Document:

Form of Junior Subordinated Note

 Exhibit 4.2 
 BROOKFIELD RESIDENTIAL PROPERTIES INC. 
 UNSECURED SUBORDINATED PROMISSORY
NOTE 
  

			
	 Date:
	  	January     —    , 2011
		
	 Amount:
	  	CDN $215,000,000

 Brookfield Residential
Properties Inc. for value received hereby acknowledges itself indebted to and unconditionally promises to pay, at the times and in the manner set forth herein, to or to the order of Brookfield Properties Limited, the principal sum of $215,000,000
(or such part thereof as may at such time be outstanding) in lawful money of Canada, and to pay interest on the principal amount of this Note outstanding from time to time, and all other payments stipulated herein, at the rate and in the manner set
forth herein. 
 ARTICLE 1 
 INTERPRETATION 
  

	1.1	Definitions 

 For the
purposes of this Note: 
 “Applicable Law” means, in respect of any person, property, transaction or event, all
applicable laws, statutes, rules, by-laws and regulations, and all applicable official directives, orders, judgments and decrees of governmental bodies; 
 “Borrower” means Brookfield Residential Properties Inc. and its successors; 
 “Business Day” means any day (other than Saturday or Sunday) on which banks are generally open for business in Toronto, Ontario; 

“Capitalization” means, with respect to the Borrower on a consolidated basis, the sum of (a) the Debt of the
Borrower and (b) Equity of the Borrower as shown on the balance sheet forming part of the most recent consolidated financial statements of the Borrower; 
 “Debt” means, with respect to the Borrower on a consolidated basis, all obligations that would then be classified as indebtedness of the Borrower, and, without duplication, includes both
short term and long term debt, as classified on the most recent financial statements of the Borrower; 
 “Debt to
Capitalization Ratio” means, with respect to the Borrower on a consolidated basis, the ratio calculated at any time obtained by dividing (a) the Debt of the Borrower as at such time, by (b) the Capitalization of the Borrower as at
such time; 
 “Default” means any event or condition which, upon notice, lapse of time, or both, would
constitute an Event of Default; 
 “Equity” means, with respect to the Borrower at any time, the aggregate of
all common, preferred and other share capital interests (however designated, whether voting or non-voting or whether certificated or uncertificated, other than all shares of the Borrower that are redeemable or retractable at the option of any person
(other than the Borrower)) in, and all warrants of, the 

 Borrower that would be reflected as equity on the balance sheet of the Borrower at that
time, together with retained earnings and contributed surplus of the Borrower, as shown on the balance sheet of the Borrower at that time; 
 “Event of Default” has the meaning attributed to such term in section 5.1; 
 “Excess Cash” means, after December 31, 2015, semi-annually at the end of June and December, the cash of the Borrower as reflected on the consolidated balance sheet of the Borrower
less the amounts to be paid for the following six month period: 
  

	 	(a)	with respect to the scheduled repayments of principal with respect to indebtedness; 

 

	 	(b)	consolidated interest expenses excluding any payment-in-kind interest expenses; 

 

	 	(c)	capital expenditures, but only to the extent not to be financed by equity or indebtedness; 

 

	 	(d)	consolidated cash income tax expenses; and 

  

	 	(e)	the projected working capital needs of the Borrower. 

 “GAAP” means generally accepted accounting principles applicable to the Borrower; 
 “Holder” means Brookfield Properties Limited and its successors and permitted assigns; 
 “Interest Payment Date” means March 31, June 30, September 30 and December 31 of each year; 

“Interest Rate” means 8.5% per annum; 
 “Loan Documents” means this Note and any other agreements, instruments and documents delivered from time to time (both before and after the date of this Note) to the Holder by the
Borrower in connection with this Note, in each case as amended, supplemented, modified, restated or replaced from time to time; 

“Material Adverse Effect” means a material adverse effect upon (i) the financial condition, assets, business or
operations of the Borrower and its subsidiaries, taken as a whole, or (ii) its or their ability to perform their obligations under any Loan Document; 
 “Maturity Date” means December 31, 2020; 

“Note” means this unsecured subordinated promissory note as amended, restated or replaced from time to time; 

“Obligations” means all indebtedness, liabilities and other obligations of the Borrower to the Holder hereunder or under
any other Loan Documents, whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter; 

“Senior Indebtedness” means all senior unsecured and unsubordinated indebtedness of the Borrower for borrowed money; and

  
 2 

 “Senior Note” means the unsecured senior promissory note dated the date
hereof in the original principal amount of $265,000,000 issued by the Borrower to Brookfield Properties Limited, as may be amended, restated or otherwise modified from time to time. 

 

	1.2	Invalidity, etc. 

 Each
of the provisions contained in this Note is distinct and severable and a declaration of invalidity, illegality or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof. 
  

	1.3	Currency 

 All monetary
amounts in this Note are stated in Canadian dollars. 
  

	1.4	Governing Law 

 This Note
shall be governed by and construed in accordance with the laws of the Province of Ontario. 
 ARTICLE 2 

PAYMENTS 
  

	2.1	Interest 

2.1.1    Interest shall accrue on the outstanding principal amount of this Note at a rate per annum equal to the
Interest Rate. 
 2.1.2    Interest on the outstanding principal amount of this Note shall accrue from day
to day, shall be calculated on the basis of the number of days elapsed and on the basis of a year of 365 or 366 days, as the case may be, and shall be paid to the Holder in arrears on the each Interest Payment Date. Interest payable on each Interest
Payment Date shall be payable in respect of the period from and including the last Interest Payment Date, to but excluding such Interest Payment Date. 
  

	2.2	Evidence of Obligations 

The Holder shall maintain an account evidencing the indebtedness and liabilities of the Borrower hereunder and the amounts of principal,
interest and other amounts owing and paid from time to time hereunder. In any legal action or proceeding in respect of this Note, the entries made in such account shall be conclusive evidence of the existence and amounts of the obligations of the
Borrower therein recorded, absent manifest error. 
  

	2.3	Manner of Payment 

 All
payments of principal, interest or other amounts payable hereunder by the Borrower shall be made on the date specified herein (which if not a Business Day, shall be the next following Business Day). So long as this Note or any part thereof is
outstanding, interest shall be payable on the date specified herein by certified cheque, wire transfer or direct debit as contemplated in section 2.1, or in such manner as the Holder, acting reasonably, may from time to time otherwise agree with the
Borrower. 

  
 3 

  

	2.4	Repayment 

 Subject to
Section 2.5, 2.6 and the other terms and conditions of this Note, the Borrower shall not be required to make payments of principal on this Note until the Maturity Date. On the Maturity Date, the principal amount of this Note then outstanding,
together with all accrued and unpaid interest and other amounts payable under this Note, shall be due and payable in full. 
  

	2.5	Mandatory Repayment with Excess Cash 

 Subject to Article 6, within 45 days after June 30 and December 31 of each year, beginning with the 45th day following December 31, 2015 (or if any such 45th day is not a Business Day,
then the next following Business Day), unless waived by the Holder, the Borrower shall be required to prepay the Note in an amount equal to the lesser of (a) 50% of the Excess Cash for the six-month period ending on such June 30 or
December 31, and (b) $100,000,000, provided, however, that the Borrower shall not be required to make any such prepayment if, on a pro-forma basis after giving effect to such repayment: 

 

	 	(a)	the Borrower’s Equity would be less than $1,375,000,000, and 

  

	 	(b)	the Borrower’s Debt to Capitalization Ratio would be greater than 35% (after giving effect to other any payments in respect of Debt then due and owing).

  

	2.6	Mandatory Prepayment with Equity Proceeds 

 Subject to Article 6, no later than the first business day following the date of receipt by Borrower or any subsidiary of net cash proceeds received from the issuance of any equity to a third party
by the Borrower or any subsidiary, the Borrower shall be required to prepay the Note in an amount equal to 50% of such net cash proceeds, provided that to the extent that any amount remains outstanding under the Senior Note, such proceeds shall
first used by the Borrower to repay such outstanding amount under the Senior Note and the excess, if any, shall be applied to prepay the Note. 
  

	2.7	Voluntary Prepayment 

The Borrower may, subject to Article 6, and provided that no amount remains outstanding under the Senior Note, at its option at any
time and from time to time prepay the whole or any part of the principal amount of the Note without premium or penalty, provided that any such prepayment shall be in the minimum amount of $500,000 and integral multiples thereof. 

 

	2.8	Application of Payments 

All amounts prepaid or repaid shall be applied firstly in reduction of the accrued and unpaid interest then outstanding in respect of the
principal amount being prepaid or repaid and thereafter in reduction of the principal amount of this Note then outstanding. 
  

	2.9	Indemnity 

 The Borrower
shall indemnify the Holder for all losses, costs, expenses, damages and liabilities which the Holder may sustain or incur as a consequence of any default by the Borrower to repay any Obligations when required by the terms of this Note. 

  
 4 

 ARTICLE 3 
 REPRESENTATIONS AND WARRANTIES 
  

	3.1	Representations and Warranties 

 The Borrower represents and warrants to the Holder as follows: 

3.1.1    Status.    It is duly incorporated and existing under the laws of its
jurisdiction of incorporation; 
 3.1.2    Power and Capacity.    It has the
power and capacity to carry on its business, to own its property and assets, and to enter into and perform its obligations under the Loan Documents to which it is a party; 
 3.1.3    Due Authorization and Execution.    It has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to
which it is a party and each Loan Document has been, or upon execution and delivery will be, duly executed and delivered by it; 

3.1.4    No Contravention.    The execution and delivery of the Loan Documents to which it
is a party and the performance by it of its obligations thereunder does not and will not contravene, breach or result in any default under its articles, bylaws or any of its other constating documents, any material contract to which it is a party or
by which it is bound, or any Applicable Law; 
 3.1.5    No Consents
Required.    No authorization, consent or approval of, or filing with or notice to, any person (including any governmental body) is required in connection with the execution, delivery or performance by it of any of the Loan
Documents to which it is party; 
 3.1.6    Enforceability.    Each of the Loan
Documents to which it is a party constitutes, or upon execution and delivery will constitute, a valid and binding obligation of it enforceable against it in accordance with its terms; 

3.1.7     No Litigation.    Other than as may be disclosed in writing at any time to the
Holder, there is presently in progress no court, administrative, regulatory or similar investigation or proceeding (collectively “Proceedings”), against or involving it, which if adversely determined could reasonably be expected to have a
Material Adverse Effect, nor, to the knowledge of the Borrower, has any such Proceeding been threatened against it, and to the knowledge of the Borrower no event has occurred which might give rise to any such Proceedings and there is no judgment or
order of any court or governmental body outstanding against it; 
 3.1.8    Ownership of
Assets.    The Borrower has good and marketable title to its assets. 

3.1.9    Intellectual Property.    The Borrower owns or licenses all intellectual property
required to carry-on business and all such licenses are in full force and effect, except where the loss of such license would not have a Material Adverse Effect. 
 3.1.10    All Material Information Supplied.    It has on the date hereof made available to the Holder all material information in its possession relating to
its assets and financial condition. All documents and instruments, made available to the Holder in respect of its financial condition are, or will be, in all cases true and correct copies and all such documents and instruments are, or will be, in
full force and effect. All budgets and other financial projections and forecasts provided by 

  
 5 

 
the Borrower to the Holder were prepared in good faith and based on assumptions believed by the Borrower be reasonable at the time of provision to the Holder. 

3.1.11    Taxes.    Other than as disclosed to the Holder, it has paid all taxes, exigible
from it or for the collection of which it is responsible under the laws of its jurisdiction of incorporation or any other jurisdiction, in the case of taxes on income, in respect of all fiscal years ended on or prior to the date of this Agreement,
and in the case of all other taxes, in respect of all periods ended prior to the date of this Agreement, for which such taxes were due and payable prior to the date of this Agreement; 

3.1.12    Financial Statements and No Material Change.    The financial statements of the
Borrower that have been made available to the Holder have been prepared in accordance with generally accepted accounting principles applied on a consistent basis, and fairly present the financial position and results of operations of the Borrower
for the dates or periods reported on thereby subject, in relation to any unaudited financial statements, any year-end adjustments. From the date of the last financial statements made available to the Holder, there has been no change which could
reasonably be expected to have a Material Adverse Effect; 
 3.1.13    No
Default.    No Default or Event of Default has occurred and is continuing or would result from the entering into of this Agreement; and 
 3.1.14    Compliance with Laws.    It has operated its business in compliance with all Applicable Laws in all material respects. 

 

	3.2	Survival of Representations and Warranties 

 The Borrower covenants that the representations and warranties made by it in this Article 3 shall be true and correct on the day of this Note and at all times until the Maturity Date, with the same
effect as if such representations and warranties had been made and given on and as of each day unless such representations or warranty is expressed to be as of a specific date, notwithstanding any investigation made at any time by or on behalf of
the Holder. 
 ARTICLE 4 
 COVENANTS 
  

	4.1	Positive Covenants 

 So
long as any Obligations remain outstanding, the Borrower covenants and agrees that: 
 4.1.1    Punctual
Payment.    It shall pay all Obligations falling due hereunder on the dates and in the manner specified herein; 
 4.1.2    Existence.    It shall, and shall cause each subsidiary to, do or cause to be done all things necessary or desirable to maintain its corporate
existence and its corporate power and capacity to own its property and assets; 
 4.1.3    Books and
Records.    It shall, and shall cause each subsidiary to, maintain proper books of account and records in accordance with sound and consistent accounting practices, covering all of its business and affairs on a current basis;

  
 6 

 4.1.4    Maintain Assets.    It shall, and
shall cause each subsidiary to, maintain its property and assets in good repair and working order, ordinary wear and tear excepted, and defend its title to same; 
 4.1.5    Compliance with Applicable Law and Contracts.    It shall, and shall cause each subsidiary to, comply in all material respects with the requirements
of all Applicable Law and all material contracts to which it is a party or by which it is bound; 

4.1.6    Payment of Taxes and Claims.    It shall, and shall cause each subsidiary to,
cause to be paid and discharged all material taxes, rents and claims payable by it as and when due; 

4.1.7    Operate Business.    It shall, and shall cause each subsidiary to, continue to
operate its business in the ordinary course as presently conducted by it; 
 4.1.8    Licenses and
Permits.    It shall, and shall cause each subsidiary to, maintain in good standing all material licenses and permits necessary for the operation of its business; and 

4.1.9    Insurance.    It shall, and shall cause each subsidiary to, maintain insurance in
such amounts and in such manner as is reasonably prudent given the nature of its business. 
  

	4.2	Holder Entitled to Perform Covenants 

 If the Borrower fails to perform any covenant contained in Section 4.1 the Holder may, in its discretion, perform any such covenant capable of being performed by it and if any such covenant requires
the payment of money the Holder may make such payments. All sums so expended by the Holder shall be deemed to form part of the Obligations, shall bear interest at the same rate as the principal amount of this Note from time to time and shall be
payable by the Borrower on demand. 
  

	4.3	Reporting Requirements 

It shall deliver or cause to be delivered to the Holder: 

 

	 	(a)	within 60 days of the end of each fiscal quarter of the Borrower (other than the 4th quarter), unaudited consolidated financial statements of the Borrower, provided
that the public filing thereof shall be deemed to constitute delivery to the Holder; 

  

	 	(b)	within 120 days of the end of each fiscal year of the Borrower, audited consolidated financial statements of the Borrower, provided that the public filing thereof shall
be deemed to constitute delivery to the Holder; 

  

	 	(c)	together with the delivery of the financial statements referred to in (a) and (b) above, a certificate of an officer of the Borrower certifying:

  

	 	(i)	no Default or Event of Default has occurred and is continuing; and 

  

	 	(ii)	demonstrating compliance with the financial covenants in Section 4.4 

 

	 	(d)	promptly upon the Borrower becoming aware thereof, notice to the Holder of: 

 

	 	(i)	material litigation; 

  

	 	(ii)	material casualty event; 

  
 7 

  

	 	(iii)	any Default or Event of Default; and 

  

	 	(iv)	the occurrence of any event which could reasonably be expected to have a Material Adverse Effect. 

 

	4.4	Financial Covenants 

 So
long as any Obligations remain outstanding, the Borrower covenants and agrees that: 
 4.4.1    It shall at
all times maintain Equity of at least $750,000,000; and 
 4.4.2    It shall not at any time exceed a Debt
to Capitalization Ratio of 65%. 
  

	4.5	Negative Covenant 

 So
long as any Obligations remain outstanding, the Borrower covenants and agrees that it shall not, and shall not permit any subsidiary to, except with the prior consent of the Holder: 

4.5.1    Sell Property.    sell, transfer or otherwise dispose of any asset other than
(i) in the ordinary course of business, (ii) to the Borrower or a subsidiary of the Borrower, (iii) to the extent such asset is worn-out, obsolete or no longer useful to the business of the Borrower or subsidiary, or (iv) unless
after giving effect to such sale, transfer or disposal the Borrower would on a pro-forma basis be in compliance with the financial covenants set forth in Section 4.4; 
 4.5.2    Amalgamations, etc.    enter into any transaction (including by way of reorganization, consolidation, amalgamation, liquidation or otherwise)
whereby all or substantially all of its property and assets would become the property of any other person unless the successor resulting from such transaction succeeds to the obligations and liabilities of the Borrower hereunder either by operation
of law or pursuant to a supplemental or replacement agreement hereof satisfactory to the Holder acting reasonably; 

4.5.3    Dividends.    make or pay or declare any dividends or make any other
distributions on its share capital, or effect any share buyback or share redemption or make any return of capital to its shareholders, unless after giving effect to such payment or distribution the Borrower would on a pro-forma basis be in
compliance with the financial covenants set forth in Section 4.4; 
 4.5.4    Offering
Securities.    permit any subsidiary to make any offering of securities other than to the Borrower or a subsidiary of the Borrower or in connection with a customary asset level joint venture arrangement; 

4.5.5    Change of Business.    change the nature of its business from that conducted on
the date hereof; or 
 4.5.6    Change to Constating Documents.    amend its
articles, bylaws or other constating documents or its financial year-end. 
 ARTICLE 5 

EVENTS OF DEFAULT AND REMEDIES 
  

	5.1	Events of Default 

 The
occurrence of any of the following events shall constitute an Event of Default: 

  
 8 

 5.1.1    default by the Borrower in payment when due of the principal or
interest on this Note or the Senior Note (including any mandatory repayment) or any other amounts owing under this Note; 

5.1.2    default by the Borrower or any subsidiary in the observance of any covenant set forth in Section 4.5;

 5.1.3    default by the Borrower or any subsidiary in the performance or observance of any other
covenant, condition or obligation contained in this Note or in any Loan Document unless such default, if capable of being remedied, is remedied within 30 Business Days after the earlier of the Borrower becoming aware of such default and notice
thereof being given by the Holder to the Borrower, or such longer period as may reasonably be necessary to remedy such default but in no case longer than 60 days; 
 5.1.4    the Borrower or any material subsidiary admits its inability to pay its debts generally as they become due or otherwise acknowledges its insolvency; 

5.1.5    the Borrower or any material subsidiary institutes any proceeding, or any proceeding is commenced against or
involving the Borrower or any material subsidiary: 
  

	 	(a)	seeking to adjudicate it a bankrupt or insolvent, 

  

	 	(b)	seeking liquidation, dissolution, winding up, reorganization, arrangement, protection or relief of it or any of its property or debt or making a proposal with respect
to it under any law relating to bankruptcy, insolvency, compromise of debts or other similar laws; or 

  

	 	(c)	seeking appointment of a receiver, trustee, agent, custodian or other similar official for it or for any part of its property and assets; 

and such proceeding is not being contested in good faith by appropriate proceedings or, if so contested, remains outstanding, undismissed
and unstayed more than 45 days from the institution of such first mentioned proceeding; 
 5.1.6    any
execution, distress or other enforcement process, whether by court order or otherwise, becomes enforceable against any material property and assets of the Borrower; 
 5.1.7    default by the Borrower or any subsidiary in the observance or performance of any covenant, term or condition in any agreement for indebtedness in excess of $50,000,000, after
the expiry of any cure or grace period applicable thereto; or 
 5.1.8    this Note or any other Loan
Document being held in any judicial proceeding to be unenforceable or invalid or ceasing for any reason to be in full force and effect or the Borrower or any person on its behalf denying or disaffirming any of such documents. 

 

	5.2	Remedies Upon Default 

Upon the occurrence of any Event of Default, the Holder may at its sole option: 

5.2.1    declare all Obligations to be immediately due and payable, and 

  
 9 

 5.2.2    take such actions and commence such proceedings as may be
permitted at law or in equity (whether or not provided for herein or in the Loan Documents) at such times and in such manner as the Holder in its sole discretion may consider expedient, 
 all without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Holder
hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law or by any of the Loan Documents. 
  

	5.3	Overdue Amounts 

5.3.1    All overdue amounts owing or deemed to be owing hereunder (“overdue amounts”), whether in respect
of principal, interest, expenses or otherwise, both before and after judgment, and in the case of expenses from the dates such expenses are incurred, other than interest that has become overdue as a result of the terms of Article 6, shall bear
interest thereon at a rate per annum that is equal to the Interest Rate plus 2% per annum. Such interest on overdue amounts shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last Business Day
of each calendar month. 
 5.3.2    In the event that, pursuant to the terms of Article 6, the Borrower
is unable to pay any amount of interest owing to the Holder pursuant to the terms hereof, the Borrower shall forthwith deposit into an interest bearing account an amount equal to the interest owing to the Holder at such time. Any amount of interest
that has become overdue as a result of Article 6 shall bear interest thereon at a rate per annum that is equal to the Interest Rate. Such interest on overdue interest shall accrue from day to day, be payable in arrears on demand and shall be
compounded monthly on the last Business Day of each calendar month. 
 ARTICLE 6 

SUBORDINATION 
  

	6.1	Subordination and Postponement 

 The Holder agrees that the Obligations are and shall hereafter remain subordinate to, and the payment of the whole or any part of the Obligations, whether in principal, interest or accessories and whether
at or prior to maturity or upon acceleration of any such maturity, shall be postponed to, the payment in full in cash of the Senior Indebtedness. In order to give effect to the foregoing: 

6.1.1    in the event that proceedings are commenced by or against the Borrower as a result of its insolvency or in
the event of the liquidation or winding-up of the Borrower or if proceedings are commenced which effect a reorganization, arrangement or compromise of debt of the Borrower, the holders of all Senior Indebtedness shall be entitled to receive payment
in full in cash of all amounts due thereon before the Holder is to receive any payment in respect of the principal, interest or any other amount owing in respect of this Note; 
 6.1.2    upon the maturity of any Senior Indebtedness which constitutes debt for borrowed money of the Borrower, by lapse of time, acceleration or otherwise, then all amounts owing in
respect of such matured Senior Indebtedness shall first be paid in full in cash, before any payment on account of principal, interest or any other amount due in respect of this Note is made; 

6.1.3    to the extent requested by any creditor of the Borrower, the Holder agrees to enter into a confirmation that
such creditor is entitled to rely on the provisions of this section; and 

  
 10 

 6.1.4    the foregoing subordination shall not relieve the undersigned
from any of its obligations hereunder or restrict the rights of the Holder hereunder. 
  

	6.2	Payments on Subordinated Indebtedness 

 6.2.1    Notwithstanding the provisions of section 6.1 above and until such time as the Borrower is in default of any of its obligations under any of the documents evidencing the
Senior Indebtedness, the Holder shall continue to be entitled to receive payment from time to time of the whole or any part of the principal and interest on the Obligations unless such payment on the Obligations would constitute or result in a
default of the Borrower under any document evidencing the Senior Indebtedness. 
 ARTICLE 7 

GENERAL 
  

	7.1	Amendment and Waiver 

 No
amendment or waiver of any provision of this Note or consent to any departure by the Borrower from any provision thereof is effective unless it is in writing and signed by the Holder. Such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given. 
  

	7.2	Notices 

 Any notice or
other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or by hand-delivery as hereinafter provided. Any such notice, if sent by facsimile, shall be deemed to have been received on the
Business Day after the day of sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below. Notice of change of address shall also be governed by this section. Notices and
other communications shall be addressed as follows: 
  

	 	7.2.1	if to the Borrower: 

  

	 	    	Brookfield Residential Properties Inc. 

	 	    	Brookfield Place, Suite 300 

	 	    	Toronto, Ontario 

	 	    	Canada M5J 2T3 

	 	    	Attention: Shane Pearson 

  

	 	7.2.2	if to the Holder: 

  

	 	    	Brookfield Properties Limited 

	 	    	Three World Financial Center 

	 	    	200 Vesey Street, 11th Floor 

	 	    	New York, NY 10281 

	 	    	Attn: Brett Fox 

  

	7.3	Enurement and Assignment 

This Note shall enure to the benefit of and be binding upon the parties hereto, their respective successors and any permitted assigns.
The Borrower may not assign its obligations under this 

  
 11 

 
Note without the written consent of the Holder. The Holder may not assign its interest in this Note without the written consent of the Holder, provided that no such consent shall be required to
an assignment (i) to Brookfield Asset Management Inc. or its successors or affiliates; or (ii) after an Event of Default that is continuing. 
  

	7.4	Further Assurances 

Whether before or after the happening of an Event of Default, the Borrower shall at its own expense do, make, execute or deliver all such
further acts, documents and things in connection with this Note and the Loan Documents as the Holder may reasonably require from time to time for the purpose of giving effect thereto, all promptly upon the request of the Holder. 

[remainder of page intentionally blank] 

  
 12 

 IN WITNESS WHEREOF the Borrower has executed this Note this     —     day of January, 2011. 
  

			
	 BROOKFIELD RESIDENTIAL
 PROPERTIES INC.

		
	By:	 	 
		 	 Name:

Title:

		
	By:	 	 
		 	 Name:

Title:

  
 13exhibit_10-1.htm

EXHIBIT 10.1

Execution Version

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (this "Agreement") is made as of November 22, 2010, by and between ALLEGHANY CAPITAL CORPORATION, a Delaware corporation ("Alleghany"), and LAREDO OIL, INC., a Delaware corporation ("Laredo").

 

RECITALS

 

A.           Alleghany, Laredo and Mark See are in discussions and negotiations with respect to a possible transaction involving Alleghany, Laredo and Mark See (the "Proposed Transaction").

 

B.           Pending the discussions concerning the Proposed Transaction, Alleghany has agreed to loan to Laredo (the "Loan") up to Two Hundred and Fifty Thousand Dollars ($250,000.00) (the "Maximum Loan Amount") to assist Laredo in funding certain of its operating costs and expenses.

 

C.            The Loan is to be evidenced by this Agreement and a senior promissory note in

 

the form of Exhibit A annexed hereto ("Note").

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants, conditions and agreements herein contained, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.              The Loan and Loan Documents

 

a) The Loan. Subject to the terms and conditions contained herein, Alleghany shall lend to Laredo a maximum amount of Two Hundred and Fifty Thousand Dollars ($250,000.00) in two installments as follows:

 

	
  

	
i)

	
One hundred and Fifty Thousand Dollars ($150,000.00) ("First Loan Installment") will be funded upon execution of this Agreement and the Note; and

 

	
  

	
ii)

	
An additional One Hundred Thousand Dollars ($100,000.00) ("Second Loan Installment") will be funded thirty (30) days after the date of the funding of the First Loan Installment; provided, however, that Alleghany shall have no obligation to fund the Second Loan Installment or any portion thereof if it has notified Laredo on or before such 30th day that it has decided not to proceed with the Proposed Transaction.

 

The amount of the Maximum Loan Amount actually funded by Alleghany shall be referred to herein as the "Funded Amount(s)".

 

b)  Use of Loan Proceeds. The proceeds from all Funded Amounts of the Loan shall be used solely and exclusively by Laredo for the following purposes, and the proceeds of the Funded Amounts shall not be used for any other purposes, without the prior written consent of Alleghany, which consent Alleghany may grant or withhold in its sole and absolute discretion:

  

1

  

 

	
  

	
i)

	
to pay for legal fees, accounting fees, filing fees and other costs and expenses associated with the Proposed Transaction and compliance by Laredo of its reporting and filing requirements as a public company; and

 

	
  

	
ii)

	
other working capital needs for Laredo in its ordinary course of business consistent with past practices, including payroll, insurance, other general and administrative expenses and obtaining third party reserve reports.

 

Notwithstanding anything to the contrary set forth above, the proceeds of the Funded Amounts shall not be used, directly or indirectly, to pay for any investment advisory fees, broker's fees, finder's fees or the like, or for any costs or expenses, (including legal fees) relating to any pending or threatened litigations or claims.

 

c) Note. Simultaneously with the execution and delivery of this Agreement, Laredo shall execute and deliver to Alleghany the Note, in the form attached as Exhibit A hereto. The term "Loan Documents" as used in this Agreement shall mean this Agreement and the Note.

 

2.              Negative Covenants.

 

a) Laredo covenants to Alleghany that unless and until the Note is paid in full, Laredo shall not, directly or indirectly, take or permit the taking of any of the following actions or activities without the prior written consent of Alleghany, which consent Alleghany may grant or withhold in Alleghany's sole and absolute discretion:

 

	
  

	
i)

	
Make any offer to purchase for cash, or purchase for cash, or acquire or redeem for cash, any shares of the capital stock of Laredo, or any warrants or options to purchase any shares of the capital stock of Laredo; or

 

	
  

	
ii)

	
Make any offer to acquire or redeem, or actually acquire or redeem, any outstanding indebtedness of Laredo, including any convertible indebtedness of Laredo, except to the extent the terms and conditions of such indebtedness require such acquisition or redemption or to the extent the acquisition or redemption payment is made in shares of capital stock or capital stock equivalents of Laredo; or

 

	 	
iii)

	
declare or make any cash dividends or distributions.

 

b) Laredo covenants to Alleghany that unless and until the Note is paid in full, Laredo shall not, except for the purpose of raising funds to pay off the Note, directly or indirectly, take or permit the taking of any of the following actions or activities without the prior written consent of Alleghany, which consent Alleghany may grant or withhold in Alleghany's sole and absolute discretion:

 

	
  

	
i) Incur any indebtedness for money borrowed which is not expressly subordinated to the payment of all interest and principal under the Note pursuant to a written subordination agreement, satisfactory to Alleghany in its sole and absolute discretion, which provides in substance and effect that no interest or principal may be paid in respect of such indebtedness, either prior to or after default, unless and until all interest and principal, and other charges, payable under the Note is paid to Alleghany in full; or

  

2

  

 

	
  

	
ii)

	
If any indebtedness for money borrowed is incurred by Laredo which otherwise satisfies the provisions of subparagraph (i) above, Laredo nevertheless makes any payment of interest or principal in respect of such indebtedness before all interest, principal and other charges due under the Note are paid in full; or

 

	
  

	
iii)

	
Guarantee any indebtedness of any other person, firm or entity; or

 

	
  

	
iv)

	
Merge or consolidate with any other corporation or entity, or sell, lease or transfer or otherwise dispose of all or substantially all of the assets of Laredo; or

 

	
  

	
v)

	
Grant or create any lien, pledge, security interest or other encumbrance in any of the assets of Laredo; or

 

	
  

	
vi)

	
Enter into any transaction with any person, firm or entity which constitutes  an "Affiliate" (as defined in Section 7(f) below) of Laredo or Mark See.

 

  

3.             Affirmative Covenants. Laredo covenants to Alleghany that unless and until the Note is paid in full:

 

a)           Laredo shall deliver to Alleghany any and all amendments hereafter made to Laredo's Articles of Incorporation and Bylaws promptly upon their adoption and prior to the filing of any said amendments with the Secretary of State's office. Laredo's Articles of Incorporation and Bylaws will continue to be valid and binding until the Note is paid in full; notwithstanding anything herein to the contrary, Laredo shall not amend its organizational documents without Alleghany's prior written consent unless such amendment is necessary to, and its effectiveness is conditioned upon completion of, a sale or issuance of capital stock, the proceeds of which are used to repay all principal and interest outstanding on the Note;

 

b)           Laredo shall preserve and keep in force and effect its corporate existence and all rights, licenses and permits necessary or appropriate to the proper conduct of its business, except where any discontinuance or termination shall not cause a material adverse change in the business, operations, properties or condition of Laredo or its ability to perform its obligations under this Agreement; and

 

c)          Laredo shall preserve and maintain its legal existence and all rights, privileges and franchises necessary or desirable in the normal conduct of its business, shall conduct its business in an orderly, efficient and regular manner, and shall comply with all applicable laws and regulations of any person and the terms of any indenture, contract or other instrument to which it may be a party or under which it or its properties may be bound if failure to so comply would have a material adverse effect on the business, properties or condition (financial or otherwise) of Laredo.

 

d)          Laredo shall use all proceeds from the issuance or sale of any shares of its capital stock to repay the principal and interest outstanding under the Note.

  

3

  

 

4.            Representations and Warranties of Laredo. Laredo represents and warrants to Alleghany

 

as follows:

 

a)           Laredo has full power and authority, to execute, deliver and perform this Agreement and the Note and all corporate action required to be taken by the Board of Directors of Laredo has been duly and validly taken;

 

b)           Laredo is a Delaware corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware;

 

c)           This Agreement constitutes, and when delivered, the Note will constitute, legal, valid and binding obligations of Laredo enforceable against Laredo in accordance with their respective terms except as limited by general principles of equity and by bankruptcy, insolvency and other laws affecting the rights of creditors generally;

 

d)           There are no legal or administrative actions pending or, to the best of Laredo's knowledge, threatened against or related to Laredo; and

 

e) The execution, delivery and performance of this Agreement and the Note will not violate any governmental requirement (including, without limitation, any applicable usury law), or conflict with, be inconsistent with or result in any default under any of the representations or warranties, covenants, conditions or other provisions of any indenture, mortgage, deed of trust, easement, restriction of record, contract, document, agreement or instrument of any kind to which Laredo is bound.

 

5.            Events of Default. Each of the following shall constitute an event of default ("Event of

 

Default") hereunder:

 

a)           Laredo fails to make any payment of principal or interest when and as the same shall become due and payable, whether at maturity or by acceleration or as part of any prepayment or otherwise, under the Note and does not cure such failure within five (5) days after such failure;

 

b)           Laredo fails to perform or otherwise breaches any covenant contained in this Agreement or the Note and, if such failure or breach is capable of being cured, does not cure such failure or breach within ten (10) days after written notice of such failure is given to Laredo by Alleghany;

 

c)           Any representation or warranty made to Alleghany by Laredo in this Agreement is or becomes false, inaccurate or misleading in any material respect either as of the date of this Agreement or as of the date on which Alleghany is required to fund the Second Loan Installment, or at any time thereafter;

 

d)           Laredo breaches or violates any provisions of any other written agreement entered into with Alleghany; or

 

e) Laredo files a petition in bankruptcy or for any form of debtor relief under any present or future law relating to bankruptcy or debtor relief; or such a filing or petition is filed against Laredo and Laredo either consents to or does not oppose such filing or petition, or such petition is not dismissed within sixty (60) days after filing; or Laredo consents to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official of Laredo or for any part of Laredo's property; or Laredo makes an assignment for the benefit of its creditors.

  

4

  

 

 

6.            Remedies. Upon an Event of Default, the Alleghany may, at its option, and without further notice to or demand upon Laredo:

 

a)           If an Event of Default occurs prior to or exists as of the date on which Alleghany is required to fund the Second Loan Installment, Alleghany shall not have any obligation to fund the Second Loan Installment.

 

b)           Declare any or all indebtedness evidenced by the Note to be due and payable immediately without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, notice of intent to accelerate, notice of acceleration, or other notices or demands of any kind or character, all at Alleghany's option, exercisable in its sole discretion;

 

c)           Exercise any other right or remedy available to Alleghany under this Agreement, or at law or in equity.

 

7.            Miscellaneous.

 

a)           Attorneys' Fees and Expenses. If either party hereto fails to perform any of its obligations under this Agreement or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Agreement, then the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees and disbursements. Any such attorneys' fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys' fees obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment.

 

b)           Notice. All notices hereunder shall be in writing. Notices may be delivered personally, by reputable overnight courier, or by United States mail, postage prepaid, to either party at the address set forth below, or at such other address as a party, by written notice, may designate. Notices given by hand shall be deemed received on the day so delivered, transmitted or sent. Notices given by overnight courier shall be deemed received on the first business day following the mailing date. Notices mailed shall be deemed received as of 5:00 P.M. on the third business day following the mailing date. Any notices shall be deemed delivered only when actually delivered or transmitted and received at the specified address.

  

5

  

 

	 	Alleghany: 	Alleghany Capital Corporation 

7 Times Square Tower, 17th Floor New York, NY 10036

Attn.: Christopher Dalrymple, Secretary

	 	 	 
	 	
Laredo:

	
Mark See, Chief Executive Officer Laredo Oil, Inc.

P.O. Box 22

Big Horn, WY 82833

 

 

	 	 	 
	 	
with a copy to:

	
 Bradley E. Sparks, Chief Financial Officer

Laredo Oil, Inc. 

2203 Townes Lane 

Austin, TX 78703

 

c)          Amendment. This Agreement may not be amended except in writing. This Agreement sets forth the entire understanding of the parties respecting the Loan from Alleghany to Laredo and supersedes all prior understandings or agreements of the parties, oral or otherwise.

 

d)           Waiver, Third Parties. No waiver by Alleghany of any provision hereof and no consent or approval by Alleghany shall be valid unless in writing, and then shall apply only to the extent specifically set forth in such writing. Alleghany may, in its sole discretion, waive any provision of this Agreement, including the restrictions on use of the proceeds of the Loan and such waiver shall not affect the validity of this Agreement or any other Loan Document. This Agreement is not intended to benefit, and does not benefit, any third person.

 

e)           Assignment: Choice of Law. Alleghany may, in its sole discretion, sell, assign or otherwise transfer all or a portion of its interest and rights in the Loan and in any of the Loan Documents to any subsidiary or affiliate of Alleghany. This Agreement shall be binding on and inure to the benefit of their respective successors and assigns of the parties hereto, except that Laredo may not assign or transfer any of its rights hereunder without the prior written consent of Alleghany. This Agreement, and the rights and remedies of Alleghany and Laredo as provided herein, shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts or choice of law principles.

 

0           "Affiliate" of any Person means another Person that directly or indirectly, throughone or more intermediaries, controls, is controlled by, or is under common control with, such first Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

g)           Counterparts. This Agreement may be executed in counterparts, all such counterparts together constituting but one and the same instrument.

  

6

  

 

IN WITNESS HEREOF, the parties hereto have executed and delivered this Loan Agreement as of the date first set forth above.

 

 

	  

ALLEGHANY:

	 	
 ALLEGHANY CAPITAL CORPORATION, 

a Delawar corporation

	 
	 	 	 	 
	 	 	 	 	 
	
 

	 	
By: 

	/s/ Peter R Sismondo	 
	 	 	 	Peter R Sismondo, vice President	 
	 	 	 	 	 
	 	 	 	 	 
	 LAREDO:  	 	  LAREDO OIL, INC., a Delawar corporation	 
	 	 	 	 	 
	 	 	 By: 	 	 
	 	 	 	 Mark See, President and CEO	 

 

 

  

7

  

IN WITNESS HEREOF, the parties hereto have executed and delivered this Loan Agreement as of the date first set forth above.

 

 

	  

ALLEGHANY:

	 	
 ALLEGHANY CAPITAL CORPORATION, 

a Delawar corporation

	 
	 	 	 	 
	 	 	 	 	 
	
 

	 	
By: 

	 	 
	 	 	 	Peter R Sismondo, vice President	 
	 	 	 	 	 
	 	 	 	 	 
	 LAREDO:  	 	  LAREDO OIL, INC., a Delawar corporation	 
	 	 	 	 	 
	 	 	 By: 	 /s/ Mark See	 
	 	 	 	 Mark See, President and CEO	 

 

 

  

8

  

Exhibit A

Senior Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

9

  

Execution Version

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO LAREDO OIL, INC. THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

 

SENIOR PROMISSORY NOTE

 

$250,000.00 ("Maximum Loan Amount") November 22, 2010

New York, New York

 

FOR VALUE RECEIVED, the receipt and adequacy of which is hereby acknowledged by the undersigned, Laredo Oil, Inc., a Delaware corporation ("Borrower"), does hereby promise to pay to the order of Alleghany Capital Corporation, a Delaware corporation ("Lender"), at 7 Times Square Tower, 17th Floor, New York, NY 10036, or at such other place as may be designated from time to time in writing by Lender, the entire principal amount of this Senior Promissory Note, or such lesser amount as is funded by Lender as provided herein, plus interest thereon as provided for herein. All sums owing hereunder are payable in lawful money of the United States of America, in immediately available funds.

 

This Senior Promissory Note (this "Note") is being executed and delivered in connection with Lender's undertaking to fund to Borrower, in two installments (collectively, the "Loans") in an aggregate maximum principal amount up to Two Hundred and Fifty Thousand Dollars ($250,000.00) ("Maximum Loan Amount") pursuant and subject to the terms and conditions of that certain Loan Agreement of even date herewith between Borrower and Lender ("Loan  Agreement"). Unless otherwise defined in this Note, all capitalized terms used in this Note shall have the meanings ascribed to them in the Loan Agreement. Such Loans will be funded by Lender at the times, in the manner and subject to the terms and conditions set forth in the Loan Agreement. The unpaid principal amount actually funded by the Lender to Borrower pursuant to Loan Agreement, up to the Maximum Loan Amount, plus interest accrued thereon and added to principal pursuant to Paragraph 2(a) below, shall be referred to herein as the "Outstanding Principal Sum".

 

1.           Interest.

 

(a)           Note Rate. Interest shall accrue on the Outstanding Principal Sum of this Note from the date on which the Outstanding Principal Sum hereunder or portion thereof is funded by Lender to the date such Outstanding Principal Sum is paid in full, at the rate of six percent (6%) per annum (referred to herein as the "Note Rate").

 

(b)           Default Rate. Upon the occurrence of an "Event of Default" (as defined in Paragraph 5 below), and so long as such Event of Default shall continue, the Outstanding Principal Sum together with all unpaid interest accrued thereon shall bear interest at an annual rate (the "Default Rate") equal to the then applicable Note Rate plus three percent (3%) per annum.

  

10

  

2.           Payments.

 

(a)           Subject to the provisions of Paragraph 6 below, interest shall be payable semi-annually, commencing on May 22, 2011 (each, an "Interest Payment Date"). The Outstanding Principal Sum (together with all accrued and unpaid interest thereon) shall be all due and payable on the "Maturity Date" set forth in Section 3 below. Notwithstanding the foregoing, all amounts received by Borrower after the date of this Note from the issuance or sale of shares of the capital stock of Borrower (referred to herein as "Equity Sale Proceeds") shall be used to pay first all accrued and unpaid interest under this Note and then shall be used to pay the Outstanding Principal Sum to the extent of the remaining balance of such Equity Sale Proceeds.

 

(b)           Notwithstanding the foregoing Paragraph 2(a), on each Interest Payment Date, Borrower may elect to allow the interest then due and payable to accrue and compound, at which time and giving effect to such election the interest having accrued on the Outstanding Principal Sum since the date of this Note or the most recent Interest Payment Date (whichever is later) shall be added to the principal amount of the Loans and become part of the Original Principal Sum for all purposes of this Note.

 

3.           Maturity Date.

 

(a)           If the "Proposed Transaction" referred to in the Loan Agreement is not consummated prior February 5, 2011, then the entire Outstanding Principal Sum, and all accrued and unpaid interest thereon, shall be all due and payable on the date which is the earlier of (a) the date on which Borrower consummates any equity or debt financing involving the receipt by Borrower of proceeds of at least $500,000.00; (b) December 31, 2011 or (b) the "Accelerated Maturity Date" (as defined in Paragraph 6 below).

 

(b)           If the "Proposed Transaction" referred to in the Loan Agreement is consummated prior to February 5, 2011, then the entire Outstanding Principal Sum, and all accrued and unpaid interest thereon, shall be all due and payable on the date which is the earlier of (a) December 31, 2013 or (b) the "Accelerated Maturity Date" (as defined in Paragraph 6 below)

 

(c)           The actual date on which the entire Outstanding Principal Sum is all due

 

and payable under this Section 2 shall be referred to herein as the "Maturity Date".

 

4.           Not Revolving Line of Credit. The Loans do not constitute a revolving credit and when any repayment of the Outstanding Principal Amount occurs, such Outstanding Principal Amount may not be re-borrowed.

 

5.           Events of Default. The occurrence of any one or more of the following events with respect to the Borrower shall constitute an event of default hereunder (each an "Event of Default"):

 

(a)           Borrower fails to make any payment of principal or interest when and as the same shall become due and payable, whether at maturity or by acceleration or as part of any prepayment or otherwise, under this Note and does not cure such failure within five (5) days after such failure;

 

(b)           Borrower fails to perform or otherwise breaches any covenant contained in the Loan Agreement or this Note and, if such failure or breach is capable of being cured, does not cure such failure or breach within ten (10) days after written notice of such failure is given to Borrower by Lender;

  

11

  

 

(c)           Any representation or warranty made to Lender by Borrower in the Loan Agreement is or becomes false, inaccurate or misleading in any material respect either as of the date of the Loan Agreement or as of the date on which Lender is required to fund the Second Loan Installment;

 

(d)           Borrower breaches or violates any provisions of any other written agreement entered into with Lender; or

 

(e) Borrower files a petition in bankruptcy or for any form of debtor relief under any present or future law relating to bankruptcy or debtor relief; or such a filing or petition is filed against Borrower and Borrower either consents to or does not oppose such filing or petition, or such petition is not dismissed within sixty (60) days after filing; or Borrower consents to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official of Borrower or for any part of Borrower's property; or Borrower makes an assignment for the benefit of its creditors.

 

6.           Remedies. Upon the occurrence of any Event of Default, Lender shall be entitled to exercise one or more of the following remedies:

 

(a)           Declare by written notice to the Borrower, the then entire Outstanding Principal Sum, together with accrued interest thereon, immediately due and payable without presentment or demand for payment, protest or other notices or demands of any kind (all of which are hereby expressly waived by Borrower), on the date specified in such written notice to the Borrower, which date (the "Accelerated Maturity Date") shall be no earlier than the fifth (5th) day following the date of such notice.

 

(b)           In addition, Lender shall be entitled to exercise any and all such other rights and remedies as the Lender may have under law or in equity.

 

(c) All of Lender's rights and remedies in connection with this Note or under applicable law or at equity shall be cumulative, and Lender's exercise of any one or more of those remedies shall not constitute an election of remedies.

 

7.           Interest Computation. Interest shall be computed on the basis of a fraction, the denominator of which is three hundred sixty-five (365) and the numerator of which is the actual number of days in the month of such adjustment.

 

8.           Principal Prepayments. Borrower shall have the right to prepay this Note, in whole or in part, at any time without penalty.

 

9.           Right to Make Notations. The holder of this Note is hereby authorized to record the date and amount of Lender's Loans, the date and amount of each payment of principal and interest, and applicable interest rates and other information with respect thereto, on schedules to be annexed to and constituting a part of this Note (or record such information by any analogous method the holder hereof may elect consistent with its customary practices) and any such recordation shall constitute prima facie evidence, absent manifest error, of the accuracy of the information so recorded; provided, however, that the failure to make a notation or the inaccuracy of any notation shall not limit or otherwise affect the obligations of Borrower under this Note.

 

10.         Delay in Enforcement. If Lender delays in exercising or failing to exercise any of their respective rights under this Note, that delay or failure shall not constitute a waiver of any of Lender's rights, or of any breach, default or failure of condition of or under this Note. No waiver by Lender of any of its rights, or of any such breach, default or failure of condition shall be effective, unless the waiver is expressly stated in a writing signed by Lender.

  

12

  

 

11.          Assignment. This Note inures to and binds the heirs, legal representatives, successors and assigns of Borrower and Lender; provided, however, that Borrower may not assign this Note or assign or delegate any of its rights or obligations under this Note.

 

12.          Usury Laws. Borrower and Lender intend to comply at all times with applicable usury laws. If at any time such laws would render usurious any amounts due under this Note under applicable law, then it is Borrower's and Lender's express intention that Borrower not be required to pay interest on this Note at a rate in excess of the maximum lawful rate, that the provisions of this Section shall control over all other provisions of this Note which may be in apparent conflict hereunder, that such excess amount shall be immediately credited to the principal balance of this Note (or, if this Note has been fully paid, refunded by Lender to Borrower), and the provisions hereof shall immediately be reformed and the amounts thereafter decreased, so as to comply with the then applicable usury law, but so as to permit the recovery of the fullest amount otherwise due under this Note.

 

13.          Unconditional Liability; No Offsets. Borrower promises absolutely and unconditionally to pay the indebtedness evidenced hereby, in accordance with the terms and conditions set forth in this Note, without offset or counterclaim.

 

14.          Governing Law and Waivers. This Note shall be governed by the laws of the State of New York. The Borrower hereby waives presentment; demand; notice of dishonor; notice of default or delinquency; notice of acceleration; notice of nonpayment; notice of costs, expenses or losses and interest thereon; and notice of interest on interest and late charges.

 

15.          Business Days; Application of Payments. Whenever any payment on this Note shall be stated to be due on a day that is not a business day, such payment shall instead be made on the next succeeding business day, and such extension of time shall be included in the computation of interest payable on this Note. Each payment hereunder shall be credited first to interest then due and the remainder of such payment shall be credited to principal.

 

16.          Jurisdiction and Venue. The parties hereto hereby irrevocably submit to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County and (b) the United States District Court for the Southern District of New York, for purposes of any action, lawsuit or other proceeding arising out of or relating to this Note and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto hereby consents to process being served by any party to this Note in any suit, action or proceeding by the mailing of a copy thereof to the applicable party.

 

17.         Attorneys Fees. If any attorney is engaged by Lender to enforce or defend any provision of this Note, or as a consequence of any Event of Default, with or without the filing of any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand all attorneys' fees and all costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid attorneys' fees and costs had been added to the principal.

 

 

[Next Page Is Signature Page]

  

13

  

 

[Signature Page for Senior Promissory Note]

 

 

IN WITNESS WHEREOF, the undersigned, by its duly authorized and acting executive officer, has executed this Senior Promissory Note as of the date first set forth above.

 

 

 

 

	 	
BORROWER:

	 
	 	 	 	 
	 	
Laredo Oil, Inc., a Delaware corporation

	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	
Mark See, President and CEO

	 
	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]