Exhibit 10.3
NOTE
New York, New York
$315,000,000 August 3, 2005
This NOTE, is dated as of August 3, 2005 (this NOTE), by RECKSON COURT
SQUARE, LLC, a Delaware limited liability company (BORROWER), having an office
at c/o Reckson Associates Realty Corp., 225 Broadhollow Road, Melville, New York
11747, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation
(together with its successors and assigns, LENDER), having an office at 60 Wall
Street, New York, New York 10005.
NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount (as defined below) together with interest
from the date hereof and other fees, expenses and charges as provided in this
Note.
1. DEFINED TERMS.
a. Capitalized terms used but not otherwise defined herein shall
have the respective meanings given thereto in the Loan
Agreement (as defined below), unless otherwise expressly
provided herein. All references to sections shall be deemed to
be references to sections of this Note, unless otherwise
indicated.
b. The following terms shall have the meaning ascribed thereto:
ANTICIPATED REPAYMENT DATE shall mean September 1, 2015.
APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
and including the Anticipated Repayment Date, the Initial Interest
Rate, and (ii) from the day after the Anticipated Repayment Date
through and including the Maturity Date, the Revised Interest Rate.
BORROWER shall have the meaning provided in the first paragraph hereof.
DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
Maximum Legal Rate and (b) four percent (4%) above the Applicable
Interest Rate.
DISCOUNT RATE shall mean the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually.
INITIAL INTEREST RATE shall mean a rate of 4.905% per annum.
INITIAL MONTHLY AMOUNT shall have the meaning provided in Section
3(a)(ii).
INTEREST PERIOD shall have the meaning provided in Section 2(b).
LENDER shall have the meaning provided in the first paragraph hereof.
LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
4(d).
LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
date hereof, between Borrower and Lender, as the same may hereafter be
amended or modified.
LOCKOUT PERIOD shall mean the period commencing on the date hereof and
expiring on the earlier date to occur of (i) two (2) years after the
closing of any Securitization or (ii) three (3) years after the first
(1st) day of the calendar month immediately following the calendar
month in which the funding of this Note occurs.
MATURITY DATE shall mean May 1, 2020, or such earlier date on which the
final payment of principal of this Note becomes due and payable as
provided in the Loan Agreement or this Note, whether at such stated
maturity date, by declaration of acceleration, or otherwise.
MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(d).
MONTHLY AMOUNT shall have the meaning provided in Section 3(a)(iii).
NOTE shall have the meaning provided in the first paragraph hereof.
PAYMENT DATE shall be the first (1st) calendar day of each calendar
month, and if such day is not a Business Day, then the Business Day
immediately preceding such day, commencing on October 1, 2005 and
continuing to and including the Maturity Date.
PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).
PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).
PRINCIPAL AMOUNT shall mean Three Hundred and Fifteen Million Dollars
($315,000,000) or so much thereof as may be outstanding under this
Note.
REVISED INTEREST RATE shall mean a rate per annum equal to two hundred
basis points (2.00%) plus the greater of (i) the Initial Interest Rate
and (ii) the Treasury Rate on Anticipated Repayment Date.
REVISED MONTHLY AMOUNT shall have the meaning provided in Section
3(a)(iii).
TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
by linear interpolation (rounded to the nearest one-thousandth of one
percent) of the yields of non-callable United States Treasury
obligations with a term of ten (10) years from such Payment Date (and
converted to a monthly equivalent yield), as determined by Lender on
the basis of Federal Reserve Statistical Release H.15 Selected Interest
Rates under the heading U.S. Governmental Security/Treasury Constant
Maturities or, if such publication is unavailable, such other
recognized source of financial market information as shall be selected
by Lender for the week prior to such Payment Date.
2
YIELD MAINTENANCE PREMIUM shall mean the present value, as of the
Prepayment Date, of the remaining scheduled payments of principal and
interest from the Prepayment Date through the date which is three (3)
months prior to the Anticipated Repayment Date (including any balloon
payment) determined by discounting such payments at the Discount Rate,
less the amount of principal being prepaid.
2. INTEREST.
a. Prior to the Anticipated Repayment Date, interest shall accrue
on the Principal Amount at the Initial Interest Rate. In the
event that Borrower does not repay the Principal Amount in
full on or before the Anticipated Repayment Date, then, from
and after the Anticipated Repayment Date, interest shall
accrue on the Principal Amount at the Revised Interest Rate.
b. Interest on the principal sum of this Note shall be calculated
based on the Applicable Interest Rate and on the basis of a
fraction, the denominator of which shall be 360 and the
numerator of which shall be the actual number of days elapsed
in the relevant Interest Period, except that interest due and
payable for a period less than a full month shall be
calculated by multiplying the actual number of days elapsed in
such period by a daily rate based on said three hundred sixty
(360) day year. Interest shall accrue from, and including, the
first (1st) day of the prior month and ending on the last day
of the prior month (an INTEREST PERIOD); in each case without
adjustment for any Business Day convention; provided that the
first accrual period shall commence on the date hereof.
c. Except as expressly set forth in the Loan Agreement to the
contrary, interest shall accrue on all amounts advanced by
Lender pursuant to the Loan Documents (other than the
Principal Amount, which shall accrue interest in accordance
with clauses a. and b. above) at the Default Rate.
d. The provisions of this Section 2 are subject in all events to
the provisions of Section 2.2.4 of the Loan Agreement.
3. PAYMENTS.
a. Interest under this Note shall be payable as follows:
i. On the date hereof, interest from the date hereof through
and including August 31, 2005 in the amount of $1,244,643.75;
ii. commencing on October 1, 2005 and on each and every
Payment Date thereafter until the Anticipated Repayment Date,
monthly installments of interest payable on this Note in
arrears in an amount (subject to adjustment as provided in
Section 4(f)) equal to interest calculated at the Initial
Interest Rate in accordance with Section 2 (the INITIAL
MONTHLY AMOUNT); and
3
iii. commencing on the Anticipated Repayment Date, monthly
installments of interest payable on this Note in arrears in an
amount (subject to adjustment as provided in Section 4(f))
equal to interest calculated at the Revised Interest Rate in
accordance with Section 2 (the REVISED MONTHLY AMOUNT and,
together with the Initial Monthly Amount, the MONTHLY AMOUNT).
b. No regularly scheduled payments of principal shall be due with
respect to the Loan prior to the Maturity Date. From and after
the Anticipated Repayment Date, unless the Indebtedness has
been repaid in full, Borrower shall continue to make payments
of the Monthly Amount on each Payment Date. From and after the
Anticipated Repayment Date, unless the Indebtedness has been
repaid in full, all Excess Cash Flow shall be applied on each
Payment Date as a partial prepayment of the outstanding
principal Indebtedness, as set forth in Section 3.1.6(a)(ii)
of the Loan Agreement.
c. All payments made by Borrower hereunder or under any of the
Loan Documents shall be made on or before 4:00 P.M. New York
City time. Any payments received after such time shall be
credited to the next following Business Day.
d. All amounts advanced by Lender pursuant to the Loan Documents,
other than the Principal Amount, shall be due and payable as
provided in the Loan Documents. In the event any such advance
is not so repaid by Borrower, Lender may, at its option, first
apply any payments received under this Note to repay such
advances, or other charges with respect to such advances (as
provided in the Loan Documents), together with any interest
thereon, and the balance, if any, shall be applied in payment
of any installment of interest or principal then due and
payable.
e. The entire Principal Amount of this Note, all unpaid accrued
interest, all interest that would accrue on the Principal
Amount through the end of the Interest Period during which the
Maturity Date occurs (to the extent the Maturity Date is not
the first (1st) day of a calendar month) and all other fees
and sums then payable hereunder or under the Loan Documents
(collectively, the MATURITY DATE PAYMENT), shall be due and
payable in full on the Maturity Date.
f. Amounts due on this Note shall be payable, without any
counterclaim, setoff or deduction whatsoever, at the office of
Lender or its agent or designee at the address set forth on
the first page of this Note or at such other place as Lender
or its agent or designee may from time to time designate in
writing.
4
g. All amounts due under this Note, including, without
limitation, interest and the Principal Amount, shall be due
and payable in lawful money of the United States.
h. To the extent that Borrower makes a payment or Lender receives
any payment or proceeds for Borrower's benefit, which are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party
under any bankruptcy law, common law or equitable cause, then,
to such extent, the obligations of Borrower hereunder intended
to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by Lender.
4. PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
hereof, the outstanding Principal Amount may not be prepaid in whole or
in part prior to the Anticipated Repayment Date.
a. VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
prepay, in whole or in part, the Principal Amount due
hereunder prior to the Anticipated Repayment Date; provided,
however, Borrower shall be entitled to make a prepayment of
all of the Principal Amount (A) in each case on any of the
three (3) Payment Dates occurring immediately preceding the
Anticipated Repayment Date (or on any Business Day occurring
in the Interest Period immediately preceding any of such three
(3) Payment Dates or the Anticipated Repayment Date, subject
to Section 4(a)(iii) below) and at any time thereafter,
without any premium or penalty and (B) on any Business Day
where Borrower has notified Lender that Borrower elects to
make a prepayment of the Principal Amount pursuant to Section
2.4.7 of the Loan Agreement, without any premium or penalty.
Any such prepayment shall be conditioned upon satisfaction of
the following:
i. Borrower shall provide prior irrevocable written
notice (the PREPAYMENT NOTICE) to Lender specifying
the proposed date on which the prepayment is to be
made, which date must be on a Business Day and shall
be no earlier than thirty (30) days after the date of
such Prepayment Notice and no later than ninety (90)
days after the date of such Prepayment Notice (the
date of a prepayment pursuant to this Section 4(a) or
Section 4(c) below being the PREPAYMENT DATE);
provided, however, that any such notice delivered
with respect to a prepayment of the Principal Amount
under Section 4(a)(A) above shall be freely revocable
by Borrower on prior written notice to Lender and,
with respect to any prepayment under Section 4(a)
above, Borrower may, from time to time on written
notice to Lender delivered no later than two (2)
Business Days prior to the then scheduled Prepayment
Date, extend such then scheduled Prepayment Date
(provided that in no event shall the aggregate number
of days by which Borrower elects to so extend any
prepayment exceed thirty (30) days);
5
ii. Borrower shall comply with the provisions set forth
in Section 4(d) of this Note; and
iii. In the event that Borrower elects to prepay the Loan
on any Business Day which is not a Payment Date, then
(A) such prepayment shall include interest payable
hereunder calculated through the end of the Interest
Period during which such prepayment is made, (B) such
prepayment shall be deposited into the Collection
Account for application in accordance with Section
3.1 of the Loan Agreement and (C) until the next
occurring Payment Date, Lender shall direct the Cash
Management Bank to invest the amount prepaid in
Permitted Investments in accordance with the Account
Agreement and Borrower shall be entitled to any
interest or earnings thereon.
b. DEFEASANCE. From and after expiration of the Lockout Period
and prior to the Anticipated Repayment Date, Borrower shall
have the right to defease the Loan pursuant to the provisions
of Section 9.1.1 of the Loan Agreement. In no event shall a
prepayment of this Note in accordance with Sections 4(a) or
4(c) trigger or result in any defeasance liability under this
Note or the other Loan Documents.
c. MANDATORY PREPAYMENTS.
i. On the next occurring Payment Date following the date
on which (x) Lender actually receives any Proceeds
(other than business interruption Proceeds or other
Proceeds of a similar nature), if Lender is not
obligated to make such Proceeds available to Borrower
for the restoration of the Property, and (y) in
accordance with Section 6.2.3(a) of the Loan
Agreement, Lender has elected to prepay the Note
using such Proceeds, Lender shall apply such Proceeds
to the Principal Amount in an amount equal to one
hundred percent (100%) of such Proceeds and the same
shall constitute a mandatory prepayment of this Note;
ii. On the Payment Date on which Lender shall apply such
Proceeds to the Principal Amount in accordance with
clause (i) above or any Payment Date thereafter,
Borrower may elect (on prior written notice to
Lender) to prepay the entire remaining balance of the
Principal Amount (without premium or penalty) if such
Proceeds do not equal the entire Principal Amount;
and
6
iii. Borrower shall comply with the provisions set forth
in Section 4(d) of this Note.
d. PAYMENTS IN CONNECTION WITH A PREPAYMENT.
i. On the date on which a prepayment, voluntary or
mandatory, is made under this Note or as required
under the Loan Agreement, Borrower shall pay to
Lender all unpaid interest on the Principal Amount
prepaid, such unpaid interest calculated (even if
such period extends beyond the date of prepayment)
through the end of the Interest Period for which such
prepayment is made.
ii. On the Prepayment Date, Borrower shall pay to Lender
all other sums (not including scheduled interest
payments) then due under the Note, the Loan
Agreement, the Security Instrument, and the other
Loan Documents;
iii. Borrower shall pay all costs and expenses of Lender
incurred in connection with the prepayment (including
without limitation, any costs and expenses associated
with a release of the Lien of the related Security
Instrument as set forth in Section 2.3.3 of the Loan
Agreement as well as reasonable attorneys' fees and
expenses (subject to the limitations set forth in
Section 14.4 of the Loan Agreement)); and
iv. In the event that the Prepayment Date in connection
with an acceleration of the Loan, Borrower shall also
pay to Lender the Yield Maintenance Premium.
e. LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
REPAID DURING THE LOCKOUT PERIOD, INCLUDING, BUT NOT LIMITED
TO, AS A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER
SHALL PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT
AND NOT AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER
SUMS AND FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN
DOCUMENTS, AN AMOUNT EQUAL TO FIVE PERCENT (5%) OF THE
PRINCIPAL AMOUNT BEING REPAID (THE "LIQUIDATED DAMAGES
AMOUNT"). NOTWITHSTANDING THE FOREGOING, THE LIQUIDATED
DAMAGES AMOUNT SHALL NOT BE APPLIED TOWARD ANY PREPAYMENTS OF
PROCEEDS (AS SUCH TERM IS DEFINED IN THE LOAN AGREEMENT) NOR
ANY PREPAYMENT DESCRIBED IN SECTION 4(a)(B) OR 4(c)(ii) ABOVE.
7
f. In the event that any partial mandatory prepayment of
principal occurs before the Anticipated Repayment Date, the
Payment Dates shall remain the same and Lender shall
recalculate the amount of subsequent Monthly Amounts to
reflect the reduction of the Principal Amount. In the event
that any partial mandatory prepayment of principal occurs
after the Anticipated Repayment Date or Excess Cash Flow is
applied to the prepayment of principal after the Anticipated
Repayment Date, the Payment Dates shall remain the same and
Lender shall take into account the reduction of the Monthly
Amount when applying payments against accrued interest and
principal Any Principal Amount prepaid pursuant to this
Section 4 may not be reborrowed hereunder. ---------
5. MISCELLANEOUS.
a. WAIVER. Borrower and all endorsers, sureties and guarantors
hereby jointly and severally waive (to the maximum extent
permitted by law) all applicable exemption rights, valuation
and appraisement, presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice
of protest of this Note, and, except as otherwise expressly
provided in the Loan Documents, all other notices in
connection with the delivery, acceptance, performance, default
or enforcement of the payment of this Note. Borrower and all
endorsers, sureties and guarantors consent to any and all
extensions of time, renewals, waivers or modifications that
may be granted by Lender with respect to the payment or other
provisions of this Note and to the release of the collateral
securing this Note or any part thereof, with or without
substitution, and agree that additional makers, endorsers,
guarantors or sureties may become parties hereto without
notice to them or affecting their liability under this Note.
b. NON-RECOURSE. Recourse to the Borrower with respect to any
claims arising under or in connection with this Note shall be
limited to the extent provided in Section 18 of the Loan
Agreement and the terms, covenants and conditions of Section
18 of the Loan Agreement are hereby incorporated by reference
as if fully set forth in this Note.
c. NOTE SECURED. This Note and all obligations of Borrower
hereunder are secured by the Loan Agreement, the Security
Instrument and the other Loan Documents.
d. NOTICES. Any notice, election, request or demand which by any
provision of this Note is required or permitted to be given or
served hereunder shall be given or served in the manner
required for the delivery of notices pursuant to the Loan
Agreement.
e. ENTIRE AGREEMENT. This Note, together with the other Loan
Documents, constitutes the entire and final agreement between
Borrower and Lender with respect to the subject matter hereof
and thereof and may only be changed, amended, modified or
waived by an instrument in writing signed by Borrower and
Lender.
8
f. NO WAIVER. No waiver of any term or condition of this Note,
whether by delay, omission or otherwise, shall be effective
unless in writing and signed by the party sought to be
charged, and then such waiver shall be effective only in the
specific instance and for the purpose for which given. No
notice to, or demand on, Borrower shall entitle Borrower to
any other or future notice or demand in the same, similar or
other circumstances.
f. SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
inure to the benefit of Borrower and Lender and their
respective successors and permitted assigns. Upon any
endorsement, assignment, or other transfer of this Note by
Lender or by operation of law, the term "Lender" as used
herein, shall mean such endorsee, assignee, or other
transferee or successor to Lender then becoming the holder of
this Note. The term "Borrower" as used herein shall include
the respective successors and assigns, legal and personal
representatives, executors, administrators, devisees, legatees
and heirs of Borrower, if any.
h. CAPTIONS. All paragraph, section, exhibit and schedule
headings and captions herein are used for reference only and
in no way limit or describe the scope or intent of, or in any
way affect, this Note.
i. COUNTERPARTS. This Note may be executed in counterparts, each
of which shall be an original and all of which, when taken
together, shall constitute one binding Note.
j. SEVERABILITY. The provisions of this Note are severable, and
if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part, then such invalidity or
unenforceability shall affect only such clause or provision,
or part thereof, and not any other clause or provision of this
Note.
k. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT,
AT LENDER'S OPTION, ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN IN NEW
YORK COUNTY OR QUEENS COUNTY AND CONSENT TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON BORROWER IN THE MANNER AND AT THE
ADDRESS SPECIFIED FOR NOTICES IN THE LOAN AGREEMENT. BORROWER
HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT BROUGHT IN SUCH LOCATION BEFORE
ANY SUCH COURT OR THAT SUCH SUIT BEFORE SUCH COURT IS BROUGHT
IN AN INCONVENIENT COURT.
9
l. JURY TRIAL WAIVER. BORROWER AND ALL PERSONS CLAIMING BY,
THROUGH OR UNDER IT HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS NOTE, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR
FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS NOW OR HEREAFTER
MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO
THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. BORROWER
ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL
REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT
THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.
m. COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
unconditionally waives, in connection with any suit, action or
proceeding brought by Lender on this Note, any and every right
it may have to (i) interpose any counterclaim therein (other
than a counterclaim which can only be asserted in the suit,
action or proceeding brought by Lender on this Note and cannot
be maintained in a separate action) and (ii) have any such
suit, action or proceeding consolidated with any other or
separate suit, action or proceeding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
10
NOTE
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and delivered
as of the day and year first above written.
BORROWER:
RECKSON COURT SQUARE, LLC, a Delaware limited
liability company
By: One Court Square Holdings LLC, a Delaware
limited liability company, its sole member
By: Reckson Operating Partnership, L.P., a Delaware
limited partnership, its sole member
By: Reckson Associates Realty Corp., a Maryland
corporation, its general partner
By: ____________________________________
Name:
Title: