Document:

exhke.htm

        Exhibit 10.26

    

    
 

    NEW
JERSEY NATURAL GAS COMPANY

    

    Deferred
Stock Retention Award Agreement

    

    This
Deferred Stock Retention Award Agreement (the "Agreement"), which includes the
attached “Terms and Conditions of Deferred Stock,” confirms the grant on
November 11, 2008 (the “Grant Date”) by NEW JERSEY NATURAL GAS COMPANY, a New
Jersey corporation (the "Company"), to KATHLEEN T. ELLIS
("Employee"), under Section 6(e) of the 2007 Stock Award and Incentive Plan (the
"Plan"), of Deferred Stock as follows:

    

    Based
upon her contribution to the success of New Jersey Natural Gas Company (“NJNG”)
in fiscal year 2008, Employee is hereby awarded a deferred stock retention award
(“Retention Award”) of 4,947.696 deferred stock units of New Jersey Resources
Corporation (“NJR”) common stock issued under the Plan (“Deferred Stock”). No
dividends or distributions on NJR Common Stock will be applied to the Deferred
Stock.

    

    Beginning
on November 11, 2011, the Retention Award will be paid to Employee in quarterly
installments on the following schedule:

    

     

    This
payout will be in the form of fully transferable shares of NJR common stock. In
addition, if not previously forfeited, the Retention Award will be paid in full
upon a Change in Control, and will be immediately paid upon the occurrence of
certain events relating to Disability and death to the extent provided in
Section 3 of the attached Terms and Conditions.

    

    Conditions
to Retention Award:  Employee is not
required to continue his/her employment with NJNG in order to receive
distribution of the Retention Award. However, NJNG’s obligation to pay the
Retention Award and Employee’s right to distribution of the Retention Award are
conditioned upon the following:

     

    
      	
              ·  

            	
              Employee
      shall not assume an executive officer position of a company engaged in the
      distribution of retail and/or wholesale energy services, including, but
      not limited to, energy trading, within the state of New
      Jersey;

            

    

     

    
      	
              ·  

            	
              Employee
      shall not solicit NJR’s or any of its subsidiaries’ customers, vendors or
      employees including, but not limited to, by interaction with existing or
      prospective customers, vendors or employees of NJR or any of its
      subsidiaries that takes place in an effort to establish, maintain and/or
      further a business relationship with such customers, vendors or employees,
      diversion of a customer’s or prospective customer’s business from NJR or
      any of its subsidiaries or by other interference with NJR’s or any of its
      subsidiaries’ business with an existing or prospective customer, vendor or
      employee, even if such customer, vendor or employee initiates contact with
      you;

            

    

     

    
      	
              ·  

            	
              Employee
      shall not disclose any confidential information related to NJR’s or any of
      its subsidiaries’ business plans or
practices;

            

    

    
      
      

    

    
      	
              ·  

            	
              Employee
      shall not make any statements, either verbally or in writing, that are
      disparaging with regard to NJR or any of its subsidiaries (including, but
      not limited to, NJNG) or their respective executives and Board members;
      and

            

    

    
      
        
        

      

      
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              ·  

            	
              Employee
      shall not engage in any financial or other misconduct that results in the
      termination of Employee’s employment for “Cause.”  For purposes
      of this letter, "Cause" means (A) conviction of a felony or the entering
      by Employee of a plea of nolo contendere to a felony charge, (B)
      Employee’s gross neglect, willful malfeasance or willful gross misconduct
      in connection with Employee’s employment hereunder which has had a
      significant adverse effect on the business of NJR or any of its
      subsidiaries, unless Employee reasonably believed in good faith that such
      act or non-act was in or not opposed to the best interests of NJR or any
      of its subsidiaries, or (C) repeated material violations by Employee of
      his or her obligations under any applicable employment agreement or policy
      of NJR or any of its subsidiaries, which have continued after written
      notice thereof from NJR or any of its subsidiaries, which violations are
      demonstrably willful and deliberate on Employee’s part and which result in
      material damage to NJR or any of its subsidiaries’ business or
      reputation.

            

    

    

    If it is
determined by the Leadership Development and Compensation Committee of the NJR
Board of Directors that Employee has engaged in any of the above activities
prior to full distribution of the Retention Award, any unpaid portion of the
Retention Award will be forfeited.

    

    The value
of the Retention Award will not be taxable to Employee until it is distributed
and will, at that time, be equal to the value of the current fair market value
of the shares of NJR common stock.  Required withholding taxes will be
deducted in the form of shares from the share payout as described in Section
7(c) of the attached Terms and Conditions, unless Employee has elected at least
90 days prior to payout to satisfy the tax obligations by other
means.

    

    The
Retention Award will not be considered as compensation for purposes of any
pension or retirement plan, or other plan that provides for benefits based on
Employee’s level of compensation.

    

    The
Retention Award and the granting thereof shall not constitute or be evidence of
any agreement or understanding, express or implied, that Employee has a right to
continue as an officer of employee of NJR or any of its subsidiaries for any
period of time, or at any particular rate of compensation.

    

    The
validity, construction, and effect of this Agreement and the Retention Award
shall be determined in accordance with the laws (including those governing
contracts) of the state of New Jersey, without giving effect to principles of
conflicts of laws, and applicable federal law.

    

    If any
provision in this Agreement is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions will in no way
be affected or impaired thereby. In the event that any provision of this
Agreement is not enforceable in accordance with its terms, such provision shall
be reformed to make it enforceable in a manner which provides NJR and its
subsidiaries the maximum rights permitted by law.

    

    The terms
of this Retention Award are governed by the Plan and this Agreement, including
the attached Terms and Conditions.  Capitalized terms used in this
Agreement but not defined herein shall have the same meanings as in the
Plan.

    

    Employee
acknowledges and agrees that (i) receipt of a copy of the Plan and agrees to be
bound by all the terms and provisions thereof, (ii) the Deferred Stock is
nontransferable, except as provided in Section 2 of the attached Terms and
Conditions and Section 11(b) of the Plan, (iii) the Deferred Stock is subject to
forfeiture as described above in certain limited circum­stances prior to
payout, and (iv) sales of the shares following payout of the Deferred Stock will
be subject to the Company's policy governing the purchase and sale of NJR
securities.

    

    IN
WITNESS WHEREOF, NEW JERSEY NATURAL GAS COMPANY has caused this Agreement to be
executed by its officer thereunto duly authorized, and Employee has duly
executed this Agreement, by which each has agreed to the terms of this
Agreement.

    

     

    
      

      /s/Laurence M.
Downes

      LAURENCE
M. DOWNES

      Chairman
and Chief Executive Officer

      
Acknowledged

    

    

    

    /s/Kathleen T.
Ellis                                                      12/31/08

    KATHLEEN
T.
ELLIS                                                    Date

    
      
        
        

      

      
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    TERMS AND
CONDITIONS OF DEFERRED STOCK

    

    The
following Terms and Conditions apply to the Deferred Stock granted to Employee
by NEW JERSEY NATURAL GAS COMPANY (the "Company"), as specified in the Deferred
Stock Retention Award Agreement (of which these Terms and Conditions form a
part).  Certain terms and conditions of the Retention Award, including
the number of shares granted and payment date(s), are set forth on the preceding
pages, which are an integral part of this Agreement.

    

    1.           General.  The
Deferred Stock is granted to Employee under the Company's 2007 Stock Award and
Incentive Plan (the "Plan"), a copy of which has been previously delivered to
Employee and/or is available upon request to the Human Resources
Department.  All of the applicable terms, conditions and other
provisions of the Plan are incorporated by reference
herein.  Capitalized terms used in this Agreement but not defined
herein shall have the same meanings as in the Plan.  If there is any
conflict between the provisions of this document and mandatory provisions of the
Plan, the provisions of the Plan govern.  Employee agrees to be bound
by all of the terms and provisions of the Plan (as presently in effect or later
amended), the rules and regula­tions under the Plan adopted from time to
time, and the decisions and determinations of the Leadership Development and
Compensation Committee of the Company's Board of Directors (the "Committee")
made from time to time.

     

          2.           Nontransferability.  Until
such time as the Deferred Stock has been distributed in accordance with the
terms of this Agreement, Employee may not transfer Deferred Stock or any rights
hereunder to any third party other than by will or the laws of descent and
distribution except for transfers to a Beneficiary or as otherwise permitted and
subject to the conditions under Section 11(b) of the Plan.  This
restriction on transfer precludes any sale, assignment, pledge, or other
encumbrance or disposition of the shares of Deferred Stock (except for
forfeitures to the Company).

    

    3.           Early Payment
Provisions. The following provisions will govern the payment of the
Deferred Stock that is outstanding at the time of Employee's death or
Disability:

    

    (a)           Death.  In the
event of Employee's death, the unpaid Deferred Stock will be paid immediately to
the Employee’s Beneficiary.

    

    (b)           Disability.  In the
event of Employee’s Disability (as defined below), the unpaid Deferred Stock
will be paid immediately to the Employee.

    

    "Disability"
means Employee has been unable to engage in any substantial gainful activity for
a period of six consecutive months by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months.  The Company and Employee shall agree on the identity of a
physician to resolve any question as to Employee's disability.  If the
Company and Employee cannot agree on the physician to make such determination,
then the Company and Employee shall each select a physician and those physicians
shall jointly select a third physician, who shall make the
determination.  The determination of any such physician shall be final
and con­clusive for all purposes of this Agreement.

    

    4.           Dividends and
Adjustments.

    

    (a)           Dividends. No dividends or
distributions on NJR Common Stock will be applied to the Deferred
Stock.

    

    (b)           Adjustments.  The
number and kind of shares of Deferred Stock, the number of such shares to be
distributed and other terms and conditions of Deferred Stock or otherwise
contained in this Agreement, other than the time and form of payment of the
Deferred Stock, shall be appropriately adjusted, in order to prevent dilution or
enlargement of Employee’s rights hereunder, to reflect any changes in the number
of outstanding shares of Common Stock resulting from any event referred to in
Section 11(c) of the Plan, taking into account any Deferred Stock or other
amounts paid or credited to Employee in connection with such event under Section
4(a) hereof, in the sole discretion of the Committee subject to the requirements
of Code Section 409A.The Committee may determine how to treat or settle any
fractional share resulting under this Agreement.

    

    5.           409A
Award.  The Deferred Stock payable under the Agreement is a
409A Award and is subject to all applicable terms and conditions set forth in
Section 11(k) of the Plan.  All provisions of the Agreement shall be
interpreted in a manner as to comply with Section 11(k) of the Plan and Code
Section 409A.

    
      
        
        

      

      
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    6.           Other Terms of Deferred
Stock.  

    

    (a)           Voting and Other Shareholder
Rights.  Employee shall not be entitled to vote Deferred Stock
on any matter submitted to a vote of holders of Common Stock, and shall not have
all other rights of a shareholder of the Company until the Deferred Stock is
distributed to Employee as described in the Agreement.

    

    (b)           Consideration for Grant of Deferred
Stock.  Employee shall not be required to pay cash
consideration for the grant of the Deferred Stock, but Employee's performance of
services to the Company prior to the payout of the Deferred Stock shall be
deemed to be consideration for this grant of Deferred Stock.

     

                (c)           Insider Trading Policy
Applicable.  Employee acknowledges that sales of shares
resulting from Deferred Stock that have been distributed will be subject to the
Company's policies governing the purchase and sale of Company
securities.

    

    (d)           Certificates Evidencing Deferred
Stock.  On the date any
Deferred Stock subject to the Retention Award becomes payable (the “Payment
Date”), such Deferred Stock shall be paid by the Company delivering to the
Employee, a number of shares of NJR common stock equal to the number of shares
of Deferred Stock that become payable upon that Payment Date. The Company shall
issue the shares either (i) in certificate form or (ii) in book entry
form, registered in the name of the Employee. Delivery of any certificates will
be made to the Employee’s last address reflected on the books of the Company
unless the Company is otherwise instructed in writing. Neither the Employee nor
any of the Employee’s successors, heirs, assigns or personal representatives
shall have any further rights or interests in any Deferred Stock that are so
paid.

    

    (e)           Stock
Powers.  Employee agrees to execute and deliver to the Company
one or more stock powers, in such form as may be specified by the General
Counsel, authorizing the transfer of the Deferred Stock to the Company, at the
Grant Date or upon request at any time thereafter.

    

    7.           Employee
Representations and Warranties and Release.  As a condition
to any non-forfeiture of the Deferred Stock that would be distributed to
Employee upon Disability, the Company may require Employee (i) to make any
representation or warranty to the Company as may be required under any
applicable law or regulation, and (ii) to execute a release from claims against
the Company arising at or before the date of such release, in such form as may
be specified by the Company.

    

    8.           Miscellaneous.

    

    (a)           Binding Agreement; Written
Amendments.  This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties.  This
Agreement constitutes the entire agreement between the parties with respect to
the Deferred Stock, and supersedes any prior agreements or documents with
respect to the Deferred Stock.  No amendment or alteration of this
Agreement which may impose any additional obligation upon the Company shall be
valid unless expressed in a written instrument duly executed in the name of the
Company, and no amendment, alteration, suspension or termination of this
Agreement which may materially impair the rights of Employee with respect to the
Deferred Stock shall be valid unless expressed in a written instrument executed
by Employee.  All amendments must comply with the requirements of Code
Section 409A.

    

    (b)           Governing Law.  The
validity, construction, and effect of this Agreement shall be determined in
accordance with the laws (including those governing contracts) of the state of
New Jersey, without giving effect to principles of conflicts of laws, and
applicable federal law.

    

    (c)           Mandatory Tax
Withholding.  Unless otherwise determined by the Committee, at
the time of payment of the Deferred Stock to Employee, the Company will withhold
from any Shares deliverable, in accordance with Section 11(d)(i) of the Plan,
the number of Shares having a value nearest to, but not exceeding, the amount of
income and employment taxes required to be withheld under applicable local laws
and regulations, and pay the amount of such withholding taxes in cash to the
appropriate taxing authorities.  Employee will be responsible for any
withholding taxes not satisfied by means of such mandatory withholding and for
all taxes in excess of such withholding taxes that may be due upon payment of
the Deferred Stock.

    

    (e)           Notices.  Any
notice to be given the Company under this Agreement shall be addressed to the
Company at its principal executive offices, in care of the Vice President,
Corporate Services, and any notice to Employee shall be addressed to Employee at
Employee’s address as then appearing in the records of the Company.

    

    (f)           Shareholder
Rights.  Employee and any Beneficiary shall not have any rights
with respect to Shares (including voting rights) covered by this Agreement prior
to the settlement and distribution of the Shares as specified
herein.

    

    
      
         

      

      
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2Multistate

Exhibit 10.148

 

PROMISSORY NOTE

 

 

	
US
$2,250,000.00
	
Effective Date: December 31, 2008

 

 

           
FOR VALUE RECEIVED, the undersigned (together with such party’s or parties’
successors and assigns, “Borrower”) jointly and severally (if more than
one) promises to pay to the order of FOOTHILL CHIMNEY ASSOCIATES LIMITED
PARTNERSHIP, a Georgia limited partnership, the principal sum of TWO MILLION
TWO HUNDRED FIFTY THOUSAND AND 00/100 Dollars (US $2,250,000.00), with
interest on the unpaid principal balance, as hereinafter provided.

 

           
1.         Defined Terms.

 

           
(a)        As used in this Note:

 

“Business
Day” means any day other than a Saturday, a Sunday or any other day on which
the national banking associations are not open for business.  

 

“Default
Rate” means an annual interest rate equal to four (4) percentage points
above the Permanent Interest Rate.  However, at no time will the Default
Rate exceed the Maximum Interest Rate.

 

“Initial
Interest Rate” means a per annum interest rate of three and one-half of one
percent (3.5%).

 

“Installment
Due Date” means, for any monthly installment of interest only, the date on
which such monthly installment is due and payable pursuant to Section 3 of this
Note. The “First Installment Due Date” under this Note is February 1,
2009. 

 

“Lender”
means the holder from time to time of this Note.

 

“Loan”
means the loan evidenced by this Note.

 

“Maturity
Date” means the earlier of (i) November 1, 2034 (the
“Scheduled Maturity Date”), (ii) the Call Date of any Call
Option exercised by the Senior Lender under the Senior Note, and (iii) the date
on which the unpaid principal balance of this Note becomes due and payable by
acceleration or otherwise pursuant to the Loan Documents or the exercise by
Lender of any right or remedy under any Loan Document. 

 

“Maximum Interest Rate” means the rate of interest that
results in the maximum amount of interest allowed by applicable law. 

 

“Permanent
Interest Rate” means a per annum interest rate of four percent (4%).

 

“Security
Instrument” means the second deed to secure debt effective as of the
effective date of this Note, from Borrower to or for the benefit of Lender and
securing this Note.

 

“Senior
Lender” means ING USA Annuity and Life Insurance Company, and any successor
holder of the Senior Note.

 

“Senior
Loan Documents” means the Senior Note secured by a deed to secure debt made
by Borrower to or for the benefit of Senior Lender, and any other loan document
executed in connection with the loan evidenced by the Senior Note.

 

“Senior
Note” means the promissory note in the original principal amount of
$19,250,000.00 made by Borrower (as assignee of Foothill Chimney Associates,
Limited Partnership, a Georgia limited partnership).

 

           
(b)        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 4582
South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, or such other
place as may be designated by Notice to Borrower from or on behalf of
Lender.

 

           
3.         Payments.

 

           
(a)        Interest will accrue on the
outstanding principal balance of this Note at the Initial Interest Rate and the
Permanent Interest Rate, as provided in Sections 3(d) and 3(e), subject to the
provisions of Section 8 of this Note.  

 

           
(b)        Interest under this Note shall be
computed, payable and allocated on the basis of a 360-day year consisting of
twelve 30-day months. 

 

           
(c)        Unless disbursement of principal
is made by Lender to Borrower on the first day of a calendar month, interest for
the period beginning on the date of disbursement and ending on and including the
last day of such calendar month shall be payable by Borrower simultaneously with
the execution of this Note.  If disbursement of principal is made by Lender
to Borrower on the first day of a calendar month, then no payment will be due
from Borrower at the time of the execution of this Note.  The Installment
Due Date for the first monthly installment payment under Sections 3(d) and 3(e)
of interest only will be the First Installment Due Date set forth in Section
1(a) of this Note.  Except as provided in this Section 3(c) and in Section
10, accrued interest will be payable in arrears. 

 

           
(d)        Beginning on First Installment Due
Date, and continuing for the next thirty-five (35) Installment Due Dates
(including the monthly installment due on January 1, 2012), accrued interest
only at the Initial Interest Rate on the outstanding principal balance of this
Note shall be payable by Borrower in consecutive monthly installments due and
payable on the first day of each calendar month.  The amount of the monthly
installment of interest only payable pursuant to this Section 3(d) on each
Payment Date shall be Six Thousand Five Hundred Sixty-Two and 50/100 Dollars
($6,562.50) unless Borrower makes a partial prepayment of the principal of the
Loan pursuant to Section 10 hereof, in which case Lender, after Borrower’s
written request, shall recalculate the amount of the monthly installment of
interest thereafter and shall notify Borrower of the same.

 

           
(e)        Beginning on February 1, 2012, and
continuing until and including the final monthly installment due on the Maturity
Date, accrued interest only at the Permanent Interest Rate on the outstanding
principal balance of this Note shall be payable by Borrower in consecutive
monthly installments due and payable on the first day of each calendar
month.  The amount of the monthly installment of interest only payable
pursuant to this Section 3(d) on each Installment Due Date shall be Seven
Thousand Five Hundred and 00/100 Dollars ($7,500.00) unless Borrower makes a
partial prepayment of the principal of the Loan pursuant to Section 10
hereof, in which case Lender, after Borrower’s written request, shall
recalculate the amount of the monthly installment of interest thereafter and
shall notify Borrower of the same.

 

           
(f)         All remaining Indebtedness,
including all principal and interest, shall be due and payable by Borrower on
the Maturity Date.

 

           
(g)        All payments under this Note shall
be made in immediately available U.S. funds.

 

           
(h)        Any regularly scheduled monthly
installment of interest only payable pursuant to this Section 3 that is
received by Lender before the date it is due shall be deemed to have been
received on the due date for the purpose of calculating interest due.

 

           
(i)         Any accrued interest
remaining past due for 30 days or more, at Lender’s discretion, may be added to
and become part of the unpaid principal balance of this Note and any reference
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.

 

           
(j)         All payments made by
Borrower hereunder shall be made irrespective of, and without any deduction for,
any set-offs or counterclaims.

 

           
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 the amount received 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.

 

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

 

           
6.         Acceleration.  If an
Event of Default has occurred and is continuing, the entire unpaid principal
balance, any accrued interest, 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 (except if notice is required by
applicable law, then after such notice).  Lender may exercise this option
to accelerate regardless of any prior forbearance.

 

           
7.         Late Charge.

 

           
(a)        If any monthly installment of
interest or principal and interest or other amount payable under this Note or
under the Security Instrument or any other Loan Document is not received in full
by Lender within ten (10) days after the installment or other amount is due,
counting from and including the date such installment or other amount is due
(unless applicable law requires a longer period of time before a late charge may
be imposed, in which event such longer period shall be substituted), Borrower
shall pay to Lender, immediately and without demand by Lender, a late charge
equal to five percent (5%) of such installment or other amount due (unless
applicable law requires a lesser amount be charged, in which event such lesser
amount shall be substituted).

 

           
(b)        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 Section 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 Section 8.

 

           
8.         Default Rate.

 

           
(a)        So long as (i) any
monthly installment under this Note remains past due for thirty (30) days or
more or (ii) any other Event of Default has occurred and is continuing,
then notwithstanding anything in Section 3 of this Note to the contrary,
interest under this Note shall accrue on the unpaid principal balance from the
Installment Due Date of the first such unpaid monthly installment or the
occurrence of such other Event of Default, as applicable, at the Default
Rate.

 

           
(b)        From and after the Maturity Date,
the unpaid principal balance shall continue to bear interest at the Default Rate
until and including the date on which the entire principal balance is paid in
full.

 

           
(c)        Borrower acknowledges that
(i) its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the Loan, (ii) during the
time that any monthly installment under this Note is delinquent for thirty (30)
days or more, 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 (iii)  it is extremely difficult and impractical to
determine those additional costs and expenses.  Borrower also acknowledges
that, during the time that any monthly installment under this Note is delinquent
for thirty (30) days or more or any other Event of Default has occurred and is
continuing, 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 Section 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 and to 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 other obligations of Borrower.

 

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

 

(i)        
Borrower fails 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.  However, Borrower will not be personally liable for any
failure described in this subsection (i) if Borrower is unable to pay to
Lender all Rents and security deposits as required by the Security Instrument
because of a valid order issued in a bankruptcy, receivership, or similar
judicial proceeding or because of the exercise of prior or superior rights by
the Senior Lender.

 

(ii)       
Borrower fails to apply all insurance proceeds and condemnation proceeds as
required by the Security Instrument.  However, Borrower will not be
personally liable for any failure described in this subsection (ii) if
Borrower is unable to apply insurance or condemnation proceeds as required by
the Security Instrument because of a valid order issued in a bankruptcy,
receivership, or similar judicial proceeding or because of the exercise of prior
or superior rights by the Senior Lender.

 

(iii)      
Borrower fails to comply with Section 14(e) or (f) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.

 

(iv)      
Borrower fails to pay when due in accordance with the terms of the Security
Instrument the amount of any item below marked “Deferred”; provided
however, that if no item is marked “Deferred”, this Section 9(c)(iv) shall
be of no force or effect.    

Deferred          
Hazard Insurance premiums or other insurance premiums,

Deferred          
Taxes,

Deferred          
water and sewer charges (that could become a lien on the Mortgaged
Property),

Deferred          
assessments or other charges (that could become a lien on the Mortgaged
Property)

 

           
(c)        Borrower shall be personally
liable to Lender for:

 

                       
(i)         the performance of all of
Borrower’s obligations under Section 18 of the Security Instrument
(relating to environmental matters);

 

                       
(ii)        the costs of any audit under
Section 14(e) of the Security Instrument; and

 

                       
(iii)       any costs and expenses incurred by
Lender in connection with the collection of any amount for which Borrower is
personally liable under this Section 9, including Attorneys’ Fees and Costs
and the costs of conducting any independent audit of Borrower’s books and
records to determine the amount for which Borrower has personal liability.

 

           
(d)        All payments made by Borrower with
respect to the Indebtedness and all amounts received by Lender from the
enforcement of its rights under the Security Instrument and the other Loan
Documents shall be applied first to the portion of the Indebtedness for which
Borrower has no personal liability.

 

           
(e)        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: 

 

                       
(i)         Borrower’s ownership of any
property or operation of any business not permitted by Section 33 of the
Security Instrument;

 

                       
(ii)        a Transfer (including, but not
limited to, a lien or encumbrance) that is an Event of Default under
Section 21 of the Security Instrument, other than a Transfer consisting
solely of the involuntary removal or involuntary withdrawal of a general partner
in a limited partnership or a manager in a limited liability company; or

 

                       
(iii)       fraud or written material
misrepresentation by Borrower 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.

 

           
(f)         To the extent that Borrower
has personal liability under this Section 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.  To the fullest extent
permitted by applicable law, in any action to enforce Borrower’s personal
liability under this Section 9, Borrower waives any right to set off the
value of the Mortgaged Property against such personal liability.

 

           
10.       Voluntary and Involuntary
Prepayments.

 

           
(a)        Any receipt by Lender of principal
due under this Note prior to the Maturity Date constitutes a prepayment of
principal under this Note.  Without limiting the foregoing, any application
by Lender, prior to the Maturity Date, of any proceeds of collateral or other
security to the repayment of any portion of the unpaid principal balance of this
Note constitutes a prepayment under this Note.

 

           
(b)        Borrower may voluntarily prepay
all or any part of the unpaid principal balance of this Note at any time.

 

           
(c)        Borrower shall prepay the entire
unpaid principal balance of this Note upon the prepayment of the Senior Note or
upon the material modification of any of the terms of the Senior Loan
Documents.  

 

           
(d)        Any prepayment of principal under
this note that is not received on an Installment Due Date shall be deemed to
have been received on the next Installment Due Date for the purpose of
calculating interest due under this Note.

 

           
(e)        Unless Lender agrees otherwise in
writing, a permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments.

 

           
11.       Costs and Expenses.  To the
fullest extent allowed by applicable law, Borrower shall pay all expenses and
costs, including Attorneys’ Fees and Costs 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.  Borrower and all
endorsers and guarantors of this Note and all other third party obligors waive
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.

 

           
14.       Loan Charges.  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.  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 this 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 this Note.

 

           
15.       Commercial Purpose. 
Borrower represents that Borrower is incurring the Indebtedness solely for
the purpose of carrying on a business or commercial enterprise, and not for
personal, family, household, or agricultural 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 Property Jurisdiction.

 

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

 

           
19.       Notices; Written Modifications.

 

           
(a)        All Notices, demands and other
communications required or permitted to be given pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.

 

           
(b)        Any modification or amendment to
this Note shall be ineffective unless in writing signed by the party sought to
be charged with such modification or amendment. 

 

           
20.       Consent to Jurisdiction and
Venue.  Borrower agrees that any controversy arising under or in
relation to this Note may be litigated in the Property Jurisdiction.  The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have jurisdiction over all controversies that shall arise
under or in relation to this Note.  Borrower 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.  However, nothing in this Note is intended
to limit any right that Lender may have to bring any suit, action or proceeding
relating to matters arising under this Note in any court of any other
jurisdiction.

 

21.      
WAIVER OF TRIAL BY JURY.  BORROWER 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 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.

 

22.      
Subordination of Note.  Notwithstanding any
provisions of this Note or the Loan Documents to the contrary, it is understood
and agreed that the terms, covenants and conditions of this Note are and shall
be subordinate in all respects, including right of payment, to the indebtedness
evidenced by the Senior Note secured by the Senior Instrument for the benefit of
the Senior Lender, and the rights of Lender under this Note and the Loan
Documents, including, without limitation, the right to exercise any remedy
hereunder, are subject to the Senior Lender’s rights under the Senior Loan
Documents and the terms and conditions of the Subordination
Agreement.

 

 

           
IN WITNESS WHEREOF, and in consideration of the Lender’s agreement to lend
Borrower the principal amount set forth above, Borrower has signed and delivered
this Note under seal or has caused this Note to be signed and delivered under
seal by its duly authorized representative.

 

	

BORROWER:

	
BELMONT PLACE APARTMENTS,
LLC, a Delaware limited
liability company

 

By:       BJP
III East Coast Properties, LLC,

            a
Delaware limited liability company,

            Its
Managing Member

 

           
By:  /s/Jay Schulman

           
Name: Jay
Schulman
           
Its: Vice President

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