors and/or assigns, c/o Midland Loan Services, Inc.,
Master Servicer, 10851 Mastin, Suite 300, Overland Park, Kansas 66210; re:
Loan Number 03-0258351.

(d)                                 Lender’s receipt of
satisfactory title endorsements or policy.

 

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(e)                                  The full release and reconveyance
of any other liens or monetary encumbrances against the Property.

(f)                                   Lender’s receipt of all of
the Required Payments (hereinafter defined).

(g)                                  Lender’s receipt of copies
of organizational documents of Buyer, Buyer’s member and Operating Tenant in
form and substance acceptable to Lender.

(h)                                 Lender’s receipt of all
other due diligence documents relating to the Transaction.

 

3.                                      Fees, Payment
and Expenses.  Buyer
covenants and agrees to pay to Lender at Closing an assumption fee of
$380,000.  Lender acknowledges that it
previously received a payment of $40,000 to reimburse Lender for expenses
incurred by Lender in connection with the Transaction.  Lender has previously paid to Eastdil Secured
a brokerage and marketing fees totaling of $411,137.  Lender has agreed to pay certain legal fees
of Seller, including $34,362.39 paid previously, and $13,878.31 which shall be
paid at Closing.  Lender also agrees to
pay all other costs and expenses incurred by or on Lender’s behalf in
connection with the Transaction.  All
payments to be received by Lender in connection with the Transaction are
collectively herein, the “Required Payments”).

 

4.                                      Dismissal of
Existing Foreclosure Proceedings and Receiver; Release of Mezzanine Liens.  Lender agrees to cause all existing
foreclosure proceedings and the existing receivership affecting the Property to
be dismissed effective upon the Closing. 
In addition, the liens of two mezzanine loans secured by direct and
indirect ownership interests in the Seller are being released by the holder
thereof, Morgan Stanley Mortgage Capital Holdings LLC.

 

5.                                      Buyer’s
Assumption of Loan; Financing Statements.  From and after the Closing, Buyer hereby
expressly assumes the obligation to pay the unpaid balance due and owing on the
Loan, all interest thereon as provided in the Note and all other obligations
under the Loan Documents, and as to the Security Instrument and Assignment of
Leases, with the same force and effect as if Buyer had been specifically named
therein as the original grantor or assignor. 
Without limiting the generality of the foregoing, Buyer expressly
assumes the obligation to pay all loan installments as they become due and to
observe all obligations of the Loan Documents. 
Buyer’s assumption of the foregoing obligations (a) is absolute,
unconditional and is not subject to any defenses, waivers, claims or offsets, (b) shall
not be affected or impaired by any agreement, condition, statement or
representation of any person or entity other than Lender.  Buyer expressly agrees that it has read,
approved and will comply with and be bound by all of the terms, conditions, and
provisions contained in the Loan Documents. 
Buyer specifically agrees that to the extent the Note is recourse,
Lender’s remedies shall not in any respect or extent be limited solely to the
Property or any other collateral securing the Loan.  Lender acknowledges and agrees that Buyer
shall only be responsible for complying with the Loan Documents from and after
the date of Closing.

 

Buyer
and Operating Tenant hereby authorize Lender to file one or more new financing
statements, or amendments to existing financing statements, covering fixtures
and personal property collateral included in the Property and covered by the
security agreement contained in the Loan Documents, without signature of Buyer
or Operating Tenant where permitted by law. Buyer and Operating Tenant hereby
confirm that they grant Lender a security interest in all fixtures and personal
property collateral described in the Loan Documents.

 

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6.                                      No
Representations of Lender.  The
parties hereto agree that (a) Lender has made no representations or
warranty, either express or implied regarding the Property and has no
responsibility whatsoever with respect to the Property, its condition, or its
use, occupancy or status, and (b) no claims relating to the Property, its
condition, or its use, occupancy or status, will be asserted against Lender or
its agents, employees, professional consultants, affiliated entities,
successors or assigns, either affirmatively or as a defense; provided, that
Buyer is not releasing any court appointed receiver or its employees, agents,
contractors or representatives (collectively, the “Receiver Parties”) from any
obligations or liability they may have under applicable law.

 

7.                                      Seller’s
Representations & Warranties.  Seller hereby represents and warrants that:

 

(a)                                 Seller is duly authorized to
execute, deliver and perform this Agreement.

(b)                                 Any court or third-party
approvals necessary for Seller to enter into this Agreement have been obtained.

(c)                                  The entities and/or persons
executing this Agreement on behalf of Seller are duly authorized to execute and
deliver this Agreement.

(d)                                 This Agreement constitutes
the valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.

(e)                                  All representations and
warranties of Seller referred to herein shall be true as of the date of this
Agreement and the Closing and shall survive the Closing.

 

8.                                      Release of Seller
and Original Guarantor. 
Lender hereby forever releases and discharges Seller, Original
Guarantor, and all other Seller Releasing Parties (as such term is defined in Section 9
below from all liabilities, obligations, costs, expenses, claims and damages,
at law or in equity, known or unknown, that Lender or any of its agents,
employees, representatives, officer, directors, general partners, limited
partners, joint shareholders, beneficiaries, trustees, administrators,
subsidiaries, affiliates, employees, servants or attorneys may now or hereafter
hold or claim to hold under common law or statutory right, arising in any
manner out of the Property, the loan, from all liability and obligations under
the Loan Documents, as the same may be modified hereby or any of the documents,
instrument or any other transactions relating thereto or the transactions
contemplated thereby.  Without limiting
the generality of the foregoing, this release shall include all aspects of this
Agreement and the Loan Documents, any negotiations, demands or requests with
respect thereto.  Lender agrees that this
release is a full, final and complete release and that it may be pleaded as an
absolute bar to any or all suit or suits pending or that may hereafter be filed
or prosecuted by Lender, or anyone claiming by , through or under Lender.  Lender agrees that this release is binding
upon its agents, employees, representatives, officers, directors, general
partners, limited partners, joint shareholders, beneficiaries, trustees,
administrators, subsidiaries, affiliates, employees, servants and attorneys.

 

9.                                      Release of
Lender.  Subject to the last sentence
of this paragraph, Seller, for itself and for its agents, employees,
representatives, officers, directors, general partners, limited partners, joint
shareholders, beneficiaries, trustees, administrators, subsidiaries,
affiliates, employees, servants and attorneys (collectively, the “Seller
Releasing Parties”) jointly and severally release and forever discharge
Lender and Midland Loan Services, Inc., and their 

 

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respective
successors, assigns, partners, directors, officers, employees, agents,
attorneys, administrators, trustees, subsidiaries, affiliates, beneficiaries,
shareholders and representatives from all liabilities, obligations, costs,
expenses, claims and damages, at law or in equity, known or unknown, which any
of the Seller Releasing Parties may now or hereafter hold or claim to hold
under common law or statutory right, arising in any manner out of the Property,
the Loan, this Agreement, any of the Original Loan Documents or any of the
documents, instruments or any other transactions relating thereto or the
transactions contemplated thereby.  Without
limiting the generality of the foregoing, this release shall include the
following matters: (a) all aspects of this Agreement and the Original Loan
Documents, any negotiations, demands or requests with respect thereto, and (b) Lender’s
exercise or attempts to exercise any of its rights under this Agreement, any of
the Original Loan Documents, at law or in equity.  The Seller Releasing Parties agree that this
release is a full, final and complete release and that it may be pleaded as an
absolute bar to any or all suit or suits pending or which may thereafter be
filed or prosecuted by any of the Seller Releasing Parties, or anyone claiming
by, through or under any of the Seller Releasing Parties.  The Seller Releasing Parties agree that this
release is binding upon each of them and their respective agents, employees,
representatives, officers, directors, general partners, limited partners, joint
shareholders, beneficiaries, trustees, administrators, subsidiaries,
affiliates, employees, servants and attorneys. 
The foregoing to the contrary notwithstanding, nothing in this Agreement
shall be deemed to release the Lender from its obligations to reimburse Seller
for certain attorneys’ fees and costs as provided in Paragraph 4a of a certain
Forbearance Agreement between Seller and Lender dated November 12, 2009,
as the same has been increased as described in Paragraph 3 above.

 

Buyer
and Buyer Principal, for themselves and for their agents, employees,
representatives, officers, directors, general partners, limited partners,
managers, members, joint shareholders, beneficiaries, trustees, administrators,
subsidiaries, affiliates, employees, servants and attorneys (collectively, the “Buyer
Releasing Parties”) jointly and severally release and forever discharge
Lender and Midland Loan Services, Inc., and their respective successors,
assigns, partners, directors, officers, employees, agents, attorneys,
administrators, trustees, subsidiaries, affiliates, beneficiaries, shareholders
and representatives (excluding the Receiver Parties) from all liabilities, obligations,
costs, expenses, claims and damages, at law or in equity, known or unknown,
which arise out of any matters occurring prior to the Closing in connection
with the transactions contemplated hereby. The Buyer Releasing Parties agree
that this release is a full, final and complete release and that it may be
pleaded as an absolute bar to any or all suit or suits pending or which may
thereafter be filed or prosecuted by any of the Buyer Releasing Parties, or
anyone claiming by, through or under any of the Buyer Releasing Parties.  The Buyer Releasing Parties agree that this
release is binding upon each of them and their respective agents, employees,
representatives, officers, directors, general partners, limited partners, joint
shareholders, beneficiaries, trustees, administrators, subsidiaries,
affiliates, employees, servants and attorneys. 
Notwithstanding the foregoing release, the Buyer Releasing Parties shall
not be barred from asserting any defenses or affirmative defenses in the event
any of the parties released hereby initiate any proceedings against any of the
Buyer Releasing Parties.

 

10.                               Confirmation of
the Loan.  From and
after the closing, Buyer agrees to perform each and every obligation under the
Loan Documents in accordance with their respective terms and conditions.  Buyer acknowledges, confirms and agrees that
the Loan Documents represent legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their 

 

6

 

terms.
Buyer agrees that this Agreement does not diminish, impair, release or
relinquish the liens, powers, titles, security interests and rights securing or
guaranteeing payment of the Loan, including the validity or first priority of
the liens and security interests encumbering the Property granted Lender by the
Loan Documents.

 

At
all times from and after the Closing, Buyer shall comply with all terms of the
Loan Documents, including without limitation, the insurance requirements of the
Loan Documents. Although the Lender may accept certain evidence of insurance
for purposes of closing the Transaction, the Lender or its servicer may at any
time and from time to time request additional insurance information from Buyer
to ensure or monitor Buyer’s compliance with the insurance provisions of the
Loan Documents and may request that Buyer provide such coverages as Lender or
its servicer may require consistent with the terms of the Loan Documents.  By entering into this Agreement, Lender
specifically does not waive or modify any of the insurance requirements under
the Loan Documents nor any of the remedies provided therein for failure to
secure such required insurance coverage.

 

11.                               Nonwaiver.  Nothing contained herein shall be construed
as a waiver of any of Lender’s rights or remedies with respect to any future
default by Buyer, Operating Tenant or Buyer Principal under this Agreement or
any Loan Document.

 

12.                               Bankruptcy of
Buyer or Buyer Principal. 
Buyer covenants and agrees that in the event Buyer shall (i) file
any petition with any bankruptcy court or be the subject of any petition under
the United States Bankruptcy Code (11 U.S.C. §101 et seq., the “Code”),
(ii) file or be the subject of any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency, or other relief for debtors, (iii) have sought or
consented to or acquiesced in the appointment of any trustee, receiver,
conservator, or liquidator, or (iv) be the subject of any order, judgment,
or decree entered by any court of competent jurisdiction approving a petition
filed against such party for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or
relief for debtors, Lender shall thereupon be entitled, and Buyer irrevocably
consents, to the entry of an order by a bankruptcy court granting to Lender
relief from any automatic stay imposed by Section 362 of the Code, or
otherwise, on or against the exercise of the rights and remedies otherwise
available to Lender as provided in the Loan Documents, this Agreement or as
otherwise provided by law or in equity, and Buyer irrevocably waives its right
to object to, attempt to enjoin or otherwise interfere with such relief and the
exercise and enforcement by Lender of its rights and remedies following entry
of such order.  Without limiting the
generality of the immediately preceding sentence, Buyer agrees that Lender will
be entitled to and it consents to immediate relief from the automatic stay
imposed by the Code to allow Lender to take any and all actions necessary, desirable
or appropriate to enforce any rights Lender may have under the Loan Documents,
including, but not limited to, the right to possession of the Property,
collection of rents, and/or the commencement or continuation of an action to
foreclose Lender’s liens and security interests.  Buyer further agrees that the filing of any
petition for relief under the Code which postpones, prevents, delays or
otherwise hinders Lender’s efforts to collect the amounts due under the Note or
to liquidate any of the collateral therefor shall be deemed to have been filed
in bad faith and, therefore, shall be subject to prompt dismissal or conversion
to a liquidation case under the Code upon motion therefor by Lender.  

 

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Further,
Buyer agrees that it will not seek, apply for or cause the entry of any order
enjoining, staying, or otherwise prohibiting or interfering with Lender’s
obtaining an order granting relief from the automatic stay and enforcement of
any rights which Lender may have under the Loan Documents, including, but not
limited to, Lender’s right to possession of the Property, collection of rents
and/or the commencement or continuation of an action to foreclose Lender’s
liens and security interests under the Loan Documents.

 

Buyer
Principal covenants and agrees that in the event Buyer Principal shall (i) file
any petition with any bankruptcy court or be the subject of any petition under
the Code, (ii) file or be the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors, (iii) have
sought or consented to or acquiesced in the appointment of any trustee,
receiver, conservator, or liquidator, or (iv) be the subject of any order,
judgment, or decree entered by any court of competent jurisdiction approving a
petition filed against such party for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or
relief for debtors, Lender shall thereupon be entitled, and Buyer Principal
irrevocably consents, to the entry of an order by a bankruptcy court granting
to Lender relief from any automatic stay imposed by Section 362 of the
Code, or otherwise, on or against the exercise of the rights and remedies
otherwise available to Lender as provided in the Loan Documents, this Agreement
or as otherwise provided by law or in equity, and Buyer Principal irrevocably
waives its right to object to, attempt to enjoin or otherwise interfere with
such relief and the exercise and enforcement by Lender of its rights and
remedies following entry of such order. 
Without limiting the generality of the immediately preceding sentence,
Buyer Principal agrees that Lender will be entitled to and it hereby consents
to immediate relief from the automatic stay imposed by the Code to allow Lender
to take any and all actions necessary, desirable or appropriate to enforce any
rights Lender may have under the Loan Documents, including, but not limited to,
the right to possession of the Property, collection of rents, and/or the commencement
or continuation of an action to foreclose Lender’s liens and security
interests. Buyer Principal further agrees that the filing of any petition for
relief under the Code which postpones, prevents, delays or otherwise hinders
Lender’s efforts to collect the amounts due under the Note or to liquidate any
of the collateral therefor shall be deemed to have been filed in bad faith and,
therefore, shall be subject to prompt dismissal or conversion to a liquidation
case under the Code upon motion therefor by Lender.  Further, Buyer Principal agrees that it will
not seek, apply for or cause the entry of any order enjoining, staying, or
otherwise prohibiting or interfering with Lender’s obtaining an order granting
relief from the automatic stay and enforcement of any rights which Lender may
have under the Loan Documents, including, but not limited to, Lender’s right to
possession of the Property, collection of rents and/or the commencement or
continuation of an action to foreclose Lender’s liens and security interests
under the Loan Documents.

 

13.                               Compliance with
Interest Law.  It is the
intention of the parties hereto to conform strictly to any present or future
law which has application to the interest and other charges under the Loan
Documents (the “Interest Law”). 
Accordingly, notwithstanding anything to the contrary in the Loan
Documents, the parties hereto agree that the aggregate amount of all interest
or other charges taken, reserved, contracted for, charged or received under the
Loan Documents or otherwise in connection with the Loan shall under no
circumstances exceed the maximum

 

8

 

amount
of interest allowed by the Interest Law. 
If any excess interest is provided for in the Loan Documents, then any
such excess shall be deemed a mistake and canceled automatically and, if
theretofore paid, shall be credited against the indebtedness evidenced and
secured by the Loan Documents (the “Indebtedness”) (or if the
Indebtedness shall have been paid in full, refunded by Lender), and the
effective rate of interest under the Loan Documents shall be automatically
reduce to the maximum effective contract rate of interest that Lender may from
time to time legally charge under the then applicable Interest Law with respect
to the Loan.  To the extent permitted by
the applicable Interest Law, all sums paid or agreed to be paid to Lender for
the use, forbearance or detention of the Indebtedness shall be amortized,
prorated, allocated and spread throughout the full term of the Loan.

 

14.                                 Compliance with
Anti-Terrorism Orders.

 

(i)                                     Buyer will not
permit the transfer of any interest in Buyer to any person or entity who is
listed on the Lists or whose beneficial owners are listed on the specially
Designated Nationals and Blocked Persons List (the “List”) maintained by
the Office of Foreign Asset Control, Department of the Treasury (“OFAC”)
pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (September 25,
2001) (the “Order”) and/or any other list of terrorists or terrorist
organizations maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders (such lists are
collectively referred to as the “Lists”).

 

(ii)                                  Buyer will not
knowingly enter into a Lease with any party who is either (A) listed on
the Lists or (B) engaged in illegal activities.

 

(iii)                               Buyer shall
immediately notify Lender if it becomes known to Buyer that any member or
beneficial owner of Buyer is listed on the Lists or (A) is indicted on, or
(B) arraigned and held over on charges involving money laundering or
predicate crimes to money laundering; provided, however, that Buyer shall not have
such obligation as to any shareholders of any public companies having indirect
ownership interests in Buyer.

 

(iv)                              Buyer shall
immediately notify Lender if it becomes known to Buyer that any tenant at the
Property is listed on the Lists or (A) is convicted on, (B) pleads
nolo contendere to, (C) is indicted on or (D) is arraigned and held
over on charges involving money laundering or predicate crimes to money
laundering.

 

15.                                 Intentionally
Omitted.

 

16.                                 Further
Assurances.  The parties
hereto agree to do any act or execute any additional documents reasonably
required by Lender, from time to time, to correct errors in the documenting of
the Transaction, to effectuate the purposes of this Agreement or to better
assure, convey, assign, transfer, perfect or confirm unto Lender the property
and rights intended to be given it in the Loan Documents.

 

17.                                 Liability.  If any party hereto consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several.  This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns forever.

 

9

 

18.                                 Severability.  If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such term, covenant or condition and the
validity or enforceability of the remaining terms, covenants or conditions
shall not in any way be affected.

 

19.                                 Applicable Law;
Jurisdiction.  This
Agreement shall be governed and construed in accordance with the laws of the
State of New York.  The parties hereto
submit to personal jurisdiction in the state courts located in said state and
the federal courts of the United States of America located in said state for
the enforcement of any obligations hereunder and waive any and all personal
rights under the law of any other state to object to jurisdiction within such
state for the purposes of any action, suit, proceeding or litigation to enforce
such obligations.

 

20.                                 No Restrictions
on Performance.  The
execution and delivery of this Agreement and compliance with the provisions
hereof, will not conflict with, or constitute a breach of or a default under
any agreement or other instrument to which any party hereto is a party or by
which it is bound.

 

21.                                 Definitions.  Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Agreement (including pronouns) shall include the corresponding masculine,
feminine or neuter forms, and the singular form such words shall include the
plural and vice versa. The words “included,” “includes” and “including” shall
each be deemed to be followed by the phrase, “without limitation.”  The words “herein,” “hereby,” “hereof,” and “hereunder”
shall each be deemed to refer to this entire Agreement and not to any
particular paragraph, article or section hereof.  Notwithstanding the foregoing, if any law is
amended so as to broaden the meaning of any term defined in it, such broader
meaning shall apply subsequent to the effective date of such amendment.  Where a defined term derives its meaning from
a statutory reference, any regulatory definition is broader than the statutory
reference and any reference or citation to a statute or regulation shall be
deemed to include any amendments to that statue or regulation and judicial and
administrative interpretations of it.

 

22.                                 Securities Act
of 1933.  Neither Seller, Buyer, Buyer Principal
nor any agent acting for any of them has offered the Note or any similar
obligation for sale to or solicited any offers to buy the Note or any similar
obligation from any person or party other than Lender, and neither Seller,
Buyer, Buyer Principal nor any agent acting for any of them will take any
action which would subject the sale of the Note to the provisions of Section 5
of the Securities Act of 1933, as amended.

 

23.                                 Compliance with
ERISA.  As of the date of this
Agreement, neither Seller, Buyer nor Buyer Principal maintains any employee
benefit plan which requires compliance with ERISA.  If at any time Seller, Buyer or Buyer
Principal shall institute any employee benefit plans, they shall at all times comply
with the requirements of ERISA.

 

24.                                 Sole Discretion
of Lender.  Wherever
pursuant to Section 2 of this Agreement, Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, Lender’s decision to approve or disapprove or to decide
that arrangements or terms are satisfactory or not satisfactory shall be in the
sole and absolute 

 

10

 

discretion
of Lender and shall be final and conclusive, except as may be otherwise
expressly and specifically provided herein.

 

25.                                 Headings, Etc.  The headings and captions of various
paragraphs of this Agreement are for convenience of reference only and are not
to be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

 

26.                                 Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which when taken together shall constitute one and the same Agreement.

 

27.                                 Integration,
Survival.  This Agreement
and the Loan Documents embody the entire agreement by and between the parties
hereto with respect to the Loan, and any and all prior correspondence,
discussions or negotiations are deemed merged therein.  Except as otherwise specifically provided herein,
all obligations of any party contained in this Agreement or the Loan Documents
shall survive the Closing and Lender hereby preserves all of its rights against
all persons or entities and all collateral securing the Loan, including,
without limitation, the Property.

 

28.                                 No Oral Change.  This Agreement, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of any party
hereto, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.

 

29.                                 Notices.  Except as otherwise specified herein, any
notice, consent, request or other communication required or permitted hereunder
shall be in writing and shall be deemed properly given if delivered in
accordance with the notice requirements contained in the Loan Documents using
the address for a party hereto set forth at the top of the first page of
this Agreement.

 

30.                               WAIVER OF
JURY TRIAL. 
THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON THE LOAN OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY HERETO.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDER’S CONSENT TO THE TRANSACTION.

 

[Remainder of Page Intentionally Left Blank]

 

11

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day, month and year first
above written.

 

 

	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  KAUAI
  COCONUT BEACH OPERATOR, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPERATING
  TENANT:

  
	
   

  	
   

  
	
   

  	
  KAUAI
  COCONUT BEACH OPERATOR, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

12

 

	
   

  	
  BUYER
  PRINCIPAL:

  
	
   

  	
   

  
	
   

  	
  JMI
  REALTY LLC,

  
	
   

  	
  A
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD OPPORTUNITY REIT 

  II, INC., A Maryland corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

13

 

	
  SELLER:

  
	
   

  
	
  WAIPOULI OWNER, LLC, a Delaware limited liability
  company

  
	
   

  
	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited liability company, its sole

  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware limited liability company,

  its sole

  
	
   

  	
   

  	
  member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware limited liability company, its 

  sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES FUND II, LLC, a Delaware limited 

  liability company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a Delaware limited liability 

  company, as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Scott Koenig

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Scott
  Koenig

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Erik Lassar

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Erik
  Lassar

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  

 

14

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, N.A., AS TRUSTEE 

  FOR THE MORGAN STANLEY CAPITAL I INC. 

  COMMERCIAL MORTGAGE PASS-THROUGH 

  CERTIFICATES SERIES 2006-XLF

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Midland
  Loan Services, Inc.,

  
	
   

  	
   

  	
  a
  Delaware corporation,

  
	
   

  	
   

  	
  Its
  Attorney-In-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Bradley J. Hauger

  
	
   

  	
   

  	
   

  	
  Bradley
  J. Hauger

  
	
   

  	
   

  	
   

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  	
  Servicing
  Officer

  

 

15

 

EXHIBIT A

Legal Description

 

16

 

EXHIBIT B

Loan Documents

 

The
following loan documents, instruments and agreements, all dated the date hereof
unless noted otherwise:

 

1.                                             Amended and
Restated Loan Agreement between Buyer and Lender.

 

2.                                             Leasehold
Mortgage, Assignment of Leases and Rents, Security Agreement, Financing
Statement and Fixture Filing, dated June 20, 2006 from Original Borrower
to Original Lender (together with that certain Spreader Agreement by and
between Original Borrower and Original Lender dated October 20, 2006 and
filed for record on October 20, 2006, as Land Court Document No. 3501709,
as amended by that certain First Amendment to Mortgage between Borrower and
Lender).

 

3.                                             Assignment of
Leases and Rents executed by Original Borrower and filed for record on
June 20, 2006, as Document No. 2006-113369 (together with that
certain First Amendment of Assignment of Leases and Rents between Borrower and
Lender).

 

4.                                             Assignment of
Leases and Rents from Operating Tenant to Lender.

 

5.                                             Security
Agreement between Borrower and Lender.

 

6.                                             Assignment of
Agreements, Licenses, Permits and Contracts executed by Borrower and Operating
Tenant.

 

7.                                             Clearing
Account Agreement among Operating Tenant, Operating Tenant’s property manager,
Lender and the Clearing Bank, and acknowledged by Borrower.

 

8.                                             Cash Management
Agreement among Borrower, Operating Tenant, Operating Tenant’s property
manager, Lender and the deposit bank thereunder.

 

9.                                             Guaranty of
Recourse Obligations made by Buyer Principal.

 

10.                                       Collateral Assignment of
Interest Rate Protection Agreement between Borrower and Lender.

 

11.                                       This Agreement.

 

12.                                       Post Closing Agreement

 

17Exhibit
10.37

 

AMENDED AND RESTATED PROMISSORY NOTE

 

	
  $38,000,000

  	
  October 20, 2010

  

 

RECITALS

 

A.                                    Payee
(hereinafter defined) is the owner and holder of a Loan Agreement dated as of June 20,
2006 (as previously amended or modified, the “Original
Loan Agreement”),
by and between Waipouli Owner, LLC, a Delaware limited liability company (“Original Maker”) and Morgan Stanley
Mortgage Capital Inc. (“Original Payee”)
and an Amended and Restated Promissory Note dated as of August 15, 2006 in
the original principal amount of $43,200,000.00 (the “Original Note”) from
Original Maker to Original Payee, evidencing a Loan in the original principal
amount of $43,200,000 (the “Original Loan”). 
As of the date hereof, the outstanding principal balance of the Original
Note is $43,200,000.00.

 

B.                                    As a condition
for Maker (as defined below) agreeing to assume the Original Loan, Payee
reduced the outstanding principal balance of the Original Loan to $38,000,000
(the “Loan”) prior to Maker’s
assumption of the Loan, Maker and Payee are amending and restating the Original
Loan Agreement (as amended and restated, the “Loan
Agreement”), and Maker and Payee wish to amend and restate the
indebtedness evidenced by the Original Note to memorialize the current
outstanding indebtedness of the Loan and to modify certain obligations with
respect to the Loan.

 

NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Maker and Payee agree to amend and restate the Original Note in its entirety as
follows:

 

1.                                      The execution
and delivery of this Amended and Restated Promissory Note (hereinafter, this “Note”, which term
shall be construed to include all future extensions, renewals, modifications,
consolidations, substitutions, replacements, restatements and increases
thereof) is not intended to constitute a novation of the Original Note nor
impair or modify the priority of any security document executed in connection
therewith.  This Note (as the same may be
extended, renewed, modified, consolidated, substituted, replaced, restated and
increased) shall continue to be secured by the security documents executed in
connection with the Loan (including, without limitation, the Mortgage).

 

2.                                      The terms,
provisions and obligations contained in the Original Note are hereby amended
and restated in their respective entireties to read as follows:

 

FOR VALUE RECEIVED, KAUAI COCONUT BEACH, LLC,
a Delaware limited liability company, having an address at c/o Behringer
Harvard Kauai Hotel, LLC, 15601 Dallas Parkway, Suite 600, Addison Texas
75001 (“Maker”),
hereby promises to pay to the order of WELLS FARGO BANK, N.A., AS
TRUSTEE FOR THE MORGAN STANLEY CAPITAL I INC. COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES SERIES 2006-XLF, having an address at c/o Midland Loan
Services, Inc., 10851 Mastin, Suite 300, Overland Park, Kansas
66210  (together with its successors and
assigns “Payee”)
or at such place as the holder hereof may from time to time designate in
writing, the principal sum of 

 

1

 

Thirty Eight Million Dollars and No Cents ($38,000,000) (the “Principal”), in
lawful money of the United States of America, with interest on the unpaid
principal balance from time to time outstanding at the Interest Rate, in
installments as follows:

 

A.                                    On the date
hereof, a payment of interest on this Note from the date hereof through and
including November 14, 2010.

 

B.                                    On December 9,
2010 and each Payment Date thereafter through and including the Maturity Date,
Maker shall pay monthly installments of interest for the Interest Period during
which such Payment Date occurs, calculated at the Interest Rate, on the
Principal balance of this Note.

 

C.                                    The balance of
the Principal sum of this Note together with all accrued and unpaid interest
thereon shall be due and payable on the Maturity Date.  If the Loan is repaid on any date other than
on a Payment Date (whether prior to or after the Stated Maturity Date), Maker
shall also pay interest that would have accrued on such repaid Principal
through and including the end of the then current Interest Period.

 

1.                                      Definitions.  Capitalized terms used but not otherwise
defined herein shall have the meanings given in the Loan Agreement dated the
date hereof between Maker and Payee.  The
following terms have the meanings set forth below:

 

Applicable Spread:  Ninety-five hundredths percent (0.95%).

 

Business Day:  any day other than a Saturday, Sunday or
any day on which commercial banks in New York, New York are authorized or
required to close.

 

Default Rate:  a rate per annum equal to the lesser of
(i) the maximum rate permitted by applicable law, or (ii) 5% above
the Interest Rate, compounded monthly.

 

First Extended Maturity Date:  First Extended Maturity Date:  May 9, 2017.

 

Initial Maturity Date:  November 9, 2015.

 

Interest Period:  each period from the 15th day of each calendar month through the 14th day of the following calendar month; except
that the Interest Period, if any, that would otherwise commence before and end
after the Maturity Date shall end on the Maturity Date.  The first Interest Period hereunder shall
commence October 15, 2010 and shall end November 14, 2010.

 

Interest Rate:  for any Interest Period, the Applicable
Spread plus LIBOR for such Interest Period (or, when applicable pursuant to
this Note or any other Loan Document, the Default Rate).

 

LIBOR:  with respect to any Interest Period, a
floating interest rate per annum (rounded upwards to the next 1/16 of 1%) equal
to the rate for U.S. dollar deposits with one month maturities which appears on
Telerate Page 3750 as of 11:00 am, London time on the related
Determination Date; provided, however, that if such rate does not
appear on Telerate 

 

2

 

Page 3750,
“LIBOR” shall mean a rate per annum equal to the rate at which U.S. dollar
deposits in an amount approximately equal to the Loan, and with one month
maturities, are offered in immediately available funds in the London Interbank
Market to the London office of National Westminster Bank, Plc by leading banks
in the Eurodollar market at 11:00 a.m., London time.  “Telerate Page 3750” means the display
designated as “Page 3750” on the Associated Press-Dow Jones Telerate
Service (or such other page as may replace Page 3750 on the Associated
Press-Dow Jones Telerate Service or such other service as may be nominated by
the British Bankers’ Association as the information vendor for the purpose of
displaying British Banker’s Association interest settlement rates for U.S.
Dollar deposits).  Any LIBOR determined
on the basis of the rate displayed on Telerate Page 3750 in accordance
with the provisions hereof shall be subject to corrections, if any, made in
such rate and displayed by the Associated Press-Dow Jones Telerate Service
within one (1) hour of the time when such rate is first displayed by such
Service.  For purposes hereof, (i) “Determination Date”
shall mean, with respect to any Interest Period, the date which is two
Eurodollar Business Days prior to the commencement of such Interest Period; and
(ii) “Eurodollar
Business Day” shall mean any day other than a Saturday, Sunday
or other day on which banks in the City of London, England or New York, New
York are closed for interbank or foreign exchange transactions.

 

Maturity Date:  the date on which the final payment of
Principal of this Note becomes due and payable as herein provided, whether at
the Stated Maturity Date, by declaration of acceleration, or otherwise.

 

Payment Date:  the 9th day of each
calendar month (or, if such day is not a Business Day, the Payment Date shall
be the first Business Day immediately preceding such day).

 

Stated Maturity Date: the Initial
Maturity Date, as the same may be extended to the First Extended Maturity Date
pursuant to Section 2.8 of the Loan Agreement.

 

2.                                      Payments and Computations.  Interest on the unpaid Principal shall be
computed on the basis of the actual number of days elapsed over a 360-day
year.  All amounts due under this Note
shall be payable without setoff, counterclaim or any other deduction whatsoever
and are payable without relief from valuation and appraisement laws and with
all costs and charges incurred in the collection or enforcement hereof,
including attorneys’ fees and court costs.

 

3.                                      Loan Documents.  This Note is evidence of the Loan and is
executed pursuant to the terms and conditions of the Loan Agreement.  This Note is secured by and entitled to the
benefits of, among other things, the Mortgage and the other Loan Documents.  Reference is made to the Loan Documents for a
description of the nature and extent of the security afforded thereby, the
rights of the holder hereof in respect of such security, the terms and
conditions upon which this Note is secured and the rights and duties of the
holder of this Note.  No reference herein
to and no provision of any other Loan Document shall alter or impair the
obligation of Maker, which is absolute and unconditional (except for
Section 10.1 of the Loan Agreement), to pay the Principal of and interest
on this Note at the time and place and at the rates and in the monies and funds
described herein.  All of the agreements,
conditions, covenants, provisions and stipulations contained in the Loan
Documents to be kept and performed by Maker are by this 

 

3

 

reference hereby made part
of this Note to the same extent and with the same force and effect as if they
were fully set forth in this Note, and Maker covenants and agrees to keep and
perform the same, or cause the same to be kept and performed, in accordance
with their terms.

 

4.                                      Loan Repayment; Prepayment.  Maker shall have the right to prepay the
Principal in whole but not in part, without prepayment penalty or similar
charge, provided that such prepayment is accompanied by interest accrued and unpaid
on the amount being prepaid through and including the prepayment date.  If any such prepayment is not made on a
Payment Date, Maker shall also pay interest that would have accrued on such
prepaid Principal through and including the end of the then current Interest
Period.  The Principal balance of this
Note is subject to mandatory prepayment, without premium or penalty, in certain
instances of Insured Casualty or Condemnation, as more particularly set forth
in Sections 2.3.2 and 7.4.2 of the Loan Agreement.  Except during the continuance of an Event of
Default, all proceeds of any repayment, including prepayment of Principal,
shall be applied in accordance with Section 2.3.1 of the Loan
Agreement.  During the continuance of an
Event of Default, all proceeds of repayment, including any payment or recovery
on the Property (whether through foreclosure, deed-in-lieu of foreclosure, or
otherwise) shall, unless otherwise provided in the Loan Documents, be applied
in such order and in such manner as Payee shall elect in Payee’s discretion.

 

5.                                      Default Rate.  After the occurrence and during the
continuance of an Event of Default, the entire unpaid Debt (hereinafter
defined) shall bear interest at the Default Rate, and shall be payable upon
demand from time to time, to the extent permitted by applicable law.  For purposes herein “Debt” shall mean:  the Principal sum of this Note, together with
all interest accrued and unpaid thereon and all other sums due under the Loan
Documents.

 

6.                                      Late Payment Charge.  If any Principal, interest or other sum due
under any Loan Document (other than the payment in full of this Note at
maturity) is not paid by Maker on the date on which it is due, Maker shall pay
to Payee upon demand an amount equal to the lesser of 5% of such unpaid sum or
the maximum amount permitted by applicable law, in order to defray the expense
incurred by Payee in handling and processing such delinquent payment and to
compensate Payee for the loss of the use of such delinquent payment.

 

7.                                      Amendments.  This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by any act or
failure to act on the part of Maker or Payee, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.  Whenever used, the singular number shall
include the plural, the plural the singular, and the words “Payee” and “Maker” shall include
their respective successors, assigns, heirs, executors and administrators.  If Maker consists of more than one person or
party, the obligations and liabilities of each such person or party shall be
joint and several.

 

8.                                      Waiver.  Maker and all others who may become liable
for the payment of all or any part of the Debt do hereby severally waive
presentment and demand for payment, notice of dishonor, protest, notice of
protest, notice of nonpayment, notice of intent to accelerate the maturity
hereof and of acceleration.  No release
of any security for the Debt or any person liable for payment of the Debt, no
extension of time for payment of this Note or any installment hereof, 

 

4

 

and no alteration,
amendment or waiver of any provision of the Loan Documents made by agreement
between Payee and Maker shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Maker, and any other person or
party who may become liable under the Loan Documents, for the payment of all or
any part of the Debt.

 

9.                                      Exculpation.  It is expressly agreed that recourse against
Maker for failure to perform and observe its obligations contained in this Note
shall be limited as and to the extent provided in Section 10.1 of the Loan
Agreement.

 

10.                               Notices.  All notices or other communications required
or permitted to be given pursuant hereto shall be given in the manner specified
in the Loan Agreement directed to the parties at their respective addresses as
provided therein.

 

11.                               No Novation.  The Original Note is restated and superseded
in its entirety by this Note, but the indebtedness evidenced by the Original
Note shall not be discharged or impaired by the execution and delivery of this
Note, and the execution and delivery of this Note is not intended to constitute
a novation of the Original Note nor impair or modify the priority of any
security document executed in connection therewith.

 

12.                               No Conflicts.  In the event of any conflict between the
provisions of this Note and any provision of the Loan Agreement, then the
provisions of the Loan Agreement shall control.

 

13.                               Governing Law.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS) AND THE APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.

 

[Remainder of Page Intentionally
Left Blank; Signature Page Follows]

 

5

 

IN
WITNESS WHEREOF, Maker and Payee have executed this Note as of the day and year
first above written.

 

	
   

  	
  MAKER:

  
	
   

  	
   

  
	
   

  	
  KAUAI
  COCONUT BEACH, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gary S. Bresky

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Gary
  S. Bresky

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Executive
  Vice President, Chief Financial Officer

  
	
   

  	
   

  	
  and
  Treasurer

  

 

[Signatures continue on next
page]

 

6

 

	
   

  	
  PAYEE:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, N.A., AS TRUSTEE FOR THE 

  MORGAN STANLEY CAPITAL I INC. 

  COMMERCIAL MORTGAGE PASS-THROUGH 

  CERTIFICATES SERIES 2006-XLF

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Midland
  Loan Services, Inc.,

  
	
   

  	
   

  	
  a Delaware
  corporation,

  
	
   

  	
   

  	
  Its
  Attorney-In-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Bradley J. Hauger

  
	
   

  	
   

  	
   

  	
  Bradley
  J. Hauger

  
	
   

  	
   

  	
   

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  	
  Servicing
  Officer

  

 

7

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