Document:

Exhibit
10.3

 

THIS
JUNIOR NOTE IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT OF EVEN DATE
HEREWITH AMONG BANK OF AMERICA, N.A., AS SENIOR LENDER, BEHRINGER HARVARD PAL
I, LLC, AS JUNIOR LENDER, AND LEND LEASE (US) CAPITAL INC., AS SUBORDINATE
LENDER, AND NO INTEREST IN THIS JUNIOR LOAN NOTE SHALL BE TRANSFERRED TO ANY
PERSON EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH INTERCREDITOR AGREEMENT

 

Junior
Loan Note

 

	
  $25,000,000

  	
   

  	
  August 14, 2009

  

 

FOR VALUE RECEIVED, Rest Easy LLC, a Delaware limited
liability company (“Borrower”), hereby promises to pay to the order of Behringer
Harvard PAL I, LLC, a Delaware limited liability company, together with any and
all of its successors and assigns and/or any other holder of this Junior Loan Note
(this “Junior Note”), as lender (the “Lender”), without offset,
in immediately available funds in lawful money of the United States of America,
the principal sum of Twenty Five Million and No/100 Dollars ($25,000,000) (or
the unpaid balance of all principal advanced against this Junior Note, if that
amount is less), together with interest on the unpaid principal balance of this
Junior Note from day to day outstanding as hereinafter provided.

 

Section 1.               Interest Rate. Subject to
the provisions of Section 18 below, the principal balance of this Junior
Note outstanding from time to time shall bear interest at the rate of eighteen
percent (18.00%) per annum (the “Note Rate”). Except to the extent
otherwise required by Section 18 below, interest shall be computed
based on a three hundred sixty (360) day year comprised of twelve (12) months
of thirty (30) days each.

 

Section 2.               Payment Schedule and
Maturity Date. Principal and interest shall be payable in lawful
money of the United States to Lender at 15601 Dallas Parkway, Suite 600,
Addison, Texas 75001, or at such other place as the Lender may from time to
time designate in writing, such principal sum and interest to be paid in the
following manner:

 

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

 

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

 

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

 

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Section 2(g) below) during the Years 1-2 Period, then
Expedited Payments (as defined in Section 2(g) below) shall thereafter
be made to Lender.

 

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

 

(i)            Borrower shall pay (A) the Minimum Monthly
Payment, and (B) following the payment of the Senior Loan Indebtedness (as
defined in the Lock Box Agreement), accrued and unpaid interest in respect of
this Junior Note to the extent of cash flow available at priority Section 4.1(b)(xx)
of the Lock Box Agreement (as hereinafter defined).

 

(ii)           In addition, if as of the beginning of the Years 3-4
Period, Lender has previously exercised the Expedited Payment Option, then Expedited
Payments shall continue to be made to Lender. If Lender exercises the Expedited
Payment Option in accordance with Section 2(g) below during the
Years 3-4 Period, Lender shall thereafter receive Expedited Payments (in addition
to the Minimum Monthly Payments).

 

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

 

(d)           The entire remaining principal amount of this Junior
Note, all accrued and unpaid interest, and all other amounts due under the
Junior Loan Documents shall be due and payable in full on September 1,
2016 (the “Maturity Date”).

 

(e)           For the avoidance of doubt, it is hereby expressly
stipulated that, notwithstanding anything to the contrary contained herein or
in the Lock Box Agreement, Borrower shall be required to pay the Minimum
Monthly Payment on the first day of each calendar month beginning on October 1,
2009, and ending on (and including) August 1, 2016 (regardless of the
amount of cash flow generated from the Property (as hereinafter defined)) in
addition to all other amounts due and payable under this Junior Note. Further, it
is hereby expressly stipulated that Borrower shall be required to pay all
amounts payable under the Junior Loan Documents on the Maturity Date regardless
of the amount of cash flow generated from the Property.

 

(f)            Without in any way limiting the obligation of
Borrower to pay at least the Minimum Monthly Payment and other amounts becoming
due under this Junior Note as set forth herein, if at any time during the term
of this Junior Note, the payment made by Borrower pursuant to this Junior Note
is not sufficient to pay all interest accrued under 

 

2

 

this Junior Note at the Note Rate, then all accrued but unpaid interest
(i) shall continue to accrue as interest and shall itself accrue interest
at the Note Rate compounded on a monthly basis, and (ii) shall be due and
payable as provided in this Junior Note.

 

(g)           As used herein, the term “Expedited Payment Option”
means the option of Lender to require payments to Lender of available cash flow
(“Expedited Payments”): (i) pursuant to and at priority Section 4.1(a)(xix)
of the Lock Box Agreement during the Years 1-2 Period, and (ii) pursuant
to and at priority Section 4.1(b)(xxi) of the Lock Box Agreement during
the Years 3-4 Period, to be applied towards payment of the Junior Loan
Indebtedness. During the Years 1-2 Period, Lender shall be deemed to have
exercised the Expedited Payment Option if (A) the Senior Loan (as defined
in the Junior Loan Agreement) is paid in full but all the First Priority
Conditions (as hereinafter defined) are not fulfilled, and (B) Lender
sends the Waiver of Payoff Notice defined in Section 3 below.
However, in the event of such deemed exercise by Lender, it shall be the
responsibility of Lender to send written notice to Borrower and the Cash
Management Agent (as defined in the Lock Box Agreement) that the Expedited
Payment Option has been exercised and that Lender is thereafter to receive
Expedited Payments. During the Years 3-4 Period, Lender shall have the right,
in its sole discretion, to exercise the Expedited Payment Option by sending written
notice to Borrower and the Cash Management Agent at any time after the Senior
Loan Indebtedness is paid in full. Upon the exercise (or deemed exercise) by
Lender of the Expedited Payment Option and delivery by Lender to Borrower and the
Cash Management Agent of the necessary payment information with respect to any
Expedited Payment, Expedited Payments shall be paid to Lender as set forth in,
as applicable, Section 2(a)(ii) and Section 2(b)(ii) above,
unless and until Lender otherwise instructs the Cash Management Agent (with a
copy to Borrower) in writing (which Lender reserves the right to do).

 

(h)           For purposes hereof, the term “First Priority
Conditions” means each of the following conditions: (i) the Senior
Loan is paid in full and the liens, assignments and security interests securing
the Senior Loan are no longer in effect, and (ii) the liens, assignments
and security interests securing the Junior Loan become first and prior to any
other liens, assignments and security interests affecting the Property (except
for any liens, assignments or security interests which Lender, in its sole
discretion, has voluntarily made superior to its liens, assignments and
security interests by execution of an instrument of subordination). The
reasonable judgment of Lender shall be conclusive as to whether the First
Priority Conditions have been fulfilled.

 

Section 3.               Acceleration of Maturity
upon Repayment of Senior Loan. If, at any time prior to
the Maturity Date, Borrower intends to pay the Senior Loan in full by any means
other than payments of cash flow made on the Senior Loan pursuant to the Lock
Box Agreement or payment resulting from the application of proceeds from a
Casualty or a Condemnation, then Borrower shall give Lender not less than
twenty (20) days’ prior written notice (the “Senior Loan Repayment Notice”)
before making final payment on the Senior Loan, setting forth the date upon
which Borrower will make final payment on the Senior Loan and describing the
source of funds for such final payment. Notwithstanding anything contained
herein to the contrary, if the Senior Loan is paid in full prior to the
Maturity Date but the remaining First Priority Conditions have 

 

3

 

not been fulfilled, then concurrently
with making final payment on the Senior Loan, Borrower must also pay to Lender (a) the
remaining principal amount of this Junior Note, all accrued and unpaid interest
in respect of this Junior Note, and all other amounts due under the Junior Loan
Documents; and (b) the Prepayment Premium described in Section 6
below, if any, it being agreed that payment of the Junior Loan under the
circumstances described in this Section 3 shall be considered a
voluntary prepayment for purposes of calculating the Prepayment Premium.
Notwithstanding the preceding sentence, however, Lender shall have the right to
waive and decline such prepayment of the Junior Loan by sending written notice
to Borrower (the “Waiver of Payoff Notice”) within ten (10) days after
receiving the Senior Loan Repayment Notice, in which event Borrower shall pay
the Senior Loan in full without paying in full the indebtedness under this
Junior Note and the other Junior Loan Documents. The sending of a Waiver of
Payoff Notice by Lender shall not impair any rights of Lender with respect to
any future prepayment of this Junior Note (including, without limitation, the
right to collect any Prepayment Premium due under Section 6 hereof
in connection with such prepayment).

 

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

 

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

 

Section 6.               Prepayment. Borrower may not
prepay the principal balance of this Junior Note except as provided in this Section 6
below.

 

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

 

4

 

Date”) upon which the sum of Twenty Five Million and
No/100 Dollars ($25,000,000) has been disbursed by Lender to Borrower pursuant
to the Junior Loan Agreement.

 

(b)           During the period beginning on the Full Disbursement
Date, Borrower shall have the right to prepay this Junior Note upon fulfillment
of all the following conditions: (i) Lender shall have actually received
from Borrower prior written notice of (A) Borrower’s intent to prepay, (B) the
amount of principal which will be prepaid (the “Prepaid Principal”), and
(C) the date on which the prepayment will be made; (ii) each
prepayment shall be in the amount of $200,000 or a larger integral multiple of
$200,000 (unless the prepayment retires the outstanding balance of this Junior
Note in full); (iii) each prepayment shall be in the amount of 100% of the
Prepaid Principal, plus accrued unpaid interest thereon to the date of
prepayment, plus any other sums which have become due to Lender under the
Junior Loan Documents on or before the date of prepayment but have not been
paid; and (iv) simultaneously with such prepayment, Borrower shall pay to
Lender the Prepayment Premium (as hereinafter defined). For purposes hereof,
the “Prepayment Premium” shall mean an amount payable to Lender for the
privilege of prepaying this Junior Note calculated as follows: (1) if such
prepayment is made before the second (2nd) anniversary of this Junior Note, the Prepayment
Premium shall be equal to five percent (5%) of the Prepaid Principal; (2) if
such prepayment is made on or after the second (2nd) anniversary of this Junior Note but before the
third (3rd) anniversary
of this Junior Note, the Prepayment Premium shall be equal to four percent (4%)
of the Prepaid Principal; (3) if such prepayment is made on or after the
third (3rd) anniversary of this Junior Note but before the fourth (4th) anniversary of this Junior
Note, the Prepayment Premium shall be equal to three percent (3%) of the
Prepaid Principal; and (4) if such prepayment is made on or after the
fourth (4th) anniversary
of this Junior Note, no Prepayment Premium shall be payable.

 

(c)           Notwithstanding the foregoing provisions of this Section 6,
the conditions set forth in clauses (i), (ii) and (iii) of Section 6(b) above
shall not be applicable to prepayments of principal that result from payments
made in respect of the Junior Loan Indebtedness under the Lock Box Agreement
(it being expressly agreed that the Prepayment Premium shall be payable with
respect thereto, except as otherwise provided in the definition of Prepayment
Premium in Section 6(b) or in the last sentence of this Section 6(c));
provided, however, that Borrower shall give Lender prior written notice if
Borrower elects to expedite the repayment of principal under Section 4.1(a)(xix)
or Section 4.1(b)(xxi) of the Lock Box Agreement. Furthermore,
notwithstanding anything contained herein to the contrary, prepayment prior to the
Full Disbursement Date shall be permitted, and no Prepayment Premium shall be
payable by Borrower, if and to the extent (i) such prepayment results from
the exercise by Lender of the Expedited Payment Option, or (ii) such
prepayment results from the application of proceeds from a Casualty or a
Condemnation.

 

(d)           Except as otherwise expressly provided in the
definition of Prepayment Premium in Section 6(b) or in Section 6(c) above,
the Prepayment Premium shall be due, to the extent permitted by applicable law,
under any and all circumstances where all or any portion of this Junior Note is
paid prior to the scheduled Maturity Date, whether such 

 

5

 

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

 

(e)           If this Junior Note is prepaid in full, any
commitment of Lender for further advances shall automatically terminate. No
Prepaid Principal may be reborrowed.

 

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

 

Section 8.               Certain Provisions Regarding
Payments. All payments made under this Junior Note shall be
applied, to the extent thereof, to late charges, to accrued but unpaid
interest, to unpaid principal, and to any other sums due and unpaid to Lender
under the Junior Loan Documents, in such manner and order as Lender may elect
in its sole discretion, any instructions from Borrower or anyone else to the
contrary notwithstanding. Remittances shall be made without offset, demand,
counterclaim, deduction, or recoupment (each of which is hereby waived) and
shall be accepted subject to the condition that any check or draft may be
handled for collection in accordance with the practice of the collecting bank
or banks. Acceptance by Lender of any payment in an amount less than the amount
then due on any indebtedness shall be deemed an acceptance on account only,
notwithstanding any notation on or accompanying such partial payment to the
contrary, and shall not in any way (a) waive or excuse the existence of an
Event of Default (as hereinafter defined), (b) waive, impair or extinguish
any right or remedy available to Lender hereunder or under the other Junior Loan
Documents, or (c) waive the requirement of punctual payment and
performance or constitute a novation in any respect. Payments received after 5:00 p.m.
(Eastern time) shall be deemed to be received on, and shall be posted as of,
the following Business Day. Whenever any payment under this Junior Note or any
other Junior Loan Document falls due on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day.

 

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

 

(a)           Borrower fails to pay when and as due and payable
any amounts payable by Borrower to Lender under the terms of this Junior Note;

 

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(b)           Any covenant, agreement or condition in this Junior Note
is not fully and timely performed, observed or kept, subject to any applicable notice
grace and/or cure period set forth in the Junior Loan Agreement;

 

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

 

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

 

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

 

(b)           Lender may set off the amount owed by Borrower to
Lender, whether or not matured and regardless of the adequacy of any other
collateral securing this Junior Note, against any and all accounts, credits,
money, securities or other property now or hereafter on deposit with, held by
or in the possession of Lender to the credit or for the account of Borrower,
without notice to or the consent of Borrower.

 

(c)           Lender may exercise any of its other rights, powers
and remedies under the Junior Loan Documents or at law or in equity.

 

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

 

Section 12.             Costs and Expenses of
Enforcement. Borrower agrees to pay to Lender on demand all
costs and expenses incurred by Lender in seeking to collect this Junior Note or
to enforce any of Lender’s rights and remedies under the Junior Loan Documents,
including court costs and reasonable attorneys’ fees and expenses, whether or
not suit is filed hereon, or whether in connection with bankruptcy, insolvency
or appeal.

 

Section 13.             Service of
Process.

 

(a)           Borrower hereby
irrevocably designates and appoints Mr. Tom Tether, Actus Lend Lease LLC,
700 Lanidex Plaza, Parsippany, New Jersey 07054, as Borrower’s authorized agent
to accept and acknowledge on Borrower’s behalf service of 

 

7

 

any and all process that may be served in any suit, action, or
proceeding instituted in connection with this Junior Note in any state or
federal court sitting in the State of New York. If such agent shall cease so to
act, Borrower shall irrevocably designate and appoint without delay another
such agent in the State of New York satisfactory to Lender and shall promptly
deliver to Lender evidence in writing of such agent’s acceptance of such
appointment and its agreement that such appointment shall be irrevocable.

 

(b)           Borrower hereby consents to process being served in
any suit, action, or proceeding instituted in connection with this Junior Note
by (i) the mailing of a copy thereof by certified mail, postage prepaid,
return receipt requested, to Borrower and (ii) serving a copy thereof upon
agent, if any, hereinabove designated and appointed by Borrower as Borrower’s
agent for service of process. Borrower irrevocably agrees that such service
shall be deemed to be service of process upon Borrower in any such suit,
action, or proceeding. Nothing in this Junior Note shall affect the right of
Lender to serve process in any manner otherwise permitted by law and nothing in
this Junior Note will limit the right of Lender otherwise to bring proceedings
against Borrower in the courts of any jurisdiction or jurisdictions, subject to
any provision or agreement for arbitration or dispute resolution set forth in
the Junior Loan Agreement.

 

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

 

Section 15.             General Provisions. Time is of
the essence with respect to Borrower’s obligations under this Junior Note. If
more than one person or entity executes this Junior Note as Borrower, all of
said parties shall be jointly and severally liable for payment of the
indebtedness evidenced hereby. Borrower and each party executing this Junior Note
as Borrower hereby severally (a) waive demand, presentment for payment,
notice of dishonor and of nonpayment, protest, notice of protest, notice of
intent to accelerate, notice of acceleration and all other notices (except any
notices which are specifically required by this Junior Note or any other Junior
Loan Document), filing of suit and diligence in collecting this Junior Note or
enforcing any of the security herefor; (b) agree to any substitution,
subordination, exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (c) agree that Lender shall
not be required first to institute suit or exhaust its remedies hereon against
Borrower or others liable or to become liable hereon or to perfect or enforce
its rights against them or any security herefor; (d) consent to any
extensions or postponements of time of payment of this Junior Note for any
period or periods of time and to any partial payments, before or after
maturity, and to any other indulgences with respect hereto, without notice
thereof to any of them; (e) submit (and waive all rights to object) to non-exclusive
personal jurisdiction of any state or federal court sitting in the State of New
York for the enforcement of any and all obligations under this Junior Note and
the other Junior Loan Documents; (f) waive the benefit of all homestead
and similar exemptions as to this Junior Note; (g) agree that their
liability under this Junior Note shall not be affected or impaired by any
determination that any title, security interest or lien taken by Lender to
secure this Junior Note is invalid or unperfected; and (h) hereby 

 

8

 

subordinate to the Junior Loan
and the Junior Loan Documents any and all rights against Borrower and any
security for the payment of this Junior Note, whether by subrogation, agreement
or otherwise, until this Junior Note is paid in full. A determination that any
provision of this Junior Note is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that
the application of any provision of this Junior Note to any person or
circumstance is illegal or unenforceable shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances. This
Junior Note may not be amended except in a writing specifically intended for
such purpose and executed by the party against whom enforcement of the
amendment is sought. Captions and headings in this Junior Note are for
convenience only and shall be disregarded in construing it. Whenever a time of
day is referred to herein, unless otherwise specified such time shall be the
local time of the place where payment of this Junior Note is to be made. The
term “Business Day” shall mean a day on which Lender is open for the
conduct of substantially all of its banking business at its office in the city
in which this Junior Note is payable (excluding Saturdays and Sundays). Whenever
a time of day is referred to herein, unless otherwise specified such time shall
be the local time of the place where payment of this Junior Note is to be made.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Junior Loan Agreement. The words “include”
and “including” shall be interpreted as if followed by the words “without
limitation.” References herein to particular sections of the Lock Box
Agreement shall include references to successor sections if the Lock Box
Agreement is amended after the date hereof.

 

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

 

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

 

Section 18.             No Usury.

 

(a)           As indicated in Section 16 above, Borrower
and Lender have agreed that the laws of the State of New York will govern,
among other issues, the maximum rate or amount of interest payable on the
indebtedness evidenced by this Junior Note and the Related Indebtedness (as
hereinafter defined). It is expressly stipulated and agreed to be the intent of
Borrower and Lender at all times to comply strictly with the applicable law
governing the maximum rate or amount of interest payable on the indebtedness
evidenced by this Junior Note and the Related Indebtedness, even if a court
disregards the agreement of the parties that the laws of the State of New York
shall govern such issue. If the applicable law is ever judicially interpreted
so as to render usurious any amount (i) contracted for, charged, taken,
reserved or received pursuant to this Junior Note, any of the other Junior Loan
Documents or any other communication or writing by or between 

 

9

 

Borrower and Lender related to the transaction or transactions that are
the subject matter of the Junior Loan Documents, (ii) contracted for,
charged, taken, reserved or received by reason of Lender’s exercise of the
option to accelerate the maturity of this Junior Note and/or the Related
Indebtedness, or (iii) Borrower will have paid or Lender will have
received by reason of any prepayment by Borrower of this Junior Note and/or the
Related Indebtedness, then it is Borrower’s and Lender’s express intent that
all amounts charged in excess of the Maximum Lawful Rate (as hereinafter
defined) shall be automatically canceled, ab initio, and all amounts in
excess of the Maximum Lawful Rate theretofore collected by Lender shall be
credited on the principal balance of this Junior Note and/or the Related
Indebtedness (or, if this Junior Note and all Related Indebtedness have been or
would thereby be paid in full, refunded to Borrower), and the provisions of
this Junior Note and the other Junior Loan Documents shall immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if
this Junior Note has been paid in full before the end of the stated term of
this Junior Note, then Borrower and Lender agree that Lender shall, with
reasonable promptness after Lender discovers or is advised by Borrower that
interest was received in an amount in excess of the Maximum Lawful Rate, either
refund such excess interest to Borrower and/or credit such excess interest
against this Junior Note and/or any Related Indebtedness then owing by Borrower
to Lender. Borrower hereby agrees that as a condition precedent to any claim or
counterclaim (in which event such proceeding shall be abated for such time
period) seeking usury penalties against Lender, Borrower will provide written
notice to Lender, advising Lender in reasonable detail of the nature and amount
of the violation and Lender shall have sixty (60) days after receipt of such
notice in which to correct such usury violation, if any, by either refunding
such excess interest to Borrower or crediting such excess interest against this
Junior Note and/or the Related Indebtedness then owing by Borrower to Lender. All
sums contracted for, charged, taken, reserved or received by Lender for the
use, forbearance or detention of any debt evidenced by this Junior Note and/or
the Related Indebtedness shall, to the extent permitted by applicable law, be
amortized or spread, using the actuarial method, throughout the stated term of
this Junior Note and/or the Related Indebtedness (including any and all renewal
and extension periods) until payment in full so that the rate or amount of
interest on account of this Junior Note and/or the Related Indebtedness does
not exceed the Maximum Lawful Rate from time to time in effect and applicable
to this Junior Note and/or the Related Indebtedness for so long as debt is
outstanding. Notwithstanding anything to the contrary contained herein or in
any of the other Junior Loan Documents, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration.

 

(b)           In the event that a court should determine that the
laws of the State of New York will not govern the issue of the maximum rate or
amount of interest payable on the indebtedness evidenced by this Junior Note
and the Related Indebtedness, then it is hereby stipulated that such issue
shall be governed by the laws of the State of Virginia or, 

 

10

 

if Lender elects, the laws of such other state in which any part of the
Property is located as specified by written notice from Lender to Borrower.

 

(c)           As used in this Junior Note:

 

(i)            The term “Maximum Lawful Rate” shall mean the
maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lender in accordance with (A) the applicable laws
of the State of New York (or, if a court disregards the choice of laws of the
State of New York set forth herein, the laws of such other state as determined
pursuant to Section 18(b) above) or (B) United States
federal law to the extent that such law permits Lender to contract for, charge,
take, receive or reserve a greater amount of interest than under the laws
described in the foregoing clause (A), taking into account all Charges made in
connection with the transaction evidenced by this Junior Note and the other Junior
Loan Documents.

 

(ii)           The term “Charges” shall mean all fees,
charges and/or any other things of value, if any, contracted for, charged,
taken, received or reserved by Lender in connection with the transactions
relating to this Junior Note and the other Junior Loan Documents, which are
treated as interest under applicable law.

 

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

 

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

 

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

 

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

 

11

 

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

 

Section 22.             Right of Setoff. Borrower
hereby grants to Lender a continuing lien, security interest and right of
setoff as security for all liabilities and obligations to Lender, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Lender and its successors and/or assigns or in
transit to any of them. At any time, without demand or notice (any such notice
being expressly waived by Borrower), Lender may setoff the same or any part
thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral
security for the Junior Loan which is evidenced by this Junior Note. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE JUNIOR LOAN WHICH IS
EVIDENCED BY THIS JUNIOR NOTE PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

Section 23.             Waiver of Jury Trial. BORROWER AND
LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS JUNIOR NOTE OR ANY OTHER JUNIOR LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF LENDER RELATING TO THE ADMINISTRATION OF THE
JUNIOR LOAN EVIDENCED BY THIS JUNIOR NOTE OR ENFORCEMENT OF THE JUNIOR LOAN
DOCUMENTS EVIDENCING AND/OR SECURING THE JUNIOR LOAN, AND AGREE THAT NEITHER
PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW,
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER
TO ACCEPT THIS JUNIOR NOTE AND MAKE THE JUNIOR LOAN.

 

12

 

Section 24.             Venue. BORROWER
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS JUNIOR
NOTE SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS LOCATED IN THE
STATE OF NEW YORK AND COUNTY OF NEW YORK AND EACH PARTY TO THIS JUNIOR NOTE
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING. THE PARTIES HERETO EACH HEREBY IRREVOCABLY WAIVE
ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS JUNIOR NOTE BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM OR LACKS JURISDICTION OVER SUCH PARTY. IT IS THE
INTENT OF THE PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS JUNIOR
NOTE. HOWEVER, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE
FOREGOING PROVISIONS, LENDER SHALL IN ALL EVENTS HAVE THE RIGHT TO FILE SUIT IN
A COURT IN ANY JURISDICTION IN WHICH THE PROPERTY IS LOCATED FOR THE PURPOSE OF
ENFORCING ITS RIGHTS IN RESPECT OF SUCH PROPERTY (INCLUDING, WITHOUT
LIMITATION, A SUIT TO FORECLOSE UPON THE PROPERTY OR ANY PART THEREOF).

 

Section 25.             Limited Liability. Except as
provided in that certain Guaranty and Indemnity of even date herewith executed
by Actus Lend Lease LLC, a Delaware corporation, the obligations of Borrower
hereunder shall be without recourse to Borrower’ members, shareholders,
officers, affiliates, directors, partners, agents, employees or consultants, or
any affiliate of any such person, or to the property or assets of any such
person. Notwithstanding anything to the
contrary herein, nothing herein shall be deemed to be a waiver of any right
which Lender may have under Sections 506(a), 506(b), 1111(b) or any
other provision of the Federal Bankruptcy Code or any similar federal or state
statute to file a claim for the full amount of the obligations evidenced and
secured by the Junior Loan Documents or to require that all collateral securing
such obligations shall continue to secure same under the Junior Loan Documents.
The foregoing will in no way limit Lender’s recourse to the collateral for the
indebtedness evidenced and secured by the Junior Loan Documents following an
Event of Default or limit the liability under any contract to which any affiliate
of Borrower is a party and which has been assigned to Lender as collateral for
the Junior Loan, including but not limited to the Construction Guaranty of Lend
Lease Corporation Limited of even date herewith and any contract assigned as collateral
under the Assignment of Contracts, Permits and Approvals of even date herewith
executed by Borrower and the other parties thereto and the Collateral
Assignment of Lodging Management Agreement.

 

13

 

[Signature page to Junior Loan Note]

 

IN WITNESS WHEREOF, Borrower has duly executed this Junior
Note as of the date first above written.

 

	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  REST EASY LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RE MANAGING MEMBER LLC,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ACTUS LEND LEASE HOLDINGS LLC, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Marc Sierra

  
	
   

  	
   

  	
   

  	
   

  	
  Marc Sierra

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Vice President

  

 

14Exhibit
10.4

 

 

 

INTERCREDITOR AND SUBORDINATION AGREEMENT

 

by
and among

 

BANK
OF AMERICA, N.A., a national banking association,

 

as
Senior Lender

 

 

BEHRINGER
HARVARD PAL I, LLC,

a Delaware limited liability company,

 

as
Junior Lender

 

 

and

 

 

LEND LEASE (US)
CAPITAL INC.,

 

as

 

 

Subordinate
Lender

 

Dated as of August 14, 2009

 

 

 

 

INTERCREDITOR AND SUBORDINATION AGREEMENT

 

This
INTERCREDITOR AND SUBORDINATION AGREEMENT (this
“Agreement”) dated as of August 14, 2009, is by and among BANK OF
AMERICA, N.A., a national banking association (the “Senior Lender”),
BEHRINGER HARVARD PAL I, LLC, a Delaware limited liability company (“Junior
Lender”), and LEND LEASE (US) CAPITAL INC., a Delaware corporation (the “Subordinate
Lender”) (together, the Senior Lender, Junior Lender and Subordinate Lender
are referred to herein as the “Lenders”).

 

RECITALS:

 

A.             Senior Lender
is the owner and holder of a promissory note in the aggregate principal amount
of THIRTY-FIVE MILLION AND NO/100 Dollars ($35,000,000.00) dated August 14,
2009 executed by Rest Easy LLC, a Delaware limited liability company (“Borrower”),
and payable to the order of the Senior Lender (as renewed, extended, modified,
amended or restated from time to time, the “Senior Note”).

 

B.            The Senior Note
and the total indebtedness evidenced thereby are (i) governed by a certain
Senior Loan Agreement of even date with the Senior Note between Senior Lender
and Borrower (as amended, supplemented, modified, restated, renewed or extended
from time to time, the “Senior Loan Agreement”) and (ii) secured by
each Mortgage, as defined in the Senior Loan Agreement, executed by Borrower
for the benefit of Senior Lender (collectively, as amended, supplemented,
modified, restated, renewed or extended from time to time, the “Senior Mortgage”),
granting a first priority lien on the Property and any Improvements situated
thereon, which Property is more particularly described in Exhibit A
attached hereto and incorporated herein. 
The Senior Note, the Senior Loan Agreement, the Senior Mortgage and any
security agreement, pledge agreement, assignment agreement, UCC financing
statements, environmental indemnity agreement, guaranty, completion guaranty,
any reimbursement agreement or reimbursement obligation of Borrower relating to
Senior Lender’s loan to Borrower to fund certain improvements that will be
completed or maintained for the benefit of the Property or surrounding
properties, any interest rate swap, collar or other interest rate protection
agreement that Borrower enters into with Senior Lender pertaining to the Senior
Loan, or any assignment of architect’s agreement, construction contract or
other contracts or subcontracts or any other document or modification now or
hereafter executed in connection therewith are herein referred to collectively
as the “Senior Loan Documents.”

 

C.              Junior Lender
is the owner and holder of a promissory note in the aggregate principal amount
of TWENTY-FIVE MILLION AND NO/100 Dollars ($25,000,000.00) dated August 14,
2009 executed by Borrower and payable to the order of the Junior Lender (as
renewed, extended, modified, amended or restated from time to time, the “Junior
Note”).

 

D.            The Junior Note
and the total indebtedness evidenced thereby are (i) governed by a certain
Junior Loan Agreement of even date with the Junior Note between Junior Lender
and Borrower (as amended, supplemented, modified, restated, renewed or extended
from time to time, the “Junior Loan Agreement”) and (ii) secured by
each Junior Mortgage, as defined in the Junior Loan Agreement, executed by
Borrower for the benefit of Junior Lender (collectively, as amended,
supplemented, modified, restated, renewed or extended from time to time, the “Junior
Mortgage”), granting a second priority lien on the Property and any
Improvements situated 

 

 

thereon.  The Junior Note, the Junior Loan Agreement,
the Junior Mortgage and any security agreement, pledge agreement, assignment
agreement, UCC financing statements, environmental indemnity agreement,
guaranty, completion guaranty, any reimbursement agreement or reimbursement
obligation of Borrower relating to Junior Lender’s loan to Borrower to fund
certain improvements that will be completed or maintained for the benefit of
the Property or surrounding properties, any interest rate swap, collar or other
interest rate protection agreement that Borrower enters into with Junior Lender
pertaining to the Junior Loan, or any assignment of architect’s agreement,
construction contract or other contracts or subcontracts or any other document
or modification now or hereafter executed in connection therewith are herein
referred to collectively as the “Junior Loan Documents.”

 

E.              Subordinate
Lender is the owner and holder of a promissory note in the aggregate principal
amount of TWENTY-ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars
($21,500,000.00) dated August 14, 2009 executed by Borrower and payable to
the order of the Subordinate Lender (as renewed, extended, modified, amended or
restated from time to time, the “Subordinate Note”).

 

F.             The Subordinate
Note and the total indebtedness evidenced thereby are (i) governed by a
certain Subordinate Loan Agreement of even date with the Subordinate Note
between Subordinate Lender and Borrower (as amended, supplemented, modified,
restated, renewed or extended from time to time, the “Subordinate Loan
Agreement”) and (ii) secured by each Subordinate Mortgage, as defined
in the Subordinate Loan Agreement, executed by Borrower for the benefit of
Subordinate Lender (collectively, as amended, supplemented, modified, restated,
renewed or extended from time to time, the “Subordinate Mortgage”),
granting a third priority lien on the Property and any Improvements situated
thereon.  The Subordinate Note, the
Subordinate Loan Agreement, the Subordinate Mortgage and any security agreement,
pledge agreement, assignment agreement, UCC financing statements, environmental
indemnity agreement, guaranty, completion guaranty, any reimbursement agreement
or reimbursement obligation of Borrower relating to Subordinate Lender’s loan
to Borrower to fund certain improvements that will be completed or maintained
for the benefit of the Property or surrounding properties, any interest rate
swap, collar or other interest rate protection agreement that Borrower enters
into with Subordinate Lender pertaining to the Subordinate Loan, or any
assignment of architect’s agreement, construction contract or other contracts
or subcontracts or any other document or modification now or hereafter executed
in connection therewith are herein referred to collectively as the “Subordinate
Loan Documents.”

 

G.            Senior Lender
is unwilling to make the Senior Loan unless (i) Junior Lender agrees to
subordinate and make inferior: (A) the right, title, security interest,
lien and interest created by the Junior Loan Documents to the right, title,
security interest, lien and interest of the Senior Mortgage and the other
Senior Loan Documents; and (B) Junior Lender’s rights to receive any
payments under or on account of the Junior Loan Obligations to Senior Lender’s
rights to receive payments under or on account of the Senior Loan Obligations;
and (ii) Subordinate Lender agrees to subordinate and make inferior: (A) the
right, title, security interest, lien and interest created by the Subordinate
Loan Documents to the right, title, security interest, lien and interest of the
Senior Mortgage and the other Senior Loan Documents; and (B) Subordinate
Lender’s rights to receive any payments under or on account of the Subordinate
Loan 

 

2

 

Obligations to Senior
Lender’s rights to receive payments under or on account of the Senior Loan
Obligations.

 

H.            Junior Lender
is unwilling to make the Junior Loan unless Subordinate Lender agrees to
subordinate and make inferior: (i) the right, title, security interest,
lien and interest created by the Subordinate Loan Documents to the right,
title, security interest, lien and interest of the Junior Mortgage and Junior
Loan Documents; and (ii) Subordinate Lender’s rights to receive any
payments under or on account of the Subordinate Loan Obligations to Junior
Lender’s right to receive payments under or on account of the Junior Loan
Obligations.

 

I.              In lieu of
recording this Agreement, Senior Lender, Junior Lender and Subordinate Lender
shall record in the appropriate real property records a Memorandum of
Intercreditor and Subordination Agreement (the “Memorandum”)
concurrently with the recordation of the Senior Mortgage, the Junior Mortgage
and the Subordinate Mortgage.

 

NOW,
THEREFORE, for and in consideration of the mutual covenants hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Senior Lender, Junior Lender and Subordinate
Lender hereby agree as follows:

 

1.             Recitals Incorporated.  The recitals set forth hereinabove are
incorporated herein by reference to the same extent and with the same force and
effect as if fully set forth hereinbelow; provided, however, that such recitals
shall not be deemed to modify the express provisions hereinafter set forth.

 

2.             Definitions.  The following terms shall have the meanings
indicated below:

 

“Affiliate” means, as
to any particular Person, any Person directly or indirectly, through one or
more intermediaries, controlling, Controlled by or under common Control with
the Person or Persons in question.

 

“Affiliated Subordinate
Lender” is defined in Section 13.

 

“Bankruptcy Event”
means (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to Borrower or its managing member, or (b) any
liquidation, dissolution or other winding up of Borrower or its managing
member, whether voluntary or involuntary and whether or not involving insolvency
or bankruptcy, or (c) any assignment for the benefit of creditors or any
other marshalling of assets or liabilities of Borrower or its managing member.

 

“Business Day” means
any day other than Saturday, Sunday or a day that is a legal holiday under the
laws of the State of New York or on which banking institutions in the
State of New York are required by law or other governmental action to
close.

 

“Collateral” means,
collectively, the Property, any Improvements and any and all other property
(whether real, personal or otherwise) and interests in property which now
constitutes or hereafter will constitute collateral or other security for
payment of the Senior Loan pursuant to the Senior Loan Documents, the Junior
Loan pursuant to the 

 

3

 

Junior
Loan Documents, or the Subordinate Loan pursuant to the Subordinate Loan
Documents.

 

“Control” means
either (a) the ownership, directly or indirectly, in the aggregate of more
than fifty percent (50%) of the beneficial ownership interests of an entity, or
(b) the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of an entity, whether through
the ability to exercise voting power, by contract or otherwise.  “Controlled by,” “controlling” and “under
common control with” shall have the respective correlative meaning thereto.

 

“Improvements” means,
collectively, any and all improvements now or hereafter located on any of the
Property.

 

“Initial Advance” has
the meaning set forth in the Senior Loan Agreement.

 

“JL Monetary Default
Election Notice” is defined in Section 7(b)(i).

 

“JL Non-Monetary Default
Election Notice” is defined in Section 7(c)(i).

 

“Junior Default”
means a “Default” as such term is defined in the Junior Loan Agreement.

 

“Junior Default Notice”
is defined in Section 8(a).

 

“Junior Enforcement
Notice” is defined in Section 8(a).

 

“Junior Lender’s Outside
Date” means a date first occurring after the issuance of a Senior
Enforcement Notice that is the date Junior Lender’s cure period applicable to
such Senior Enforcement Notice, as more particularly set forth in Section 7(b) with
respect to Senior Monetary Defaults or Section 7(c) with
respect to Senior Non-Monetary Defaults, expires, unless Junior Lender has
elected in writing to purchase the Senior Loan pursuant to Section 7(g) below,
in which event “Junior Lender’s Outside Date” shall be the Purchase Closing
Date.

 

“Junior Loan” or “Junior
Loan Obligations” means all present and future indebtedness, obligations
and liabilities of Borrower under the Junior Loan Documents, including (a) all
principal (including principal which is borrowed, repaid and reborrowed),
interest (including interest accruing subsequent to, and interest that would
have accrued but for, the filing of any petition under any bankruptcy,
insolvency or similar law or the commencement of any Proceeding), default
interest, late charges, prepayment fees, expenses, fees, reimbursement
obligations relating to Junior Lender’s issuance or execution of standby
letters of credit or developer’s agreements pertaining to the Property or
surrounding properties, other reimbursements, interest rate swaps, collars or
other interest rate protection agreements that Borrower may enter into with
Junior Lender pertaining to the Junior Loan, indemnities and other amounts
payable thereunder, in each case whether now or hereafter arising, direct or
indirect, primary or secondary, joint, several or joint and several, liquidated
or unliquidated, final or contingent, and whether incurred as maker, endorser
or otherwise; (b) all indebtedness arising from all 

 

4

 

present
and future optional or obligatory advances (including advances to cover
overdrafts that pertain to the Property) under the Junior Note or any other
Junior Loan Document, (c) any and all amendments, modifications,
extensions, renewals, refinancing or refundings of any of such indebtedness,
obligations or liabilities, and (d) any and all sums advanced or expended
by Junior Lender (whether deemed optional or obligatory advances, or otherwise)
which Junior Lender deems necessary or appropriate (1) to advance or
complete construction of the Property and any Improvements and market the
Property or any portion thereof for sale, (2) to repair, maintain or
otherwise protect the Property and any Improvements or to prevent waste or
destruction or to pay or prevent liens or to defend Borrower’s title or Junior
Lender’s lien priority, (3) to pay taxes, assessments or insurance
premiums in respect of the Property or any Improvements or to otherwise protect
Junior Lender’s security interest in the Property, any Improvements and any
other Collateral, or (4) in connection with Junior Lender’s protection or
exercise of its rights or remedies under the Junior Loan Documents.  To the extent any payment on any of the
Junior Loan Obligations, whether by or on behalf of Borrower, as proceeds of
security or enforcement of any right of setoff or otherwise, is recovered by or
required to be paid over to Borrower or a receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person in a Proceeding, such Junior Loan
Obligation or any part thereof originally intended to be satisfied by such
payment shall be deemed to be reinstated and outstanding as if such payment had
not occurred.  All outstanding Junior
Loan Obligations shall be and remain Junior Loan Obligations subordinate to the
Senior Loan Obligations and superior to the Subordinate Loan Obligations for
all purposes of this Agreement, regardless of whether they are allowed, not
allowed or subordinated in any Proceeding.

 

“Junior Loan Agreement”
is defined in Recital D.

 

“Junior Loan Documents”
is defined in Recital D.

 

“Junior Loan Enforcement Action” means
any (a) judicial or non-judicial foreclosure proceeding, the exercise of
any power of sale, the taking of a deed or assignment in lieu of foreclosure,
the obtaining of a receiver or the taking of any other enforcement action under
the Junior Loan Documents by the Junior Lender against the Property or
Borrower, including, without limitation, the taking of possession or control of
the Property or instituting or participating in the institution of any
Proceeding, (b) demand or action taken by the Junior Lender in order to
collect all or any indebtedness under the Junior Loan Documents secured by the
Property (other than acceleration of the Junior Loan, giving of notices of
default and statements of overdue amounts and exercising rights expressly
provided in the Lock Box Agreement) or (c) exercise of any default
enforcement right or remedy available to Junior Lender under the Junior Loan
Documents, at law, in equity or otherwise against the Borrower or the Property.

 

“Junior Loan Modification”
is defined in Section 13.

 

“Junior Loan Purchase
Price” means a purchase price equal to the aggregate amount outstanding,
including principal, accrued interest, prepayment premium, exit fee, swap
breakage costs, default interest, late charges, foreclosure or other
enforcement 

 

5

 

expenses,
attorneys’ fees, Protective Advances, and any other outstanding Junior Loan
Obligations and reasonable costs of the Purchase incurred by the Junior Lender.

 

“Junior Monetary Default”
means a Junior Default that can be cured solely by the payment of money.

 

“Junior Mortgage” is
defined in Recital C.

 

“Junior Non-Monetary
Default” means a Junior Default that cannot be cured solely by the payment
of money.

 

“Junior Note” is
defined in Recital C.

 

“Junior Permitted Scheduled Payments”
is defined in Section 6.

 

“Junior Purchase” is defined in Section 8(e).

 

“Junior Purchase Closing Date” is
defined in Section 8(e).

 

“Lender” means any of the Senior
Lender, Junior Lender or Subordinate Lender, as applicable.

 

“Lender Purchase Notice” is defined in
Section 7(g)(i).

 

“Loan Documents”
means, collectively, the Senior Loan Documents, Junior Loan Documents and
Subordinate Loan Documents.

 

“Loans” means,
collectively, the Senior Loan, the Junior Loan and the Subordinate Loan.

 

“Lock Box Agreement”
means the “Lock Box Agreement” as such term is defined in the Senior Loan
Agreement.

 

“Non-Affiliated
Subordinate Lender” is defined in Section 13.

 

“PAL Lease” is
defined in the Senior Loan Agreement.

 

“Person” means any
person, individual, sole proprietorship, partnership, joint venture,
corporation, limited liability company, unincorporated organization,
association, institution, entity, party, including any government and any
political subdivision, agency, or instrumentality thereof.

 

“Purchase” is defined
in Section 7(g)(ii).

 

“Purchase Closing Date”
is defined in Section 7(g)(ii).

 

“Proceeding” means (a) any
voluntary or involuntary case, action or proceeding before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or 

 

6

 

(b) any
general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.

 

“Property” means,
collectively, the real property and all other property (whether real, personal
or otherwise) encumbered by the Senior Mortgage, the Junior Mortgage and the
Subordinate Mortgage.

 

“Protective Advances”
means any and all sums advanced or expended by Senior Lender, Junior Lender or Subordinate
Lender (whether deemed optional or obligatory advances, or otherwise) which
Senior Lender, Junior Lender or Subordinate Lender, as the case may be, deems
necessary or appropriate (a) to advance or complete construction of the
Property and any Improvements and market the Property or any portion thereof
for sale, (b) to repair, maintain or otherwise protect the Property and
any Improvements or to prevent waste or destruction or to pay or prevent liens
or to defend Borrower’s title or Senior Lender’s, Junior Lender’s or
Subordinate Lender’s lien priority, (c) to pay taxes, assessments or
insurance premiums in respect of the Property or any Improvements or to
otherwise protect Senior Lender’s, Junior Lender’s or Subordinate Lender’s
security interest in the Property, any Improvements and any other Collateral,
or (d) in connection with Senior Lender’s, Junior Lender’s or Subordinate
Lender’s protection or exercise of its rights or remedies under the Senior Loan
Documents, Junior Loan Documents or the Subordinate Loan Documents, as the case
may be.

 

“Senior Default”
means a “Default” as such term is defined in the Senior Loan Agreement.

 

“Senior Default Notice” is defined in Section 7(a).

 

“Senior Enforcement Notice” is defined
in Section 7(a).

 

“Senior Loan Agreement”
is defined in Recital B.

 

“Senior Loan Documents”
is defined in Recital B.

 

“Senior Loan Enforcement Action” means
any (a) judicial or non-judicial foreclosure proceeding, the exercise of
any power of sale, the taking of a deed or assignment in lieu of foreclosure,
the obtaining of a receiver or the taking of any other enforcement action by
the Senior Lender under the Senior Loan Documents against the Property or
Borrower, including, without limitation, the taking of possession or control of
the Property or instituting or participating in the institution of any
Proceeding, (b) acceleration of the Senior Loan, or demand or action taken
by the Senior Lender in order to collect all or any indebtedness under the
Senior Loan Documents secured by the Property (other than giving of notices of
default and statements of overdue amounts and exercising rights expressly
provided in the Lock Box Agreement) or (c) exercise of any default
enforcement right or remedy available to Senior Lender under the Senior Loan
Documents, at law, in equity or otherwise against the Borrower or the Property.

 

7

 

“Senior Loan” or “Senior
Loan Obligations” means all present and future indebtedness, obligations
and liabilities of Borrower under the Senior Loan Documents, including (a) all
principal (including principal which is borrowed, repaid and reborrowed),
interest (including interest accruing subsequent to, and interest that would
have accrued but for, the filing of any petition under any bankruptcy,
insolvency or similar law or the commencement of any Proceeding), default
interest, late charges, prepayment fees, expenses, fees, reimbursement
obligations relating to Senior Lender’s issuance or execution of standby
letters of credit or developer’s agreements pertaining to the Property or
surrounding properties, other reimbursements, interest rate swaps, collars or
other interest rate protection agreements that Borrower may enter into with
Senior Lender pertaining to the Senior Loan, indemnities and other amounts
payable thereunder, in each case whether now or hereafter arising, direct or
indirect, primary or secondary, joint, several or joint and several, liquidated
or unliquidated, final or contingent, and whether incurred as maker, endorser
or otherwise; (b) all indebtedness arising from all present and future
optional or obligatory advances (including advances to cover overdrafts that
pertain to the Property) under the Senior Note or any other Senior Loan
Document, (c) any and all amendments, modifications, extensions, renewals,
refinancing or refundings of any of such indebtedness, obligations or
liabilities, and (d) any and all sums advanced or expended by Senior
Lender (whether deemed optional or obligatory advances, or otherwise) which
Senior Lender deems necessary or appropriate (1) to advance or complete
construction of the Property and any Improvements and market the Property or
any portion thereof for sale, (2) to repair, maintain or otherwise protect
the Property and any Improvements or to prevent waste or destruction or to pay
or prevent liens or to defend Borrower’s title or Senior Lender’s lien
priority, (3) to pay taxes, assessments or insurance premiums in respect
of the Property or any Improvements or to otherwise protect Senior Lender’s
security interest in the Property, any Improvements and any other Collateral,
or (4) in connection with Senior Lender’s protection or exercise of its
rights or remedies under the Senior Loan Documents.  To the extent any payment on any of the
Senior Loan Obligations, whether by or on behalf of Borrower, as proceeds of
security or enforcement of any right of setoff or otherwise, is recovered by or
required to be paid over to Borrower or a receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person in a Proceeding, such Senior Loan
Obligation or any part thereof originally intended to be satisfied by such
payment shall be deemed to be reinstated and outstanding as if such payment had
not occurred.  All outstanding Senior Loan
Obligations shall be and remain Senior Loan Obligations for all purposes of
this Agreement, regardless of whether they are allowed, not allowed or
subordinated in any Proceeding.

 

“Senior
Loan Modification” is defined in Section 13.

 

“Senior Loan Purchase
Price” means a purchase price equal to the aggregate amount outstanding,
including principal, accrued interest, prepayment premium, exit fee, swap
breakage costs, default interest, late charges, foreclosure or other
enforcement expenses, attorneys’ fees, Protective Advances, and any other
outstanding Senior Loan Obligations and reasonable costs of the Purchase
incurred by the Senior Lender.

 

8

 

“Senior Monetary Default”
means a Senior Default that can be cured solely by the payment of money.

 

“Senior Mortgage” is
defined in Recital B.

 

“Senior Non-Monetary
Default” means a Senior Default that cannot be cured solely by the payment
of money.

 

“Senior Note” is
defined in Recital A.

 

“SL
Monetary Default Response Notice” is defined in Section 7(b)(ii).

 

“SL Non-Monetary Default
Response Notice” is defined in Section 7(c)(ii).

 

“Special Modification
Terms of Junior Loan Documents” means any amendment or modification of the
Junior Loan Documents entered into after the date of this Agreement with
respect to the following in order to: (a) increase the principal amount
secured by the Junior Mortgage (other than increases in respect of Protective
Advances) or amend the Junior Note or otherwise modify the amount or timing of
the payments on the Junior Note, (b) increase the interest rate (other
than a calculation of the increase to a default rate and imposition of late
charges), (c) amend or modify the provisions limiting transfers of
interests in the Borrower or the Property, (d) shorten the scheduled
maturity date of the Junior Loan (except that Junior Lender may permit Borrower
to exercise any extension options in accordance with the terms and provisions
of the Junior Loan Documents), (e) amend the default section under the
Junior Loan Documents in a manner that shortens grace or cure periods or adds
any provisions to cross-default or cross-collateralize the Junior Loan with any
other indebtedness, or (f) increase in any other material respect any
monetary obligations of Borrower under the Junior Loan Documents.

 

“Special Modification
Terms of Senior Loan Documents” means any amendment or modification of the
Senior Loan Documents entered into after the date of this Agreement with
respect to the following in order to: (a) increase the principal amount
secured by the Senior Mortgage (other than increases in respect of Protective
Advances), (b) increase the interest rate (other than a calculation of the
increase to a default rate and imposition of late charges), (c) amend or
modify the provisions limiting transfers of interests in the Borrower or the
Property, (d) shorten the scheduled maturity date of the Senior Loan
(except that Senior Lender may permit Borrower to exercise any extension
options in accordance with the terms and provisions of the Senior Loan
Documents), (e) amend the default section under the Senior Loan Documents
in a manner that shortens grace or cure periods or adds any provisions to
cross-default or cross-collateralize the Senior Loan with any other
indebtedness, or (f) increase in any other material respect any monetary
obligations of Borrower under the Senior Loan Documents except by entering into
an interest rate swap or other similar interest rate hedging instrument.

 

“Special Modification
Terms of Subordinate Loan Documents” means any amendment or modification of
the Subordinate Loan Documents entered into after the date of this Agreement
with respect to the following in order to: (a) increase the principal 

 

9

 

amount
secured by the Subordinate Mortgage (other than increases in respect of
Protective Advances), (b) increase the interest rate (other than a
calculation of the increase to a default rate and imposition of late charges), (c) amend
or modify the provisions limiting transfers of interests in the Borrower or the
Property, (d) shorten the scheduled maturity date of the Subordinate Loan
(except that Subordinate Lender may permit Borrower to exercise any extension
options in accordance with the terms and provisions of the Subordinate Loan
Documents), (e) amend the default section under the Subordinate Loan
Documents in a manner that shortens grace or cure periods or adds any
provisions to cross-default or cross-collateralize the Subordinate Loan with
any other indebtedness, or (f) increase in any other material respect any
monetary obligations of Borrower under the Subordinate Loan Documents.

 

“Subordinate Default”
means a “Default” as such term is defined in the Subordinate Loan Documents.

 

“Subordinate Lender
Response Notice” is defined in Section 7(b).

 

“Subordinate Lender’s
Outside Junior Loan Date” means a date first occurring after the issuance
of a Junior Enforcement Notice that is the date Subordinate Lender’s cure
period applicable to such Junior Default Notice, as more particularly set forth
in Section 8(b) with respect to Junior Monetary Defaults or Section 8(c) with
respect to Junior Non-Monetary Defaults, as applicable below, expires unless
Subordinate Lender has elected in writing to purchase the Junior Loan pursuant
to Section 8(e) below, in which event, “Subordinate Lender’s
Outside Junior Loan Date” shall be the Junior Purchase Closing Date with
respect to the purchase of the Junior Loan.

 

“Subordinate Lender’s
Outside Senior Loan Date” means a date first occurring after the issuance
of a Senior Enforcement Notice that is the date Subordinate Lender’s cure
period applicable to such Senior Default Notice, as more particularly set forth
in Section 7(b) with respect to Senior Monetary Defaults or Section 7(c) with
respect to Senior Non-Monetary Defaults, expires unless Subordinate Lender has
elected in writing to purchase the Senior Loan and the Junior Loan pursuant to Section 7(g) below,
in which event, “Subordinate Lender’s Outside Date” shall be the Senior
Purchase Closing Date with respect to the purchase of the Senior Loan and
Junior Loan.

 

“Subordinate Loan” or
“Subordinate Loan Obligations” means all present and future indebtedness,
obligations and liabilities of Borrower under the Subordinate Loan Documents,
including (a) all principal (including principal which is borrowed, repaid
and reborrowed), interest (including interest accruing subsequent to, and
interest that would have accrued but for, the filing of any petition under any
bankruptcy, insolvency or similar law or the commencement of any Proceeding),
default interest, late charges, prepayment fees, expenses, fees, reimbursement
obligations relating to Subordinate Lender’s issuance or execution of standby
letters of credit or developer’s agreements pertaining to the Property or
surrounding properties, other reimbursements, interest rate swaps, collars or
other interest rate protection agreements that Borrower may enter into with
Subordinate Lender pertaining to the Subordinate Loan, indemnities and other
amounts payable thereunder, in each case whether now or hereafter arising,
direct or 

 

10

 

indirect,
primary or secondary, joint, several or joint and several, liquidated or
unliquidated, final or contingent, and whether incurred as maker, endorser or
otherwise; (b) all indebtedness arising from all present and future
optional or obligatory advances (including advances to cover overdrafts that
pertain to the Property) under the Subordinate Note or any other Subordinate
Loan Document, (c) any and all amendments, modifications, extensions,
renewals, refinancing or refundings of any of such indebtedness, obligations or
liabilities, and (d) any and all sums advanced or expended by Subordinate
Lender (whether deemed optional or obligatory advances, or otherwise) which
Subordinate Lender deems necessary or appropriate (1) to advance or
complete construction of the Property and any Improvements and market the
Property or any portion thereof for sale, (2) to repair, maintain or
otherwise protect the Property and any Improvements or to prevent waste or
destruction or to pay or prevent liens or to defend Borrower’s title or
Subordinate Lender’s lien priority, (3) to pay taxes, assessments or
insurance premiums in respect of the Property or any Improvements or to
otherwise protect Subordinate Lender’s security interest in the Property, any
Improvements and any other Collateral, or (4) in connection with
Subordinate Lender’s protection or exercise of its rights or remedies under the
Subordinate Loan Documents.  To the
extent any payment on any of the Subordinate Loan Obligations, whether by or on
behalf of Borrower, as proceeds of security or enforcement of any right of
setoff or otherwise, is recovered by or required to be paid over to Borrower or
a receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
in a Proceeding, such Subordinate Loan Obligation or any part thereof
originally intended to be satisfied by such payment shall be deemed to be
reinstated and outstanding as if such payment had not occurred.  All outstanding Subordinate Loan Obligations
shall be and remain Subordinate Loan Obligations subordinate to both the Senior
Loan Obligations and the Junior Loan Obligations for all purposes of this
Agreement, regardless of whether they are allowed, not allowed or subordinated
in any Proceeding.

 

“Subordinate Loan
Agreement” is defined in Recital D.

 

“Subordinate Loan
Documents” is defined in Recital D.

 

“Subordinate Loan Enforcement Action”
means any (a) judicial or non-judicial foreclosure proceeding, the
exercise of any power of sale, the taking of a deed or assignment in lieu of
foreclosure, the obtaining of a receiver or the taking of any other enforcement
action under the Subordinate Loan Documents by the Subordinate Lender against
the Property or Borrower, including, without limitation, the taking of
possession or control of the Property or instituting or participating in the
institution of any Proceeding, (b) demand or action taken by the
Subordinate Lender in order to collect all or any indebtedness under the
Subordinate Loan Documents secured by the Property (other than acceleration of
the Subordinate Loan, giving of notices of default and statements of overdue
amounts and exercising rights expressly provided in the Lock Box Agreement) or (c) exercise
of any default enforcement right or remedy available to Subordinate Lender
under the Subordinate Loan Documents, at law, in equity or otherwise against
the Borrower or the Property.

 

“Subordinate Loan
Modification” is defined in Section 13.

 

11

 

“Subordinate Loan Purchase Price”
means a purchase price equal to the aggregate amount outstanding, including
principal, accrued interest, prepayment premium, exit fee, swap breakage costs,
default interest, late charges, foreclosure or other enforcement expenses,
attorneys’ fees, Protective Advances, and any other outstanding Subordinate
Loan Obligations and reasonable costs of the Subordinate Purchase incurred by
the Subordinate Lender.

 

“Subordinate Mortgage” is defined in
Recital D.

 

“Subordinate Note” is
defined in Recital D.

 

“Subordinate Permitted
Scheduled Payments” is defined in Section 6.

 

“Subordinate Purchase”
is defined in Section 13(b).

 

“Subordinate Purchase
Closing Date” is defined in Section 13.

 

“Subordinate Purchase
Notice” is defined in Section 8(e).

 

“Swap Contract” is
defined in the Senior Loan Documents.

 

“Transfer” is defined
in Section 13.

 

3.             Approval of Loans and Loan
Documents; Funding.

 

(a)           Subordinate
Lender hereby acknowledges that (i) subject to the terms and conditions of
this Agreement, it hereby consents to and approves of the making of the Senior
Loan and Junior Loan and, subject to the terms and provisions of this
Agreement, all of the terms and provisions of the Senior Loan Documents and
Junior Loan Documents, (ii) the execution, delivery and performance of the
Senior Loan Documents and Junior Loan Documents will not constitute a default
or an event which, with the giving of notice or the lapse of time, or both,
would constitute a default under the Subordinate Loan Documents, (iii) Senior
Lender is under no obligation or duty to, nor has Senior Lender represented
that it will, see to the application of the proceeds of the Senior Loan by
Borrower or any other Person to whom Senior Lender disburses such proceeds, (iv) any
application or use of the proceeds of the Senior Loan for purposes other than those
provided in the Senior Loan Documents shall not affect, impair or defeat the
terms and provisions of this Agreement or the Senior Loan Documents, (v) Junior
Lender is under no obligation or duty to, nor has Junior Lender represented
that it will, see to the application of the proceeds of the Junior Loan by
Borrower or any other Person to whom Junior Lender disburses such proceeds, and
(vi) any application or use of the proceeds of the Junior Loan for
purposes other than those provided in the Junior Loan Documents shall not
affect, impair or defeat the terms and provisions of this Agreement or the
Junior Loan Documents.  The foregoing
consent and acknowledgement by Subordinate Lender is not intended and shall not
be construed to (i) impose any duty or obligation on Subordinate Lender
with respect to Senior Lender or Junior Lender or with respect to the Senior
Loan Documents and Junior Loan Documents other than as expressly set forth in
this Agreement (and no such duty or obligation shall be implied), or 

 

12

 

(ii) amend
or modify the respective obligations of the parties to the Subordinate Loan
Documents other than as expressly set forth herein.

 

(b)           Junior Lender
hereby acknowledges that (i) subject to the terms and conditions of this
Agreement, it hereby consents to and approves of the making of the Senior Loan
and Subordinate Loan and, subject to the terms and provisions of this
Agreement, the terms of the Senior Loan Documents and Subordinate Loan Documents,
(ii) the execution and delivery of the Senior Loan Documents and
Subordinate Loan Documents will not constitute a default or an event which,
with the giving of notice or the lapse of time, or both, would constitute a
default under the Junior Loan Documents, (iii) each of the Senior Lender
and Subordinate Lender is under no obligation or duty to, nor has either of the
Senior Lender or Subordinate Lender represented that it will, see to the
application of the proceeds of the Senior Loan or Subordinate Loan by Borrower
or any other Person to whom each of the Senior Lender and Subordinate Lender
disburses such proceeds and (iv) any application or use of the proceeds of
the Senior Loan and Subordinate Loan for purposes other than those provided in
the Senior Loan Documents and Subordinate Loan Documents shall not affect,
impair or defeat the terms and provisions of this Agreement or the Senior Loan
Documents or Subordinate Loan Documents, respectively.  The foregoing consent and acknowledgement by
Junior Lender is not intended and shall not be construed to (i) impose any
duty or obligation on Junior Lender with respect to Senior Lender or
Subordinate Lender or with respect to the Senior Loan Documents and Subordinate
Loan Documents other than as expressly set forth in this Agreement (and no such
duty or obligation shall be implied), or (ii) amend or modify the
respective obligations of the parties to the Junior Loan Documents other than
as expressly set forth herein.

 

(c)           Senior Lender
hereby acknowledges that (i) subject to the terms and conditions of this
Agreement, it hereby consents to and approves of the making of the Junior Loan
and Subordinate Loan and, subject to the terms and provisions of this
Agreement, the terms of the Junior Loan Documents and Subordinate Loan
Documents, (ii) the execution and delivery of the Junior Loan Documents
and Subordinate Loan Documents will not constitute a default or an event which,
with the giving of notice or the lapse of time, or both, would constitute a
default under the Senior Loan Documents, (iii) each of the Junior Lender
and Subordinate Lender is under no obligation or duty to, nor has either of the
Junior Lender or Subordinate Lender represented that it will, see to the
application of the proceeds of the Junior Loan or Subordinate Loan,
respectively, by Borrower or any other Person to whom Junior Lender or
Subordinate Lender, respectively, disburses such proceeds and (iv) any
application or use of the proceeds of the Junior Loan and Subordinate Loan for
purposes other than those provided in the Junior Loan Documents and Subordinate
Loan Documents, respectively, shall not affect, impair or defeat the terms and
provisions of this Agreement or the Junior Loan Documents or Subordinate Loan
Documents.  The foregoing consent and
acknowledgement by Senior Lender is not intended and shall not be construed to (i) impose
any duty or obligation on Senior Lender with respect to Junior Lender and
Subordinate Lender or with respect to the Junior Loan Documents or Subordinate
Loan Documents other than as expressly set forth in this Agreement (and no such
duty or 

 

13

 

obligation
shall be implied), or (ii) amend or modify the respective obligations of
the parties to the Senior Loan Documents other than as expressly set forth
herein.

 

(d)           Notwithstanding
anything herein to the contrary, Senior Lender, Junior Lender and Subordinate
Lender agree that, except for the Initial Advance of the Senior Loan, the
Subordinate Loan shall be funded in full prior to the time that the Junior Loan
and Senior Loan are funded, and, except for the Initial Advance of the Senior
Loan, the Junior Loan shall be funded in full prior to the time that the Senior
Loan is funded.

 

4.             Representations, Warranties
and Covenants.

 

(a)           Subordinate
Lender hereby represents, warrants and covenants as follows:

 

(i)            Subordinate
Lender has delivered to Senior Lender and Junior Lender true, correct and
complete copies of the Subordinate Loan Documents as same exist as of the date
hereof.  Exhibit B attached
hereto and made a part hereof is a true, correct and complete listing of all of
the Subordinate Loan Documents as of the date hereof.  To Subordinate Lender’s knowledge, there
currently exists no default or event which, with the giving of notice or the
lapse of time, or both, would constitute a default under any of the Subordinate
Loan Documents.  Subordinate Lender has
no knowledge of any previous default or event of default under any of the
Subordinate Loan Documents which has not been cured or waived.

 

(ii)           Subordinate
Lender is the sole legal and beneficial owner of the entire Subordinate Loan.

 

(iii)          Subordinate
Lender shall deliver to Senior Lender and Junior Lender copies of any
amendments to any one or more of the Subordinate Loan Documents within a
reasonable time after any of such applicable instruments have been executed by
Subordinate Lender.  Notwithstanding
anything herein to the contrary, Subordinate Lender shall provide Senior Lender
with prompt notice of a Subordinate Default.

 

(iv)          This Agreement
has been duly authorized by Subordinate Lender, the persons executing,
acknowledging, and delivering this Agreement on behalf of Subordinate Lender
are fully authorized to do so, and all of the terms and provisions of this Agreement
are enforceable against Subordinate Lender and its successors and assigns,
except to the extent that such enforceability may be limited by laws generally
affecting the enforcement of creditors’ rights or by principles of equity.  Any consents required in order for
Subordinate Lender to execute this Agreement and perform its obligations
hereunder have been obtained.

 

(v)           Subordinate
Lender acknowledges and understands that Senior Lender and Junior Lender will
rely upon the certification, warranties, representations, covenants, and
agreements contained in this Agreement as a material consideration and
inducement in making, extending or modifying the loan evidenced by the Senior
Note or Junior Note.

 

14

 

(vi)          Subordinate
Lender acknowledges and understands that Senior Lender and Junior Lender are
lending money and extending credit to Borrower on the basis of Borrower’s
financial status as an independent entity, separate and apart from any other
entity, including without limitation Subordinate Lender or any other affiliate
of Borrower, and that Senior Lender and Junior Lender expect to be able to look
to the assets of Borrower for the satisfaction of their respective loans.

 

(b)           Junior Lender hereby represents,
warrants and covenants as follows:

 

(i)            Junior Lender
has delivered to Senior Lender and Subordinate Lender true, correct and
complete copies of the Junior Loan Documents as same exist as of the date
hereof.  Exhibit C attached
hereto and made a part hereof is a true, correct and complete listing of the
Junior Loan Documents as of the date hereof. 
To Junior Lender’s knowledge, there currently exists no default or event
which, with the giving of notice or the lapse of time, or both, would
constitute a default under any of the Junior Loan Documents.  Junior Lender has no knowledge of any
previous default or event of default under any of the Junior Loan Documents
which has not been cured or waived.

 

(ii)           Junior Lender
is the sole legal and beneficial owner of the Junior Loan.

 

(iii)          Junior Lender
shall deliver to Senior Lender and Subordinate Lender copies of any amendments
to any one or more of the Junior Loan Documents within a reasonable time after
any of such applicable instruments have been executed by Senior Lender.  Notwithstanding anything herein to the
contrary, Junior Lender shall provide Senior Lender with prompt notice of a
Junior Default.

 

(iv)          This Agreement
has been duly authorized by Junior Lender, the persons executing,
acknowledging, and delivering this Agreement on behalf of Junior Lender are
fully authorized to do so, and all of the terms and provisions of this
Agreement are enforceable against Junior Lender and its successors and assigns,
except to the extent that such enforceability may be limited by laws generally
affecting the enforcement of creditors’ rights or by principles of equity.  Any consents required in order for Junior
Lender to execute this Agreement and perform its obligations hereunder have
been obtained.

 

(v)           Junior Lender
acknowledges and understands that Senior Lender and Subordinate Lender will
rely upon the certification, warranties, representations, covenants, and
agreements contained in this Agreement as a material consideration and
inducement in making, extending or modifying the loans evidenced by the Senior
Note and the Subordinate Note.

 

15

 

(c)           Senior Lender hereby
represents, warrants and covenants as follows:

 

(i)            Senior Lender
has delivered to Junior Lender and Subordinate Lender true, correct and
complete copies of the Senior Loan Documents as same exist as of the date
hereof.  Exhibit D attached
hereto and made a part hereof is a true, correct and complete listing of the
Senior Loan Documents as of the date hereof. 
To Senior Lender’s knowledge, there currently exists no default or event
which, with the giving of notice or the lapse of time, or both, would
constitute a default under any of the Senior Loan Documents.  Senior Lender has no knowledge of any
previous default or event of default under any of the Senior Loan Documents
which has not been cured or waived.

 

(ii)           Senior Lender
is the sole legal and beneficial owner of the Senior Loan.

 

(iii)          Senior Lender
shall deliver to Junior Lender and Subordinate Lender copies of any amendments
to any one or more of the Senior Loan Documents within a reasonable time after
any of such applicable instruments have been executed by Senior Lender.

 

(iv)          This Agreement
has been duly authorized by Senior Lender, the persons executing,
acknowledging, and delivering this Agreement on behalf of Senior Lender are
fully authorized to do so, and all of the terms and provisions of this
Agreement are enforceable against Senior Lender and its successors and assigns,
except to the extent that such enforceability may be limited by laws generally
affecting the enforcement of creditors’ rights or by principles of equity.  Any consents required in order for Senior
Lender to execute this Agreement and perform its obligations hereunder have been
obtained.

 

(v)           Senior Lender
acknowledges and understands that Junior Lender and Subordinate Lender will
rely upon the certification, warranties, representations, covenants, and
agreements contained in this Agreement as a material consideration and inducement
in making, extending or modifying the loans evidenced by the Junior Note and
the Subordinate Note.

 

5.             Subordination.

 

(a)           Subject to the
terms of this Agreement, Subordinate Lender, for itself and its successors and
assigns (including, without limitation, all subsequent holders of the
Subordinate Note and the Subordinate Mortgage) does hereby subordinate (a) the
Subordinate Mortgage and all other Subordinate Loan Documents, (b) all of
the Subordinate Loan Obligations, and (c) all of its right, title,
security interest, lien, and interest in and to the Property, any Improvements
thereon and any other Collateral and all sales proceeds, other proceeds, rents,
issues, and profits therefrom, to first, (A)(i) the Senior Mortgage and
all other Senior Loan Documents, (ii) all of the Senior Loan Obligations, (iii) all
of the right, title, security interest, lien and interest held by Senior Lender
and its successors and assigns (including, without limitation, all subsequent 

 

16

 

holders
of the Senior Note and the Senior Mortgage), in and to the Property, any
Improvements thereon and any other Collateral and all sales proceeds, proceeds
from insurance or condemnation, other proceeds, rents, issues, and profits
therefrom, under and pursuant to (X) the Senior Note, (Y) the Senior
Mortgage, and (Z) all other Senior Loan Documents, and any and all
extensions, renewals, modifications, and replacements thereof and second, (B)(i) the
Junior Mortgage and all other Junior Loan Documents, (ii) all of the
Junior Loan Obligations, (iii) all of the right, title, security interest,
lien and interest held by Junior Lender and its successors and assigns
(including, without limitation, all subsequent holders of the Junior Note and
the Junior Mortgage), in and to the Property, any Improvements thereon and any
other Collateral and all sales proceeds, proceeds from insurance or
condemnation, other proceeds, rents, issues, and profits therefrom, under and
pursuant to (X) the Junior Note, (Y) the Junior Mortgage, and (Z) all
other Junior Loan Documents, and any and all extensions, renewals,
modifications, and replacements thereof. 
From and after the date hereof, all of the documents, indebtedness,
right, title, security interest, lien, and interest described in
clauses (a), (b) and (c) above in this paragraph shall be
subject and subordinate to all of the documents, indebtedness, right, title,
security interest, lien, and interest described in clauses (A)(i), (ii) and
(iii) and (B)(i), (ii) and (iii) above in this paragraph.

 

(b)           Subject to the
terms of this Agreement, Junior Lender, for itself and its successors and
assigns (including, without limitation, all subsequent holders of the Junior
Note and the Junior Mortgage) does hereby subordinate (a) the Junior
Mortgage and all other Junior Loan Documents, (b) all of the Junior Loan
Obligations, and (c) all of its right, title, security interest, lien, and
interest in and to the Property, any Improvements thereon and any other
Collateral and all sales proceeds, other proceeds, rents, issues, and profits
therefrom, to (i) the Senior Mortgage and all other Senior Loan Documents,
(ii) all of the Senior Loan Obligations, (iii) all of the right,
title, security interest, lien and interest held by Senior Lender and its
successors and assigns (including, without limitation, all subsequent holders
of the Senior Note and the Senior Mortgage), in and to the Property, any
Improvements thereon and any other Collateral and all sales proceeds, proceeds
from insurance or condemnation, other proceeds, rents, issues, and profits
therefrom, under and pursuant to (X) the Senior Note, (Y) the Senior
Mortgage, and (Z) all other Senior Loan Documents, and any and all
extensions, renewals, modifications, and replacements thereof.  From and after the date hereof, all of the
documents, indebtedness, right, title, security interest, lien, and interest
described in clauses (a), (b) and (c) above in this paragraph shall
be subject and subordinate to all of the documents, indebtedness, right, title,
security interest, lien, and interest described in clauses (i), (ii) and (iii) above
in this paragraph.

 

6.             Permitted Scheduled
Payments; Permitted Sales Proceeds Payments.

 

(a)           Subordinate
Lender, for itself and its successors and assigns (including, without
limitation, all subsequent holders of the Subordinate Note and the Subordinate
Mortgage) does hereby agree that, notwithstanding anything provided in the
Subordinate Loan Documents to the contrary, but subject to the terms of the
Lock Box Agreement, so long as the Senior Loan Obligations and Junior Loan
Obligations remain outstanding, unless both Senior Lender and Junior Lender
shall consent in writing:

 

17

 

(i)            Default; No
Payments.  Except as
otherwise provided in the Lock Box Agreement, no payment shall be made on
account of the Subordinate Loan Obligations at any time when a Senior Default
is existing under the Senior Loan Documents or a Junior Default is existing
under the Junior Loan Documents.

 

(ii)           Subordinate
Permitted Scheduled Payments.  So long as no Senior Default is existing
under the Senior Loan Documents and no Junior Default is existing under the
Junior Loan Documents, Subordinate Lender may collect and receive Subordinate
Permitted Scheduled Payments on account of the Subordinate Loan
Obligations.  As used herein, “Subordinate
Permitted Scheduled Payments” shall mean the payments permitted to be made
with respect to Subordinate Loan Obligations pursuant to Section 4.1
of the Lock Box Agreement.

 

(iii)          Subordinate
Lender Payments Held In Trust For Senior Lender and Junior Lender.  In the event that any payment is made to
Subordinate Lender which is not permitted under this Agreement, such payments
shall be held by Subordinate Lender in trust for the benefit of first, Senior
Lender and second, Junior Lender, and shall be paid forthwith over and
delivered: first, to Senior Lender for application to the payment of all of the
Senior Loan Obligations remaining unpaid; and second, to Junior Lender for
application to the payment of all Junior Loan Obligations remaining unpaid,
subject to the terms of the Lock Box Agreement.

 

(b)           Junior Lender,
for itself and its successors and assigns (including, without limitation, all
subsequent holders of the Junior Note and the Junior Mortgage) but subject to
the terms of the Lock Box Agreement, does hereby agree that, notwithstanding
anything provided in the Junior Loan Documents to the contrary, so long as the
Senior Loan Obligations remain outstanding, unless Senior Lender shall consent
in writing:

 

(i)            Default; No
Payments.  Except as
otherwise provided in the Lock Box Agreement, no payment shall be made on
account of the Junior Loan Obligations at any time when a Senior Default is
existing under the Senior Loan Documents.

 

(ii)           Junior
Permitted Scheduled Payments.  So long as no Senior Default is existing
under the Senior Loan Documents, Junior Lender may collect and receive Junior
Permitted Scheduled Payments on account of the Junior Loan Obligations.  As used herein, “Junior Permitted
Scheduled Payments” shall mean the payments permitted to be made with
respect to the Junior Loan Obligations pursuant to Section 4.1 of
the Lock Box Agreement.

 

(iii)          Junior Lender
Payments Held In Trust For Senior Lender.  In the event that any payment is made to
Junior Lender which is not permitted under this Agreement, such payments shall
be held by Junior Lender in trust for the benefit of Senior Lender and shall be
paid forthwith over and delivered to Senior Lender for application to the
payment of all of the Senior Loan Obligations remaining unpaid, subject to the
terms of the Lock Box Agreement.

 

18

 

7.             Default Under Senior Loan
Documents.

 

(a)           Senior Default
Notice and Senior Enforcement Notice.  Prior to commencing any Senior Loan
Enforcement Action, Senior Lender shall deliver to Subordinate Lender and
Junior Lender two (2) written notices, as follows: (i) a copy of any
written notice (the “Senior Default Notice”) sent by Senior Lender to
Borrower regarding the occurrence of a Senior Default, which shall be delivered
to Junior Lender and Subordinate Lender substantially concurrently with the
delivery of such Senior Default Notice to Borrower, and (ii) written
notice (the “Senior Enforcement Notice”) that Senior Lender intends to
commence a Senior Loan Enforcement Action by reason of such Senior Default,
which shall be delivered to Junior Lender and Subordinate Lender at a time
determined by Senior Lender, but only after the period allowed for Borrower to
cure such Senior Default, if any, in the Senior Loan Documents has
expired.  Senior Lender shall forbear
from actually commencing such Senior Loan Enforcement Action until the later of
Junior Lender’s Outside Date or Subordinate Lender’s Outside Date.

 

(b)           Senior Monetary
Default.  The following provisions set
forth in this Section 7(b) shall be applicable if Senior
Lender sends a Senior Enforcement Notice with respect to a Senior Monetary
Default:

 

(i)            Upon delivery
of a Senior Enforcement Notice with respect to a Senior Monetary Default,
Junior Lender shall, within five (5) Business Days after such delivery,
send written notice (the “JL Monetary Default Election Notice”) to
Senior Lender and Subordinate Lender that either (A) Junior Lender intends
to cure such Senior Monetary Default, in which event the JL Monetary Default
Election Notice to Senior Lender shall be accompanied by payment to the Senior
Lender of immediately available funds sufficient to cure the Senior Monetary
Default, or (B) Junior Lender has elected to first give Subordinate Lender
the right to cure such Senior Monetary Default. 
If Junior Lender fails to send a JL Monetary Election Notice within five
(5) Business Days after delivery of the Senior Enforcement Notice, then
Junior Lender shall be deemed to have elected the option described in
clause (B) of the preceding sentence. 
If Junior Lender elects (or is deemed to have elected) to first give
Subordinate Lender the right to cure such Senior Monetary Default and
thereafter Subordinate Lender elects (or is deemed to have elected) not to cure
the Senior Monetary Default pursuant to Section 7(b)(ii) below,
then Junior Lender shall have until the fifteenth (15th) Business Day after
delivery of the Senior Enforcement Notice within which to cure such Senior
Monetary Default.

 

(ii)           If Junior
Lender elects (or is deemed to have elected) to first give Subordinate Lender
the right to cure a Senior Monetary Default pursuant to Section 7(b)(i) above,
then Subordinate Lender shall have five (5) Business Days after delivery
of the JL Monetary Default Election Notice (or, if no JL Monetary Default
Election Notice is sent, ten (10) Business Days after delivery of the
Senior Enforcement Notice) to send written notice (the “SL Monetary Default
Response Notice”) to Junior Lender and Senior Lender stating either (A) that
Subordinate Lender has elected to cure such Senior Monetary Default, in which 

 

19

 

event
the SL Monetary Default Response Notice to Senior Lender shall be accompanied
by payment to the Senior Lender of immediately available funds in an amount
sufficient to cure the Senior Monetary Default, or (B) that Subordinate
Lender has elected not to cure such Senior Monetary Default.  If Subordinate Lender fails to send a SL
Monetary Default Response Notice within five (5) Business Days after
delivery of the JL Monetary Default Election Notice (or, if no JL Monetary
Default Election Notice is sent, within ten (10) Business Days after
delivery of the Senior Enforcement Notice), then Subordinate Lender shall be
deemed to have elected the option described in clause (B) of the
preceding sentence.  If Subordinate
Lender elects (or is deemed to have elected) not to cure the Senior Monetary
Default, then Junior Lender may elect to cure same pursuant to the last
sentence in Section 7(b)(i) above.  Notwithstanding anything contained herein to
the contrary, if Subordinate Lender elects (or is deemed to have elected) not
to cure the Senior Monetary Default, then Subordinate Lender shall be deemed to
have waived any right it may have to cure such Senior Monetary Default.  In such event, Junior Lender shall have the sole
right (but not the obligation) to cure the Senior Monetary Default in
accordance with Section 7(b)(i) above and not later than
fifteen (15) Business Days after delivery of the Senior Enforcement Notice.

 

(c)           Senior
Non-Monetary Default.  The
following provisions set forth in this Section 7(c) shall be
applicable if Senior Lender sends a Senior Enforcement Notice with respect to a
Senior Non-Monetary Default:

 

(i)            Upon delivery
of a Senior Enforcement Notice from Senior Lender pursuant to Section 7(a)(ii) with
respect to a Senior Non-Monetary Default, Junior Lender shall, within ten (10) days
after such delivery, send written notice (the “JL Non-Monetary Default
Election Notice”) to Senior Lender and Subordinate Lender that either (A) Junior
Lender will attempt to cure such Senior Non-Monetary Default, in which event
Junior Lender shall be allowed thirty (30) days after the date of the Senior
Enforcement Notice to effect such cure, or (B) Junior Lender has elected
to first give Subordinate Lender the right to cure such Senior Non-Monetary
Default.  If Junior Lender fails to send
a JL Non-Monetary Default Election Notice within ten (10) days after
delivery of the Senior Enforcement Notice, then Junior Lender shall be deemed
to have elected the option described in clause (B) of the preceding
sentence.  If Junior Lender elects (or is
deemed to have elected) to first give Subordinate Lender the right to cure such
Senior Non-Monetary Default and thereafter Subordinate Lender elects (or is deemed
to have elected) not to cure the Senior Non-Monetary Default pursuant to Section 7(c)(ii) below,
then Junior Lender shall have forty (40) days after delivery of the Senior
Enforcement Notice within which to cure such Senior Non-Monetary Default.

 

(ii)           If Junior
Lender elects (or is deemed to have elected) to give Subordinate Lender the
right to cure a Senior Non-Monetary Default pursuant to Section 7(c)(i) above,
then Subordinate Lender shall have ten (10) days after delivery of the JL
Non-Monetary Default Election Notice (or, if no JL 

 

20

 

Non-Monetary
Default Election Notice is sent, twenty (20) days after such delivery of the
Senior Enforcement Notice) to send written notice (the “SL Non-Monetary
Default Response Notice”) to Junior Lender and Senior Lender stating either
(A) that Subordinate Lender will attempt to cure such Senior Non-Monetary
Default, in which event Subordinate Lender shall be allowed forty (40) days
after such delivery of the Senior Enforcement Notice to effect such cure, or (B) that
Subordinate Lender has elected not to cure such Senior Non-Monetary
Default.  If Subordinate Lender fails to
send a SL Non-Monetary Default Response Notice within ten (10) days after
delivery of the JL Non-Monetary Default Election Notice (or, if no JL
Non-Monetary Default Election Notice is sent, within twenty (20) days after
delivery of the Senior Enforcement Notice), then Subordinate Lender shall be
deemed to have elected the option described in clause (B) of the
preceding sentence.  Notwithstanding
anything contained herein to the contrary, if Subordinate Lender elects (or is
deemed to have elected) not to cure the Senior Non-Monetary Default, then
Subordinate Lender shall be deemed to have waived any right it may have to cure
such Senior Non-Monetary Default.  In
such event, Junior Lender shall have the sole right (but not the obligation) to
cure the Senior Non-Monetary Default in accordance with Section 7(c)(i) above
and not later than forty (40) days after delivery of the Senior
Enforcement Notice.

 

(iii)          If Junior
Lender elects in its JL Non-Monetary Default Election Notice to attempt to cure
the Senior Non-Monetary Default but fails to cure same within thirty (30) days
after delivery of the Senior Enforcement Notice, then Subordinate Lender shall
have until forty (40) days after the delivery of the Senior Enforcement Notice
within which to cure such Senior Non-Monetary Default.

 

(iv)          If Subordinate
Lender elects in its SL Non-Monetary Default Response Notice to attempt to cure
the Senior Non-Monetary Default but fails to cure same within forty (40) days
after delivery of the Senior Enforcement Notice as provided in Section 7(c)(ii) above,
then Junior Lender shall have until fifty (50) days after delivery of the
Senior Enforcement Notice within which to cure such Senior Non-Monetary
Default.

 

(d)           Termination of
Cure Periods Upon Bankruptcy.  The cure periods set forth in the foregoing
provisions of this Section 7 shall automatically terminate upon the
occurrence of a Bankruptcy Event.

 

(e)           [Reserved.]

 

(f)            [Reserved.]

 

(g)           Rights to Purchase Senior
and Junior Loans.

 

(i)            At any time
following delivery of a Senior Default Notice and prior to the delivery by
Senior Lender of a Senior Enforcement Notice, either the Junior Lender or the
Subordinate Lender, as applicable, may send written notice 

 

21

 

(the
“Lender Purchase Notice”) to Senior Lender and Junior Lender and/or
Subordinate Lender, as applicable, as follows: (A) in the case of notice
by Junior Lender, notice that Junior Lender intends to purchase the Senior Loan
at the Senior Loan Purchase Price, or (B) in the case of notice by
Subordinate Lender, notice that Subordinate Lender intends to purchase the
Senior Loan at the Senior Loan Purchase Price and the Junior Loan at the Junior
Loan Purchase Price (it being expressly agreed that Subordinate Lender may not
purchase the Senior Loan unless concurrently therewith Subordinate Lender also
purchases the Junior Loan at the Junior Loan Purchase Price).  Upon delivery of a Lender Purchase Notice,
the Lender delivering such notice shall have the exclusive right to purchase
the Senior Loan (or the Senior Loan and the Junior Loan, in the event Subordinate
Lender gives the Purchase Notice) until the Purchase Closing Date (as
hereinafter defined).

 

(ii)           If either
Junior Lender or Subordinate Lender elects in writing to purchase the Senior
Loan (and, in the case of Subordinate Lender, the Junior Loan as well) (the “Purchase”),
the Purchase shall close on a date selected by Junior Lender or Subordinate
Lender, as applicable, that is not later than thirty (30) days after the
delivery of the Lender Purchase Notice (the “Purchase Closing Date”).  If Junior Lender is the purchaser,
concurrently with payment to Senior Lender of the Senior Loan Purchase Price: (A) Senior
Lender shall deliver or cause to be delivered to Junior Lender all Senior Loan
Documents held by or on behalf of Senior Lender, and (B) Senior Lender
shall execute in favor of Junior Lender (or its designee) assignment
documentation, in form and substance reasonably acceptable to Junior Lender,
assigning the Senior Loan and its rights under the Senior Loan Documents
(without recourse, representations or warranties, except for representations as
to the outstanding balance of the Senior Loan and as to Senior Lender’s not
having assigned or encumbered its rights in the Senior Loan).  Upon consummation of the Purchase by Junior
Lender, Junior Lender shall be subrogated to the rights of Senior Lender under
the Senior Loan Documents.  If
Subordinate Lender is the purchaser, concurrently with payment to the Senior
Lender of the Senior Loan Purchase Price and to the Junior Lender of the Junior
Loan Purchase Price: (1) Senior Lender shall deliver or cause to be
delivered to Subordinate Lender all Senior Loan Documents held by or on behalf
of Senior Lender; (2) Senior Lender shall execute in favor of Subordinate
Lender (or its designee) assignment documentation, in form and substance
reasonably acceptable to Subordinate Lender, assigning the Senior Loan and its
rights under the Senior Loan Documents (without recourse, representations or
warranties, except for representations as to the outstanding balance of the
Senior Loan and as to Senior Lender’s not having assigned or encumbered its
rights in the Senior Loan); (3) Junior Lender shall deliver or cause to be
delivered to Subordinate Lender all Junior Loan Documents held by or on behalf
of Junior Lender; and (4) Junior Lender will execute in favor of
Subordinate Lender (or its designee) assignment documentation, in form and
substance reasonably acceptable to Subordinate Lender, assigning the Junior
Loan and its rights under the Junior Loan Documents (without recourse,
representations or warranties, except for representations as to the outstanding
balance of the Junior Loan and as to Junior 

 

22

 

Lender’s
not having assigned or encumbered its rights in the Junior Loan).  Upon consummation of the Purchase by
Subordinate Lender, Subordinate Lender shall be subrogated to the rights of
Senior Lender under the Senior Loan Documents and the Junior Lender under the
Junior Loan Documents.  If a Lender
Purchase Notice is sent pursuant to Section 7.1(g)(i) and this
Section 7.1(g)(ii), Senior Lender shall forbear from sending a
Senior Enforcement Notice until such time as the Purchase Closing Date has
passed without the contemplated sale and purchase of the Senior Loan (or both
the Senior Loan and the Junior Loan if the Lender Purchase Notice was sent by
Subordinate Lender) having occurred.

 

(iii)          Junior Lender
shall also have the option to consummate a Purchase of the Senior Loan for the
Senior Loan Purchase Price, and Subordinate Lender shall also have the option
to consummate a Purchase of the Senior Loan for the Senior Loan Purchase Price
and of the Junior Loan for the Junior Loan Purchase Price, at any time during
the period beginning on the date of acceleration of the Senior Loan and ending
on the date prior to the date a foreclosure or trustee’s sale (or deed in lieu
of foreclosure) is conducted or consummated in respect of the Senior Loan.  Junior Lender may exercise such option by
sending written notice of such exercise to Senior Lender together with the
deposit of immediately available funds in the amount of the Senior Loan
Purchase Price with an escrow agent reasonably satisfactory to the Senior
Lender, and in such event Junior Lender shall purchase the Senior Loan for the
Senior Loan Purchase Price within ten (10) Business Days after such notice
is delivered (but in any event prior to the scheduled date of such foreclosure
or trustee’s sale (or deed in lieu of foreclosure)).  Concurrently with payment to Senior Lender of
the Senior Loan Purchase Price: (A) Senior Lender shall deliver or cause
to be delivered to Junior Lender all Senior Loan Documents held by or on behalf
of Senior Lender, and (B) Senior Lender shall execute in favor of Junior
Lender (or its designee) assignment documentation, in form and substance
reasonably acceptable to Junior Lender, assigning the Senior Loan and its
rights under the Senior Loan Documents (without recourse, representations or
warranties, except for representations as to the outstanding balance of the
Senior Loan and as to Senior Lender’s not having assigned or encumbered its
rights in the Senior Loan).  Upon
consummation of the Purchase, Junior Lender shall be subrogated to the rights
of Senior Lender under the Senior Loan Documents.

 

Subordinate Lender may exercise the option referred to in the preceding
paragraph of this clause (iii) by sending written notice of such
exercise to Senior Lender and Junior Lender, together with the deposit of
immediately available funds in the amount of the Senior Loan Purchase Price and
Junior Lender Purchase Price with an escrow agent reasonably satisfactory to
the Senior Lender and Junior Lender, and in such event Subordinate Lender shall
purchase the Senior Loan for the Senior Loan Purchase Price and the Junior Loan
for the Junior Loan Purchase Price within ten (10) Business Days after
such notice is delivered (but in any event prior to the scheduled date of such
foreclosure or trustee’s sale (or deed in lieu of foreclosure)).  Concurrently with payment to Senior Lender of
the Senior Loan Purchase Price and to Junior Lender of the Junior Loan Purchase

 

23

 

Price: (A) Senior Lender and Junior Lender
shall deliver or cause to be delivered to Subordinate Lender all Senior Loan
Documents held by or on behalf of Senior Lender and Junior Lender, and (B) Senior
Lender and Junior Lender shall execute in favor of Subordinate Lender (or its
designee) assignment documentation, in form and substance reasonably acceptable
to Subordinate Lender, assigning the Senior Loan and its rights under the
Senior Loan Documents and the Junior Loan and its rights under the Junior Loan
Documents (without recourse, representations or warranties, except for
representations as to the outstanding balance of the Senior Loan and the Junior
Loan, respectively, and as to Senior Lender’s or Junior Lender’s as appropriate
not having assigned or encumbered its rights in the relevant Loan).  Upon consummation of the Purchase,
Subordinate Lender shall be subrogated to the rights of Senior Lender under the
Senior Loan Documents and Junior Lender under the Junior Loan Documents.

 

(iv)          Notwithstanding
anything to the contrary herein, upon delivery of a Senior Enforcement Notice
by Senior Lender to Subordinate Lender, Subordinate Lender shall have ten (10) days
during which it shall have the exclusive right to provide to the Senior Lender
and the Junior Lender a Lender Purchase Notice. 
If Subordinate Lender fails to provide such Lender Purchase Notice
within such ten (10) day period, Subordinate Lender shall have no further
right to provide a Lender Purchase Notice with respect to such Senior
Enforcement Notice except as provided in Section 7(g)(iii) above.  At the expiration of such ten (10) day
period, subject to clause (iii), Junior Lender shall have an additional
ten (10) day period within which to provide a Lender Purchase Notice.  Thereafter, neither Subordinate Lender nor
Junior Lender shall have any right to provide a Lender Purchase Notice in
connection with the applicable Senior Enforcement Notice (except as provided in
Section 7(g)(iii) above).

 

(v)           Upon delivery
of a Lender Purchase Notice, the Lender delivering such notice shall have the
exclusive right to purchase the Senior Loan (and the Junior Loan, if
applicable) until the Purchase Closing Date.

 

(h)           Failure to Cure Senior
Default or Purchase Senior Loan.  If (i) Junior Lender fails to either
cure the Senior Default that was the subject of the Senior Enforcement Notice
or to purchase the Senior Loan prior to the Purchase Closing Date, if any, and (ii) Subordinate
Lender fails to either cure the Senior Default that was the subject of the
Senior Enforcement Notice or to purchase the Senior Loan and the Junior Loan
prior to the Purchase Closing Date, if any, then Senior Lender shall, in
addition to the right to take a Senior Loan Enforcement Action, have the right
to amend, modify, restructure or extend the Senior Mortgage or any other Senior
Loan Documents (including without limitation any and all Special Modification
Terms of Senior Loan Documents) without notice to or the consent of Junior
Lender and Subordinate Lender.  In such
event, the Junior Loan, the Junior Mortgage and the other Junior Loan Documents
and the Subordinate Loan, the Subordinate Mortgage and the other Subordinate Loan
Documents and all indebtedness, obligations, liens and security interests
evidenced or secured thereby or from time to time outstanding thereunder shall
continue to be junior, subject, and subordinate in all respects to the Senior
Loan, the 

 

24

 

Senior Mortgage and the Senior Loan Documents, as so amended, modified,
extended, or restructured (including without limitation any and all Special
Modification Terms of Senior Loan Documents); provided, however, that in no
event shall the principal amount of the Senior Loan be increased except by
reason of Protective Advances.  Third
parties including title insurance companies insuring the priority of the Senior
Mortgage are hereby authorized to rely on this provision as to the priority of
the Senior Loan Documents, as so amended, modified, extended or restructured,
without any requirement to confirm such senior position from Junior Lender or
the Subordinate Lender.

 

8.             Default Under Junior Loan
Documents.

 

(a)           Junior Default
Notice and Junior Enforcement Notice.  Prior to commencing any Junior Loan
Enforcement Action, subject to Section 9(a) hereof, Junior
Lender shall provide Senior Lender and Subordinate Lender with two (2) written
notices, as follows: (i) a copy of any written notice (the “Junior Default
Notice”) sent by Junior Lender to Borrower regarding the occurrence of a Junior
Default, which shall be delivered to Senior Lender and Junior Lender
substantially concurrently with the delivery of such Junior Default Notice to
Borrower, and (ii) written notice (the “Junior Enforcement Notice”) that,
subject to Section 9(a) hereof, Junior Lender intends to
commence a Junior Loan Enforcement Action by reason of such Junior Default,
which shall be delivered to Senior Lender and Subordinate Lender at a time
determined by Junior Lender, but only after the period allowed for Borrower to
cure such Junior Default in the Junior Loan Documents has expired.  Junior Lender shall forbear from actually
commencing such Junior Loan Enforcement Action until Subordinate Lender’s
Outside Junior Loan Date, provided that any Junior Loan Enforcement Action is
subject to Section 9(a) hereof.

 

(b)           Junior Monetary
Default.  Upon receipt of a Junior
Enforcement Notice with respect to a Junior Monetary Default, Subordinate
Lender shall have a period of five (5) Business Days after such receipt
within which Subordinate Lender may (but shall not be obligated to) cure such
Junior Monetary Default by making payment to Junior Lender in immediately available
funds sufficient to cure the Junior Monetary Default.

 

(c)           Junior
Non-Monetary Default.  Upon
receipt of a Junior Enforcement Notice with respect to a Junior Non-Monetary
Default, Subordinate Lender shall, within 10 Business Days after such
receipt, send written notice (the “Subordinate Non-Monetary Default Election
Notice”) to Senior Lender and Junior Lender that either (i) Subordinate
Lender will attempt to cure such Junior Non-Monetary Default, in which event
Subordinate Lender shall be allowed thirty (30) days after such Subordinate
Non-Monetary Default Election Notice to effect such cure, or (ii) Subordinate
Lender has elected not to cure such Junior Non-Monetary Default.  If Subordinate Lender fails to send a
Subordinate Non-Monetary Default Election Notice within 10 Business Days after
delivery of the Junior Enforcement Notice, then Subordinate Lender shall be
deemed to have elected the option described in clause (ii) of the
preceding sentence.

 

25

 

(d)           Termination of
Cure Periods Upon Bankruptcy.  The cure periods set forth in the foregoing
provisions of this Section 8 shall automatically terminate upon the
occurrence of a Bankruptcy Event.

 

(e)           Subordinate Lender’s Right
to Purchase Junior Loan.

 

(i)            Upon receipt of
a Junior Enforcement Notice, Subordinate Lender may, within ten (10) Business
Days after such receipt, send written notice (the “Subordinate Purchase
Notice”) to Junior Lender and Senior Lender that Subordinate Lender intends
to purchase the Junior Loan at the Junior Loan Purchase Price.  If Subordinate Lender fails to send the
Subordinate Purchase Notice within such ten (10) Business Day period,
Subordinate Lender shall be deemed to have waived its right to purchase the
Junior Loan in connection with such Junior Enforcement Notice.

 

(ii)           If Subordinate
Lender elects in writing to purchase the Junior Loan (the “Junior Purchase”),
the Junior Purchase shall close on a date selected by Subordinate Lender that
is not later than forty (40) days after the delivery of a copy of the
Junior Enforcement Notice to Subordinate Lender (the “Junior Purchase
Closing Date”).  On the Junior
Purchase Closing Date, Subordinate Lender shall pay the Junior Loan Purchase
Price to Junior Lender and concurrently therewith: (A) Junior Lender shall
deliver or cause to be delivered to Subordinate Lender all Junior Loan
Documents held by or on behalf of Junior Lender, and (B) Junior Lender
shall execute in favor of Subordinate Lender (or its designee) assignment documentation,
in form and substance reasonably acceptable to Subordinate Lender, assigning
the Junior Loan and its rights under the Junior Loan Documents (without
recourse, representations or warranties, except for representations as to the
outstanding balance of the Junior Loan and as to Junior Lender’s not having
assigned or encumbered its rights in the Junior Loan).  Upon consummation of the Junior Purchase,
Subordinate Lender shall be subrogated to the rights of Junior Lender under the
Junior Loan Documents.

 

(f)            Failure to Cure
Junior Default.  If
Subordinate Lender fails to cure the Junior Default that was the subject of the
Junior Enforcement Notice or to purchase the Junior Loan prior to Subordinate
Lender’s Junior Outside Date, then Junior Lender shall have the right, subject
to Section 9(a) hereof, to amend, modify, restructure or
extend the Junior Mortgage or any other Junior Loan Documents (including
without limitation any and all Special Modification Terms of Junior Loan
Documents) without notice to or the consent of Subordinate Lender but with the
consent of the Senior Lender if required pursuant to Section 10(b) hereof.  In such event, the Subordinate Loan, the
Subordinate Mortgage and the other Subordinate Loan Documents and all
indebtedness, obligations, liens and security interests evidenced or secured
thereby or from time to time outstanding thereunder shall continue to be
junior, subject, and subordinate in all respects to the Junior Loan, the Junior
Mortgage and the Junior Loan Documents, as so amended, modified, extended, or
restructured (including without limitation any and all Special Modification
Terms of Junior Loan Documents).  Third
parties including title insurance companies insuring the priority of the Junior
Mortgage are hereby authorized to rely on 

 

26

 

this
provision as to the priority of the Junior Loan Documents, as so amended,
modified, extended or restructured, without any requirement to confirm such
senior position from Subordinate Lender.

 

(g)           During such
time as the Senior Loan Obligations have been satisfied in whole, the Junior
Lender shall be considered the Senior Lender for purposes hereof, and the
Subordinate Lender shall be considered the Junior Lender, and the provisions hereof
shall continue to apply as though the Junior Loan were the Senior Loan and the
Subordinate Loan the Junior Loan.

 

9.             Restrictions on Enforcement
by Junior Lender and Subordinate Lender.

 

(a)           Junior Lender.  Notwithstanding anything contained herein to
the contrary, so long as any of the Senior Loan Obligations remain outstanding, Junior
Lender must obtain the prior written consent of the Senior Lender prior to
commencing any Junior Loan Enforcement Action.

 

(b)           Subordinate
Lender.  Notwithstanding anything
contained herein to the contrary, so long as any of the Senior Loan Obligations
or Junior Loan Obligations remain outstanding, Subordinate Lender shall not,
without the prior written consent of both Senior Lender and Junior Lender,
commence any Subordinate Loan Enforcement Action.

 

10.           Modification of Loan
Documents.

 

(a)           Except as
otherwise provided in Section 7(h), Senior Lender shall not modify
any of the Special Modification Terms of the Senior Loan Documents without the
prior written approval of Subordinate Lender and Junior Lender (which approval
shall not be unreasonably withheld, conditioned or delayed).  Subordinate Lender and Junior Lender shall
approve or disapprove any proposed Special Modification Terms of Senior Loan
Documents within ten (10) Business Days after delivery of written notice
of such terms, and such approval shall be deemed denied if Subordinate Lender
and Junior Lender shall fail to approve any proposed Special Modification Terms
of Senior Loan Documents within ten (10) Business Days after delivery of
written notice of such terms.  Senior
Lender shall have the right, without the consent of Junior Lender or
Subordinate Lender in each instance, to enter into any amendment, deferral,
extension, modification, renewal, replacement, consolidation, supplement or
waiver of the Senior Loan or the Senior Loan Documents which is not a Special
Modification Term of Senior Loan Documents.

 

(b)           Junior Lender
shall not modify any of the Special Modification Terms of Junior Loan Documents
without the prior written approval of Subordinate Lender (except as otherwise
provided in Section 8(f)) and Senior Lender (which approval shall
not be unreasonably withheld, conditioned or delayed).  Subordinate Lender and Senior Lender shall
approve or disapprove any proposed Special Modification Terms of Junior Loan
Documents within ten (10) Business Days after delivery of written notice
of such terms, and such approval shall be deemed denied if Subordinate Lender
and Senior Lender shall 

 

27

 

fail
to approve any proposed Special Modification Terms of Junior Loan Documents
within ten (10) Business Days after delivery of written notice of such
terms.  Subject to Section 9(a),
Junior Lender shall have the right, without the consent of Senior Lender or
Subordinate Lender in each instance, to enter into any amendment, deferral,
extension, modification, renewal, replacement, consolidation, supplement or
waiver of the Junior Loan or the Junior Loan Documents which is not a Special
Modification Term of Junior Loan Documents.

 

(c)           Subordinate
Lender shall not modify any of the Special Modification Terms of Subordinate
Loan Documents without the prior written approval of Junior Lender and Senior
Lender (which approval shall not be unreasonably withheld, conditioned or
delayed).  Junior Lender and Senior
Lender shall approve or disapprove any proposed Special Modification Terms of
Subordinate Loan Documents within ten (10) Business Days after delivery of
written notice of such terms, and such approval shall be deemed denied if
Junior Lender and Senior Lender shall fail to approve any proposed Special
Modification Terms of Subordinate Loan Documents within ten (10) Business
Days after delivery of written notice of such terms.  Subject to Section 9(b),
Subordinate Lender shall have the right, without the consent of Senior Lender
or Junior Lender in each instance, to enter into any amendment, deferral,
extension, modification, renewal, replacement, consolidation, supplement or waiver
of the Subordinate Loan or the Subordinate Loan Documents which is not a
Special Modification Term of Subordinate Loan Documents.

 

(d)           Notwithstanding
the foregoing provisions, any amounts funded by the Senior Lender under the
Senior Loan Documents, the Junior Lender under the Junior Loan Documents or the
Subordinate Lender under the Subordinate Loan Documents as a result of (i) the
making of any Protective Advances or other advances by the Senior Lender,
Junior Lender or the Subordinate Lender, or (ii) interest accruals or
accretions and any compounding thereof (including default interest), shall not
be deemed to contravene this Section 10, nor will the act of
entering into a Swap Contract.

 

11.           Freedom of Action.

 

(a)           Each of
Subordinate Lender and Junior Lender agrees that Senior Lender may at any time
and from time to time, without the consent of Subordinate Lender or Junior
Lender, and without affecting the subordination and other agreements herein
made by Subordinate Lender or Junior Lender, enter into any amendment,
deferral, extension, modification, increase, renewal, replacement,
consolidation, supplement or waiver of the Senior Loan or the Senior Loan
Documents or enter into a Swap Contract (subject, however, to the restriction
on Special Modification Terms of Senior Loan Documents set forth herein), and
may also do any one or more of the following in Senior Lender’s sole and
absolute discretion (subject, however, to the restriction on Special
Modification Terms of Senior Loan Documents set forth herein):

 

(i)            Extend, renew,
modify, amend, diminish or waive any of the terms of any of the Senior Loan
Documents, including, without limitation, those arising out of building cost
revisions, change orders or changes to the plans and 

 

28

 

specifications,
or any payment provisions under any of the Senior Loan Documents, relating to
the Property or any Improvements, or any payment provisions under any of the
Senior Loan Documents, or grant any other indulgence to Borrower or any other
Person in respect of any or all of the Senior Loan Obligations or any other
matter or enter into a Swap Contract;

 

(ii)           Make such
Protective Advances as Senior Lender may deem appropriate (it being understood
that Senior Lender has not in any way committed to make any such advance);

 

(iii)          Add or
substitute, or take any action or omit to take any action which results in the
release of any endorser, guarantor or any collateral or security;

 

(iv)          Apply any sums
received from Borrower, any guarantor, endorser, or cosigner, or from the
disposition of any Collateral or security, to any indebtedness whatsoever owing
from such Person or secured by such Collateral or security, in such manner and
order as Senior Lender determines in its sole discretion, and regardless of
whether such indebtedness is part of the Senior Loan Obligations, is secured,
or is due and payable;

 

(v)           Make loans or
advances to Borrower secured in whole or in part by the Collateral or refrain
from making any such loans or advances;

 

(vi)          Accept partial
payments of, compromise or settle, refuse to enforce, or release all or any
parties to, any or all of the Senior Loan Obligations;

 

(vii)         Settle, release
(with or without receipt of consideration therefor, and whether by operation of
law or otherwise), compound, compromise, collect or liquidate any of the Senior
Loan Obligations in any manner permitted by applicable law; provided, however,
Senior Lender shall not release any of the Collateral or any guarantor of the
Senior Loan Obligations prior to Subordinate Lender’s Outside Senior Loan Date
or Junior Lender’s Outside Date; and

 

(viii)        Accept, release
(with or without receipt of consideration), waive, surrender, enforce,
exchange, modify, impair or extend the time for the performance, discharge or
payment of, any and all property of any kind securing any or all of the Senior
Loan Obligations or any guaranty of any or all of the Senior Loan Obligations,
or on which Senior Lender at any time may have a lien, or refuse to enforce its
rights or make any compromise or settlement or agreement therefor in respect of
any or all of such property; Senior Lender is not under and shall not hereafter
be under any obligation to marshal any assets in favor of Subordinate Lender,
or against or in payment of any or all of the Senior Loan Obligations, and may
proceed against any of the Collateral in such order and manner as it elects;
provided, however, Senior Lender shall not release any of the Collateral or any
guarantor of the Senior Loan Obligations prior to Subordinate Lender’s Outside
Senior Loan Date or Junior Lender’s Outside Date.

 

29

 

(b)           All such actions,
rights and matters set forth in Sections 11(a)(i) through 11(a)(viii) above
shall be senior in all respects to the Junior Loan Obligations and Junior Loan
Documents and Subordinate Loan Obligations and the Subordinate Loan Documents which
shall automatically be subordinate to such actions, rights and matters set
forth in (a)(i) through (viii) above. 
Third parties, including title insurance companies insuring the priority
of the Senior Loan Documents, are hereby authorized to rely upon this provision
as to the priority of such matters without requirement to confirm such senior
position from Junior Lender or Subordinate Lender.

 

(c)           Each of
Subordinate Lender and Senior Lender agrees that Junior Lender may at any time
and from time to time, without the consent of Subordinate Lender or Senior
Lender, but subject to Section 9(a) hereof, and without
affecting the subordination and other agreements herein made by Subordinate
Lender, and without affecting the senior priority and other agreements made by
the Senior Lender, enter into any amendment, deferral, extension, modification,
renewal, replacement, consolidation, supplement or waiver of the Junior Loan or
the Junior Loan Documents (subject, however, to the restriction on Special
Modification Terms of Junior Loan Documents) and may also do any one or more of
the following in Junior Lender’s sole and absolute discretion (subject,
however, to the restriction on Special Modification Terms of Junior Loan
Documents set forth herein):

 

(i)            Extend, renew,
modify, amend, diminish or waive any of the terms of any of the Junior Loan
Documents, including, without limitation, those arising out of building cost
revisions, change orders or changes to the plans and specifications, or any
payment provisions under any of the Junior Loan Documents, relating to the
Property or any Improvements, or any payment provisions under any of the Junior
Loan Documents, or grant any other indulgence to Borrower or any other Person
in respect of any or all of the Junior Loan Obligations or any other matter;

 

(ii)           Make such
Protective Advances as Junior Lender may deem appropriate (it being understood
that Junior Lender has not in any way committed to make any such advance);

 

(iii)          Add or
substitute, or take any action or omit to take any action which results in the
release of any endorser, guarantor or any collateral or security;

 

(iv)          Apply any sums
received from Borrower, any guarantor, endorser, or cosigner, or from the
disposition of any Collateral or security, to any indebtedness whatsoever owing
from such Person or secured by such Collateral or security, in such manner and
order as Junior Lender determines in its sole discretion, and regardless of
whether such indebtedness is part of the Junior Loan Obligations, is secured,
or is due and payable;

 

(v)           Make loans or
advances to Borrower secured in whole or in part by the Collateral or refrain
from making any such loans or advances;

 

30

 

(vi)          Accept partial
payments of, compromise or settle, refuse to enforce, or release all or any
parties to, any or all of the Junior Loan Obligations;

 

(vii)         Settle, release
(with or without receipt of consideration therefor, and whether by operation of
law or otherwise), compound, compromise, collect or liquidate any of the Junior
Loan Obligations in any manner permitted by applicable law; provided, however,
Junior Lender shall not release any of the Collateral or any guarantor of the
Junior Loan Obligations prior to Subordinate Lender’s Outside Junior Loan Date;
and

 

(viii)        Accept, release
(with or without receipt of consideration), waive, surrender, enforce,
exchange, modify, impair or extend the time for the performance, discharge or
payment of, any and all property of any kind securing any or all of the Junior
Loan Obligations or any guaranty of any or all of the Junior Loan Obligations,
or on which Junior Lender at any time may have a lien, or refuse to enforce its
rights or make any compromise or settlement or agreement therefor in respect of
any or all of such property; Junior Lender is not under and shall not hereafter
be under any obligation to marshal any assets in favor of Subordinate Lender,
or against or in payment of any or all of the Junior Loan Obligations, and may
proceed against any of the Collateral in such order and manner as it elects;
provided, however, Junior Lender shall not release any of the Collateral or any
guarantor of the Junior Loan Obligations prior to Subordinate Lender’s Outside
Junior Loan Date.

 

(d)           All such actions,
rights and matters set forth in Sections 11(c)(i) through 11(c)(viii) above
shall be (x) senior in all respects to the Subordinate Loan Obligations
and the Subordinate Loan Documents which shall automatically be subordinate to
such actions, rights and matters set forth in (c)(i) through (c)(viii) above
and (y) subordinate in all respects to the Senior Loan Obligations and
Senior Loan Documents.  Third parties,
including title insurance companies insuring the priority of the Junior Loan
Documents, are hereby authorized to rely upon this provision as to the priority
of such matters without requirement to confirm such senior position from
Subordinate Lender.

 

12.           Dealings with Borrower.

 

(a)           In making
disbursements under any of the Senior Loan Documents, Senior Lender has no duty
to, nor has Senior Lender represented that it will, see to the application of
any proceeds by the Person or Persons to whom Senior Lender disburses such
proceeds.  Any application or use of such
proceeds for purposes other than those provided for in the Senior Loan
Documents does not and shall not defeat the subordination herein made, in whole
or in part.

 

(b)           In making
disbursements under any of the Senior Loan Documents, Senior Lender may waive
any and all conditions to a disbursement contained in the Senior Loan
Documents.  No such waiver shall defeat
the subordination herein made, in whole or in part.

 

31

 

(c)           The rights
granted to Senior Lender hereunder are solely for its protection and nothing
herein contained shall impose on Senior Lender any duties with respect to
Borrower, Junior Lender or Subordinate Lender.

 

(d)           In making
disbursements under any of the Junior Loan Documents, Junior Lender has no duty
to, nor has Junior Lender represented that it will, see to the application of
any proceeds by the Person or Persons to whom Junior Lender disburses such
proceeds.  Any application or use of such
proceeds for purposes other than those provided for in the Junior Loan
Documents does not and shall not defeat the subordination herein made, in whole
or in part.

 

(e)           In making
disbursements under any of the Junior Loan Documents, Junior Lender may waive
any and all conditions to a disbursement contained in the Junior Loan
Documents.  No such waiver shall defeat
the subordination herein made, in whole or in part.

 

(f)            The rights
granted to Junior Lender hereunder are solely for its protection, and nothing
herein contained shall impose on Junior Lender any duties with respect to
Borrower or Subordinate Lender.

 

(g)           Notwithstanding
anything to the contrary contained herein, any consent or approval rights of
Lenders under the Delegated Consent Documents (as defined in Exhibit E)
shall be subject to the provisions of Exhibit E attached hereto and
made a part hereof.  Each of Senior
Lender, Junior Lender and Subordinate Lender hereby acknowledge and agree that
each of the Borrower and the other parties to such Delegated Consent Documents
is expressly made a third party beneficiary of the provisions of Exhibit E
solely for the purposes of enforcing the provisions of Exhibit E
and that Borrower and the other parties to such Delegated Consent Documents
shall be entitled to rely on the provisions of Exhibit E in
connection with satisfying their respective obligation(s) to obtain any
consent and/or approval of any Lender under any of the Delegated Consent
Documents.  No modification, amendment,
termination or waiver of the provisions of Exhibit E shall be
binding upon Borrower or such other parties to such Delegated Consent Documents
except as expressly set forth in a writing signed by each such Person.

 

13.           Restrictions on Transfer of
Subordinate Loan.

 

(a)           With respect to
the initial Subordinate Lender or any successor or assign of the initial Subordinate
Lender that is an Affiliate of Subordinate Lender (each, an “Affiliated
Subordinate Lender”), such Affiliated Subordinate Lender agrees that it shall
not sell, assign, pledge, encumber or otherwise transfer (each, a “Transfer”)
any portion of its interest in the Subordinate Loan Documents without the prior
written consent of Junior Lender, which consent shall not be unreasonably
withheld, conditioned or delayed.  If
Subordinate Lender desires to Transfer the Subordinate Loan, Subordinate Lender
shall send notice to Junior Lender describing the identity of the proposed
transferee and requesting Junior Lender’s approval thereof (a copy of such
notice shall be simultaneously provided to the Senior Lender).  Within ten (10) Business Days after 

 

32

 

delivery
of such notice, Junior Lender shall respond to Subordinate Lender with a notice
either approving or disapproving the contemplated Transfer (a copy of such
notice shall be simultaneously provided to the Senior Lender).  If Junior Lender fails to respond to a notice
sent by Subordinate Lender requesting Junior Lender’s approval of a Transfer
within ten (10) Business Days after delivery, the Junior Lender shall be
deemed to have approved such Transfer. 
Any Transfer made in violation of this Section 13(a) shall
be deemed void.

 

(b)           After the
consummation of a Transfer of the Subordinate Loan to a party other than an
Affiliated Subordinate Lender (a “Non-Affiliated Subordinate Lender”), such
Non-Affiliated Subordinate Lender agrees that it shall not Transfer any portion
of its interest in the Subordinate Loan Documents without the prior written
consent of Junior Lender, which consent may be withheld only if the proposed
transferee of the Non-Affiliated Subordinate Lender’s interest in the
Subordinate Loan Documents is a Person with which the Junior Lender has
previously been in a dispute that was the subject of a court or arbitration
proceeding within the then preceding six years. 
If a Non-Affiliated Subordinate Lender desires to Transfer the
Subordinate Loan, such Non-Affiliated Subordinate Lender shall send notice to
Junior Lender describing the identity of the proposed transferee and requesting
Junior Lender’s approval thereof (a copy of such notice shall be simultaneously
provided to the Senior Lender).  Within
ten (10) Business Days after delivery of such notice, Junior Lender shall
respond to Subordinate Lender with a notice either approving or disapproving
the contemplated Transfer (a copy of such notice shall be simultaneously
provided to the Senior Lender).  If
Junior Lender disapproves the proposed Transfer, Junior Lender shall include in
its notice the reasons for such disapproval. 
If Junior Lender disapproves the proposed Transfer for any reason other
than that the proposed transferee is a Person with which the Junior Lender has
previously been in a dispute that was the subject of a court or arbitration
proceeding within the then preceding six years, then Junior Lender shall,
within thirty (30) days after providing such notice (the “Subordinate
Purchase Closing Date”), purchase the Subordinate Loan (the “Subordinate
Purchase”) at the Subordinate Loan Purchase Price as provided in Section 13(c) below.

 

(c)           If the Junior
Lender purchases the Subordinate Loan pursuant to the preceding Section 13(b),
then, concurrently with payment to Non-Affiliated Subordinate Lender of the
Subordinate Loan Purchase Price: (A) Non-Affiliated Subordinate Lender
shall deliver or cause to be delivered to Junior Lender all Subordinate Loan
Documents held by or on behalf of Non-Affiliated Subordinate Lender, and (B) Non-Affiliated
Subordinate Lender shall execute in favor of Junior Lender (or its designee)
assignment documentation, in form and substance reasonably acceptable to Junior
Lender, assigning the Subordinate Loan and its rights under the Subordinate
Loan Documents (without recourse, representations or warranties, except for
representations as to the outstanding balance of the Subordinate Loan and as to
Non-Affiliated Subordinate Lender’s not having assigned or encumbered its
rights in the Subordinate Loan).  Upon
consummation of the Subordinate Purchase, Junior Lender shall be subrogated to
the rights of Non-Affiliated Subordinate Lender under the Subordinate Loan
Documents.

 

33

 

(d)           Notwithstanding anything to the contrary in this Section 13
or otherwise in this Agreement, any Affiliated Subordinate Lender or
Non-Affiliated Subordinate Lender shall have the right to transfer its interest
in the Subordinate Loan (or any part thereof or interest therein) to an
Affiliate upon fifteen (15) days’ prior written notice to (but without the
consent of) Senior Lender and Junior Lender and delivery to Senior Lender and
Junior Lender by such Affiliate of an assumption agreement whereby it assumes
all of such Non-Affiliated Subordinate Lender’s obligations hereunder.

 

14.           Assignment of the Junior
Loan Obligations.  Junior
Lender may assign or transfer any or all of the Junior Loan Obligations and/or
any interest therein or herein and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Junior Loan
Obligations shall be and remain senior to the Subordinate Loan Obligations, and
the Subordinate Loan Obligations shall be and remain subject and subordinate to
the Junior Loan for the purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Junior Loan Obligations or of
any interest therein or herein shall, to the extent of the interest of such
assignee or transferee in the Junior Loan Obligations, be entitled to the
benefits of this Agreement to the same extent as if such assignee or transferee
were Junior Lender; provided, however, that, unless Junior Lender shall
otherwise consent in writing, Junior Lender shall have an unimpaired right,
prior and superior to that of any such assignee or transferee, to enforce this
Agreement, for the benefit of Junior Lender, as to those portions of the Junior
Loan Obligations which Junior Lender has not assigned or transferred.

 

15.           Assignment of the Senior
Loan Obligations.  Senior
Lender may assign or transfer any or all of the Senior Loan Obligations and/or
any interest therein or herein and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Senior Loan
Obligations shall be and remain senior to the Junior Loan Obligations and
Subordinate Loan Obligations, and the Subordinate Loan Obligations shall be and
remain subject and subordinate to the Junior Loan Obligations and Senior Loan
Obligations for the purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Senior Loan Obligations or of
any interest therein or herein shall, to the extent of the interest of such
assignee or transferee in the Senior Loan Obligations, be entitled to the
benefits of this Agreement to the same extent as if such assignee or transferee
were Senior Lender; provided, however, that, unless Senior Lender shall
otherwise consent in writing, Senior Lender shall have an unimpaired right,
prior and superior to that of any such assignee or transferee, to enforce this
Agreement, for the benefit of Senior Lender, as to those portions of the Senior
Loan Obligations which Senior Lender has not assigned or transferred.

 

16.           Intent to Sell.  If Senior Lender intends to solicit
purchasers to purchase all of its interest in the Senior Loan in whole and such
purchasers are a Person other than the Junior Lender, the Subordinate Lender or
the Borrower or any Affiliate thereof, Senior Lender shall give Junior Lender
prompt written notice of its intent to sell and shall use reasonable best
efforts, if there is a bidding process for the purchase of such Senior Loan, to
include the Junior Lender in such bidding process.

 

17.           Acquisition of
Senior Loan by Borrower or Subordinate Lender Prohibited.  Notwithstanding anything contained herein to
the contrary, other than a sale pursuant to Section 7, Senior
Lender shall not sell the Senior Loan to Borrower, Subordinate Lender, or any 

 

34

 

Affiliate of Borrower or Subordinate Lender,
unless either (a) concurrently therewith, the Junior Loan is sold to the
same party on terms acceptable to the Junior Lender in its sole discretion, or (b) the
prior written consent of Junior Lender has been obtained (which consent may be
given or withheld in the sole discretion of Junior Lender).  Subordinate Lender shall not purchase, or
allow any Affiliate of Subordinate Lender to purchase, other than a sale
pursuant to Section 7,  the Senior Loan, unless (i) concurrently
therewith, the Junior Loan is sold to the same party on terms acceptable to the
Junior Lender in its sole discretion, or (ii) the prior written consent of
Junior Lender is obtained (which consent may be given or withheld in the sole
discretion of Junior Lender).

 

18.           Casualty.  Subject to the terms of the Lock Box
Agreement, in the event of a casualty to the buildings or improvements constructed
on any portion of the Property or a condemnation or taking under a power of
eminent domain of all or any portion of the Property, Senior Lender shall have
a first and prior interest in and to any payments, awards, proceeds,
distributions, or consideration arising from any such event (the “Award”).  If the amount of the Award is in excess of
all amounts owed to Senior Lender under the Senior Loan Documents (the amount
of such excess is referred to herein as the “Excess”), however, and
either the Senior Loan has been paid in full or Borrower is entitled to a
remittance of same under the Senior Loan Documents other than to restore the
Property, the Excess or portion to be so remitted to Borrower shall, to the
extent permitted in the Senior Loan Documents, be paid to or at the direction
of Junior Lender, and if the Junior Lender has been paid all amounts due, to or
at the direction of the Subordinate Lender unless other Persons have claimed
the right to such Excess, in which case Senior Lender (or Junior Lender if
there is no Senior Lender) shall only be required to provide notice to Junior
Lender and Subordinate Lender of the Excess and of any other claims
thereto.  In the event of any competing
claims for any Excess, Senior Lender (or Junior Lender if there is no Senior
Lender) shall continue to hold the Excess until Senior Lender (or Junior Lender
if there is no Senior Lender) receives an agreement signed by all Persons
making a claim to the Excess or a final order of a court of competent
jurisdiction directing Senior Lender (or Junior Lender if there is no Senior
Lender) as to how and to which Person(s) the Excess is to be
distributed.  Notwithstanding the
foregoing, but subject to the terms of the Lock Box Agreement, in the event of
a casualty or condemnation, Senior Lender (or Junior Lender if there is no
Senior Lender) shall release the Award to the Borrower if and to the extent
required by the terms and conditions of the Senior Loan Documents (or Junior
Loan Documents if there is no Senior Lender) and the Lock Box Agreement to
repair and restore the Premises in accordance with the terms and provisions of
the Senior Loan Documents (or Junior Loan Documents if there is no Senior
Lender).  Any portion of the Award made available
to the Borrower for the repair or restoration of the Premises shall not be
subject to attachment by Junior Lender and Subordinate Lender.

 

19.           Bankruptcy.

 

(a)           Upon any
distribution of the assets or properties of Borrower or upon any dissolution,
winding up, liquidation, bankruptcy or reorganization involving Borrower
(whether in bankruptcy, insolvency or receivership proceedings or any other
Proceeding, or upon an assignment for the benefit of creditors or otherwise):

 

35

 

(i)            Senior Lender
shall first be entitled to receive payment in full of the principal of and
interest on the Senior Loan Obligations and all fees and any other payments
(including post-petition interest and all costs and expenses) due pursuant to
the terms of the Senior Loan Documents, before Junior Lender is entitled to
receive any payment on account of the Junior Loan Obligations; and Junior
Lender shall then be entitled to receive payment in full of the principal of
and interest on the Junior Loan Obligations and all fees and any other payments
(including post-petition interest and all costs and expenses) due pursuant to
the terms of the Junior Loan Documents, before Subordinate Lender is entitled
to receive any payment on account of the Subordinate Loan Obligations.  The Junior Lender acknowledges and agrees
that its distributions in bankruptcy may be diminished in order to pay the
Senior Loan Obligations and all fees and any other payments (including
post-petition interest and all costs and expenses) to the extent the Senior
Lender receives payment on its secured claim in bankruptcy exceeding the value
of collateral encumbered by the Senior Lender’s lien; the Subordinate Lender
acknowledges and agrees that its distributions in bankruptcy may be diminished
in order to pay the Senior Loan Obligations and/or the Junior Loan Obligations
and all fees and any other payments (including post-petition interest and all
costs and expenses) to the extent the Senior Lender and/or the Junior Lender
receive payment on their secured claims in bankruptcy exceeding the value of
collateral encumbered by their liens.

 

(ii)           Any payment or
distribution of the assets or properties of Borrower of any kind or character,
whether in cash, property, or securities, to which Subordinate Lender would be
entitled except for the provisions of this Agreement, shall be paid by the
debtor in possession, liquidating trustee or agent or other person making such
payment or distribution directly to first, Senior Lender and second, Junior
Lender; and any payment or distribution of the assets or properties of Borrower
of any kind or character, whether in cash, property, or securities, to which
Junior Lender would be entitled except for the provisions of this Agreement,
shall be paid by the debtor in possession, liquidating trustee or agent or
other person making such payment or distribution directly to Senior Lender; and

 

(iii)          In the event
that, notwithstanding the foregoing, any payment or distribution of the assets
or properties of Borrower of any kind or character, whether in cash, property,
or securities, shall be received by Subordinate Lender on account of principal,
interest, fees, or other amounts on or with respect to the Subordinate Loan
Obligations before all of the Senior Loan Obligations and Junior Loan
Obligations are paid in full, such payments or distribution shall be received
and held in trust for and shall be paid over first, to Senior Lender forthwith,
for application to the payment of the Senior Loan Obligations until all such
Senior Loan Obligations shall have been paid in full in accordance with the
terms of the Senior Loan Documents and second to Junior Lender forthwith, for
application to the payment of the Junior Loan Obligations until all such Junior
Loan Obligations shall have been paid in full in accordance with the terms of
the Junior Loan Documents.

 

36

 

(b)           To effectuate
the foregoing, Subordinate Lender does hereby irrevocably assign to first,
Senior Lender and second, Junior Lender all of Subordinate Lender’s rights as a
secured or unsecured creditor in any Proceeding and first (i) authorizes
Senior Lender to take, or refrain from taking, any action to assert, enforce,
modify, waive, release or extend Subordinate Lender’s lien and/or claim in such
Proceeding, including but not limited to (A) filing a proof of claim
arising out of the Subordinate Loan Obligations, (B) voting or refraining
from voting claims arising from the Subordinate Loan Obligations, either in
Senior Lender’s name or in the name of Senior Lender as attorney-in-fact of
Subordinate Lender, (C) accepting or rejecting any payment or distribution
made with respect to any claim arising from the Subordinate Loan Obligations
and applying such payment and distribution to payment of Senior Lender’s claim
until the Senior Loan Obligations are paid and satisfied in full in accordance
with their terms, and (D) taking any and all actions and executing any and
all instruments necessary to effectuate the foregoing and, among other things,
to establish Senior Lender’s entitlement to assert Subordinate Lender’s claim
in such Proceeding, provided that notwithstanding the foregoing provisions,
with respect to any plan of reorganization proposed in a Proceeding in respect
of which creditors are voting, Senior Lender may vote on behalf of Subordinate
Lender only if the proposed plan would result in Senior Lending being
“impaired” (as such term is defined in the Bankruptcy Code); and second, (ii) if
Senior Lender has been paid in full all amounts payable under the Senior Loan
Documents, authorizes Junior Lender to take, or refrain from taking, any action
to assert, enforce, modify, waive, release or extend Subordinate Lender’s lien
and/or claim in such Proceeding, including but not limited to (A) filing a
proof of claim arising out of the Subordinate Loan Obligations, (B) voting
or refraining from voting claims arising from the Subordinate Loan Obligations,
either in Junior Lender’s name or in the name of Junior Lender as
attorney-in-fact of Subordinate Lender, (C) accepting or rejecting any
payment or distribution made with respect to any claim arising from the
Subordinate Loan Obligations and applying such payment and distribution to
payment of Junior Lender’s claim until the Junior Loan Obligations are paid and
satisfied in full in accordance with their terms, and (D) taking any and
all actions and executing any and all instruments necessary to effectuate the
foregoing and, among other things, to establish Junior Lender’s entitlement to
assert Subordinate Lender’s claim in such Proceeding, provided that
notwithstanding the foregoing provisions, with respect to any plan of
reorganization proposed in a Proceeding in respect of which creditors are
voting, Junior Lender (if there is no Senior Lender) may vote on behalf of
Subordinate Lender only if the proposed plan would result in Junior Lender
being “impaired” (as such term is defined in the Bankruptcy Code).

 

20.           Additional Waivers and
Agreements.

 

(a)           Subordinate
Lender waives the right to require Senior Lender to proceed against Borrower or
any other Person liable on any Senior Loan Obligation or Junior Lender or to
proceed against or exhaust any security held from Borrower or other Person, or
to pursue any other remedy in Senior Lender’s power whatsoever, and Subordinate
Lender waives the right to have the property of Borrower applied to the
discharge of, first, any Senior Loan Obligation and, second, any Junior Loan
Obligation.  Junior Lender waives the
right to require Senior Lender to proceed against Borrower or any 

 

37

 

other
Person liable on any Senior Loan Obligation, to proceed against or exhaust any
security held from Borrower or other Person, or to pursue any other remedy in
Senior Lender’s power whatsoever, and Junior Lender waives the right to have
the property of Borrower first applied to the discharge of any Senior Loan
Obligation.  Subject to the terms of this
Agreement, the Lock Box Agreement and the Senior Loan Documents, Senior Lender
may, at its election, exercise any right or remedy Senior Lender may have
against Borrower or any security held by Senior Lender, including, without
limitation, the right to foreclose upon any such security by one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, without affecting or impairing in any way the
obligations of Subordinate Lender hereunder, except to the extent, first, the
Senior Loan Obligations and, second, Junior Loan Obligations have been paid,
and Subordinate Lender waives any defense arising out of the absence,
impairment or loss of any right of reimbursement, contribution or subrogation
or any other right or remedy against Borrower or any such security, whether
resulting from such election by Senior Lender or otherwise except to the extent
expressly set forth in this Agreement.

 

(b)           Subordinate
Lender assumes all responsibility for keeping itself informed as to the
condition (financial or otherwise), business, assets and operations of
Borrower, the condition of any Collateral and all other circumstances that
might in any way affect Subordinate Lender’s risk under this Agreement
(including, without limitation, the risk of nonpayment of the Senior Loan
Obligations or Junior Loan Obligations), and Senior Lender and Junior Lender
shall have no duty or obligation whatsoever to obtain or disclose to
Subordinate Lender any information or documents relative to such condition,
business, assets, or operations of Borrower or such risk, whether acquired by
Senior Lender or Junior Lender in the course of its relationship with Borrower
or otherwise.

 

(c)           Junior Lender
assumes all responsibility for keeping itself informed as to the condition
(financial or otherwise), business, assets and operations of Borrower, the
condition of any Collateral and all other circumstances that might in any way
affect Junior Lender’s risk under this Agreement (including, without
limitation, the risk of nonpayment of the Senior Loan Obligations), and Senior
Lender shall have no duty or obligation whatsoever to obtain or disclose to
Junior Lender any information or documents relative to such condition,
business, assets, or operations of Borrower or such risk, whether acquired by
Senior Lender in the course of its relationship with Borrower or otherwise.

 

(d)           Subordinate
Lender shall have no duty or obligation whatsoever to obtain or disclose to
Junior Lender or Senior Lender any information or documents relative to the
condition, business, assets, or operations of Borrower, whether acquired by
Subordinate Lender in the course of its relationship with Borrower or
otherwise.

 

(e)           The Subordinate
Note shall bear a legend indicating that payment of the Subordinate Loan
Obligations is subject to the terms of this Agreement.

 

(f)            The Junior Note
shall bear a legend indicating that payment of the Junior Loan Obligations is
subject to the terms of this Agreement.

 

38

 

(g)           Subordinate
Lender acknowledges that each of the Senior Lender and Junior Lender has made
no warranties or representations to it with respect to the due execution,
legality, validity, completeness or enforceability of the Senior Loan Documents
or Junior Loan Documents or the collectability of the Senior Loan Obligations or
Junior Loan Obligations evidenced thereby.

 

(h)           Junior Lender
acknowledges that Senior Lender has made no warranties or representations to it
with respect to the due execution, legality, validity, completeness or
enforceability of the Senior Loan Documents or the collectability of the Senior
Loan Obligations evidenced thereby.

 

(i)            If any of the
Senior Loan Obligations or Junior Loan Obligations or any lien securing same
should be invalidated, avoided or set aside, the subordination provided for
herein nevertheless shall continue in full force and effect and, with respect
to the Senior Loan Obligations, as among Senior Lender, Junior Lender and
Subordinate Lender, or with respect to the Junior Loan Obligations, as between
the Junior Lender and the Subordinate Lender, or with respect to the Junior
Loan Obligations, as between the Junior Lender and the Subordinate Lender,
shall be and be deemed to remain in full force and effect.

 

(j)            Subordinate
Lender hereby expressly, unconditionally and irrevocably waives all rights (i) under
Sections 361 through 365, 502(e) and 509 of the Bankruptcy Code (or
any similar sections hereafter in effect under any other Federal or state laws
or legal or equitable principles relating to bankruptcy, insolvency,
reorganizations, liquidations or otherwise for the relief of debtors or
protection of creditors), and (ii) to seek or obtain conversion to a
different type of proceeding or to seek or obtain dismissal of a proceeding, in
each case in relation to a bankruptcy, reorganization, insolvency or other
proceeding under similar laws with respect to Borrower.  Without limiting the generality of the
foregoing, Subordinate Lender hereby expressly, unconditionally and irrevocably
waives (A) the right to seek to provide credit (secured or otherwise) to
Borrower in any way under Section 364 of the Bankruptcy Code unless the
same is subordinated in right and time of payment in all aspects to (i) the
Senior Loan Obligations in a manner acceptable to Senior Lender in its sole and
absolute discretion and (ii) the Junior Loan Obligations in a manner
acceptable to the Junior Lender in its sole discretion, if applicable; (B) the
right to take a position inconsistent with or contrary to that of Senior Lender
(including a position by Senior Lender to take no action) or Junior Lender
(including a position by the Junior Lender to take no action) if Borrower seeks
to use, sell or lease Collateral (or the proceeds or products thereof) under Section 363
of the Bankruptcy Code; (C) the right to receive any Collateral security
(including any “super priority” or equal or “priming” or replacement lien) for
any Subordinate Loan Obligation unless Senior Lender and Junior Lender have
received senior positions acceptable to Senior Lender and Junior Lender in their
absolute discretion to secure, first, all Senior Loan Obligations (in the same
Collateral to the extent Collateral is involved) or, second, all Junior Loan
Obligations (in the same Collateral to the extent Collateral is involved); and (D) the
right to seek adequate protection in respect of Collateral (or the proceeds or
products thereof) under Section 363 or 361 of the Bankruptcy Code.

 

39

 

(k)           Junior Lender
hereby expressly, unconditionally and irrevocably waives all rights (i) under
Sections 361 through 365, 502(e) and 509 of the Bankruptcy Code (or
any similar sections hereafter in effect under any other Federal or state laws
or legal or equitable principles relating to bankruptcy, insolvency,
reorganizations, liquidations or otherwise for the relief of debtors or
protection of creditors), and (ii) to seek or obtain conversion to a
different type of proceeding or to seek or obtain dismissal of a proceeding, in
each case in relation to a bankruptcy, reorganization, insolvency or other
proceeding under similar laws with respect to Borrower.  Without limiting the generality of the
foregoing, Junior Lender hereby expressly, unconditionally and irrevocably
waives (A) the right to seek to provide credit (secured or otherwise) to
Borrower in any way under Section 364 of the Bankruptcy Code unless the
same is subordinated in right and time of payment in all aspects to the Senior
Loan Obligations in a manner acceptable to Senior Lender in its sole and
absolute discretion; (B) the right to take a position inconsistent with or
contrary to that of Senior Lender (including a position by Senior Lender to
take no action) if Borrower seeks to use, sell or lease Collateral (or the
proceeds or products thereof) under Section 363 of the Bankruptcy Code; (C) the
right to receive any Collateral security (including any “super priority” or
equal or “priming” or replacement lien) for any Junior Loan Obligation unless
Senior Lender has received a senior position acceptable to Senior Lender in its
sole and absolute discretion to secure all Senior Loan Obligations (in the same
Collateral to the extent Collateral is involved); and (D) the right to
seek adequate protection in respect of Collateral (or the proceeds or products
thereof) under Section 363 or 361 of the Bankruptcy Code.

 

21.           Continuing Benefits.  No right of Senior Lender or any present or
future holder of the Senior Loan Obligations, or Junior Lender or any present
or future holder of the Junior Loan Obligations, to enforce the subordination
as provided herein shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of Borrower or any other party, whether
borrower, guarantor or otherwise, or by any noncompliance by Borrower or any
borrower, guarantor or otherwise with the terms of the Senior Note or Junior
Note, as applicable, or any other of the Senior Loan Documents or any other of
the Junior Loan Documents, as applicable, regardless of any knowledge thereof
which such holder may have or be otherwise charged with.

 

22.           No Waiver; Modification.  Except as otherwise expressly provided in
this Agreement, neither this Agreement nor the transactions herein contemplated
shall operate to waive the enforcement after the date hereof of any due on
sale, due on encumbrance or accelerating transfer provision contained in the
Senior Loan Documents, Junior Loan Documents or the Subordinate Loan Documents.  No delay on the part of Senior Lender, Junior
Lender or Subordinate Lender in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by Senior
Lender, Junior Lender or Subordinate Lender of any right or remedy shall
preclude other or further exercise thereof or the exercise of any right or
remedy; nor shall any modification or waiver of any of the provisions of this
Agreement be binding upon Senior Lender, Junior Lender or Subordinate Lender
except as expressly set forth in a writing duly signed and delivered by or on
behalf of Senior Lender, Junior Lender or Subordinate Lender.  This Agreement may be executed in any number
of counterparts.

 

40

 

23.           Reinstatement of Agreement.  The provisions of this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Loan Obligations, Junior Loan Obligations or
the Subordinate Loan Obligations is invalidated, declared to be fraudulent or
preferential, set aside, rescinded or must otherwise be returned by Senior
Lender, Junior Lender or Subordinate Lender, as the case may be, under any
bankruptcy law, state or federal law, common law or equitable cause, all as
though such payment had not been made.

 

24.           Borrower’s Waiver.  The Borrower hereby waives (a) notice of
acceptance of this Agreement by Senior Lender, Junior Lender and Subordinate
Lender, (b) notice of the existence or creation or nonpayment of all or
any of the Senior Loan Obligations, Junior Loan Obligations and the Subordinate
Loan Obligations, and (c) all diligence in the collection or protection of
or realization upon the Senior Loan Obligations or the collateral therefor, the
Junior Loan Obligations or the collateral therefor or the Subordinate Loan
Obligations or the collateral therefor.

 

25.           Legend.

 

(a)           Subordinate
Lender agrees to (i) execute a Memorandum of Intercreditor Agreement in
respect of this Agreement and (ii) cause appropriate entries in the books
and records of Subordinate Lender to indicate that the Subordinate Loan
Obligations are subject to, first, the Senior Loan Obligations and, second,
Junior Loan Obligations.

 

(b)           Junior Lender
agrees to (i) execute a Memorandum of Intercreditor Agreement in respect
of this Agreement and (ii) cause appropriate entries in the books and
records of Junior Lender to indicate that the Junior Loan Obligations are
subject to the Senior Loan Obligations.

 

26.           Notices.  Any notice which a party is required or may
desire to give the other shall be in writing and may be sent by facsimile,
personal delivery or by mail (either (i) by United States registered or
certified mail, return receipt requested, postage prepaid, or (ii) by
Federal Express or similar generally recognized overnight carrier regularly
providing proof of delivery), addressed as follows (subject to the right of a
party to designate a different address for itself by notice similarly given at
least fifteen (15) days in advance):

 

	
   

  	
  If to Subordinate Lender:

  
	
   

  	
   

  
	
   

  	
  Lend Lease (US) Capital
  Inc.

  
	
   

  	
  700 Lanidex Plaza

  
	
   

  	
  Parsippany, NJ 07054

  
	
   

  	
  Attention: President

  
	
   

  	
  Telecopy: (973) 503-5730

  

 

41

 

	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Lend Lease (US) Capital
  Inc.

  
	
   

  	
  Three Coliseum Centre

  
	
   

  	
  2550 West Tyvola Road

  
	
   

  	
  Suite 600

  
	
   

  	
  Charlotte, North Carolina
  28217

  
	
   

  	
  Attention: Treasurer

  
	
   

  	
  Telecopy:
  (704) 357-2854

  
	
   

  	
   

  
	
   

  	
  and to:

  
	
   

  	
   

  
	
   

  	
  Lend Lease (US) Capital
  Inc.

  
	
   

  	
  700 Lanidex Plaza

  
	
   

  	
  Parsippany, New Jersey
  07054

  
	
   

  	
  Attention: Secretary

  
	
   

  	
  Telecopy: (973) 503-5730

  
	
   

  	
   

  
	
   

  	
  and to:

  
	
   

  	
   

  
	
   

  	
  Perkins Coie LLP

  
	
   

  	
  1201 Third Avenue,
  Suite 4800

  
	
   

  	
  Seattle, WA 98101

  
	
   

  	
  Attention:

  	
  Arthur Kolios

  
	
   

  	
   

  	
  and James Cowan

  
	
   

  	
  Telecopy:

  	
  (206) 359-9222 and

  
	
   

  	
   

  	
  (503) 346-2065

  
	
   

  	
   

  
	
   

  	
  If to Junior Lender:

  
	
   

  	
   

  
	
   

  	
  Behringer Harvard
  PAL I, LLC

  
	
   

  	
  15601 Dallas Parkway,
  Suite 600

  
	
   

  	
  Dallas, TX 75001

  
	
   

  	
  Attention: Andrew Bruce

  
	
   

  	
  Telecopy: (214) 655-1610

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Behringer Harvard
  PAL I, LLC

  
	
   

  	
  15601 Dallas Parkway,
  Suite 600

  
	
   

  	
  Dallas, TX 75001

  
	
   

  	
  Attention: Chief Legal
  Officer

  
	
   

  	
  Telecopy: (214) 655-1610

  

 

42

 

	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  Powell Coleman &
  Arnold, LLP

  
	
   

  	
  8080 North Central
  Expressway

  
	
   

  	
  Suite 1380

  
	
   

  	
  Dallas, TX 75206

  
	
   

  	
  Attention: Patrick M.
  Arnold

  
	
   

  	
  Telecopy: (214) 373-8768

  
	
   

  	
   

  
	
  If to Senior Lender:

  
	
   

  	
   

  
	
   

  	
  Bank of America, N.A.

  
	
   

  	
  901 Main Street, 20th Floor

  
	
   

  	
  Dallas, TX 75202

  
	
   

  	
  Attention:
  Mr. Jamison L. Fox

  
	
   

  	
  Telecopy:
  (214) 209-2090

  
	
   

  	
   

  
	
   

  	
  If to Borrower:

  
	
   

  	
   

  
	
   

  	
  Rest Easy LLC

  
	
   

  	
  c/o Actus Lend Lease LLC

  
	
   

  	
  1801 West End Avenue

  
	
   

  	
  Suite 1700

  
	
   

  	
  Nashville, TN 37203

  
	
   

  	
  Attention: President

  
	
   

  	
  Telecopy: (615) 963-2686

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Rest Easy LLC

  
	
   

  	
  c/o Actus Lend Lease LLC

  
	
   

  	
  700 Lanidex Plaza

  
	
   

  	
  Parsippany, NJ 07054

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Telecopy: (973) 503-5730

  
	
   

  	
   

  
	
   

  	
  Lowenstein
  Sandler PC

  
	
   

  	
  65
  Livingston Avenue

  
	
   

  	
  Roseland,
  NJ 07068

  
	
   

  	
  Attention:
  Edward J. Hunter, Esq.

  
	
   

  	
  Telecopy:
  (973) 597-2590

  

 

27.           Priority.  The priorities herein specified are
applicable irrespective of the time of creation of the Senior Loan Obligations,
Junior Loan Obligations or the Subordinate Loan Obligations.

 

43

 

28.           Further Assurances.  So long as the Senior Loan Obligations,
Junior Loan Obligations and the Subordinate Loan Obligations remain
outstanding, either party shall execute, acknowledge, and deliver upon the
demand of the other party, at any time or times, any and all further documents
or instruments in recordable form for the purpose of further confirming the
subordination and the agreements herein set forth.

 

29.           Estoppel Certificate.  Each of Senior Lender, Junior Lender and
Subordinate Lender hereby agrees that within ten (10) days after written
demand of the other party, it shall execute, acknowledge and deliver a
certification setting forth the total amount of indebtedness owed to it under
the Senior Loan Documents, Junior Loan Documents or the Subordinate Loan
Documents, as the case may be, and such other certifications as may be
reasonably requested by the other party. 
Notwithstanding the foregoing, none of Senior Lender, Junior Lender or
Subordinate Lender shall be obligated to give such certification more
frequently than once every other calendar month.

 

30.           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE CONFLICT-OF-LAWS PRINCIPLES THEREOF).  IT IS THE INTENT AND PURPOSE OF THE PARTIES
HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS AGREEMENT.  Notwithstanding anything to the contrary
provided in the foregoing, it is acknowledged and agreed that as to matters
which relate to the creation, perfection and enforcement of security interests
created under the Senior Loan Documents, Junior Loan Documents and Subordinate
Loan Documents, the same shall be construed in accordance with the laws of the
State in which the applicable Collateral shall be located or, as to accounts
constituting Collateral, the jurisdiction designated in the applicable security
documentation governing such accounts as Collateral.

 

31.           Forum.  ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS
LOCATED IN THE STATE AND COUNTY OF NEW YORK AND EACH PARTY TO THIS AGREEMENT
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING.  THE
PARTIES HERETO EACH HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH THEY MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM OR LACKS
JURISDICTION OVER SUCH PARTY.  IT IS THE
INTENT AND PURPOSE OF THE PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1402
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO
THIS AGREEMENT.

 

44

 

32.           Waiver Of Jury Trial.  SENIOR LENDER, JUNIOR LENDER AND SUBORDINATE
LENDER WAIVE TRIAL BY JURY IN RESPECT OF ANY CLAIM, COUNTERCLAIM, ACTION OR
CAUSE OF ACTION RELATING TO OR ARISING OUT OF THIS AGREEMENT.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY SENIOR LENDER, JUNIOR LENDER AND SUBORDINATE LENDER AND
SENIOR LENDER, JUNIOR LENDER AND SUBORDINATE LENDER HEREBY REPRESENT THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.  SENIOR LENDER, JUNIOR LENDER AND SUBORDINATE
LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION 32
IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL.  EACH OF SENIOR LENDER, JUNIOR LENDER AND
SUBORDINATE LENDER FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED
IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY
INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

 

33.           Senior Lender Rights.  Notwithstanding anything to the contrary
herein, if at any time all obligations owed to the Senior Lender under the
Senior Loan Documents and the Project Documents, as defined in the Senior Loan
Agreement, have been paid in full, the rights and obligations of the Senior
Lender hereunder shall no longer be in effect. 
However, notwithstanding the preceding sentence, to the extent that
Senior Lender has any consent, approval, participation or similar rights or
rights to receive notices, reports or other information under the Project
Documents, at such time as all obligations owed to the Senior Lender under the
Senior Loan Documents and the Project Documents have been paid in full, all
such rights shall be deemed assigned to Junior Lender, unless Junior Lender
rejects such assignment (which it hereby reserves the right to do) in a written
instrument executed by Junior Lender.

 

34.           Junior Lender Rights.  Notwithstanding anything to the contrary
herein, if at any time all obligations owed to the Junior Lender under the
Junior Loan Documents and the Project Documents, as defined in the Junior Loan
Agreement, have been paid in full, the rights and obligations of the Junior
Lender hereunder shall no longer be in effect. 
However, notwithstanding the preceding sentence, to the extent that
Junior Lender has any consent, approval, participation or similar rights or
rights to receive notices, reports or other information under the Project
Documents (including, without limitation, rights of the Senior Lender to which
the Junior Lender has succeeded pursuant to Section 33), at such
time as all obligations owed to the Junior Lender under the Junior Loan
Documents and the Project Documents have been paid in full, all such rights
(including, without limitation, rights of the Senior Lender to which the Junior
Lender has succeeded pursuant to Section 33) shall be deemed
assigned to Subordinate Lender, unless Subordinate Lender rejects such
assignment (which it hereby reserves the right to do) in a written instrument
executed by Subordinate Lender.

 

45

 

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

 

 

	
   

  	
  SENIOR LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA,
  N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jamison Fox

  
	
   

  	
   

  	
  Jamison Fox

  
	
   

  	
   

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JUNIOR LENDER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD
  PAL I, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
  Executive Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBORDINATE LENDER:

  
	
   

  	
   

  
	
   

  	
  LEND LEASE (US)
  CAPITAL INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward R. Cook

  
	
   

  	
   

  	
  Edward R. Cook

  
	
   

  	
   

  	
  Vice President

  

 

46

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