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VARIABLE FACILITY NOTE
(3-Month LIBOR Index Structured ARM)
 

  US  $152,362,500.00  
January 3, 2012

 
FOR VALUE RECEIVED, the undersigned (individually and collectively, “Borrower”)
jointly and severally (if more than one) promises to pay to the order of PNC
BANK, NATIONAL ASSOCIATION (“Lender”), the principal sum of ONE HUNDRED
FIFTY-TWO MILLION THREE HUNDRED SIXTY-TWO THOUSAND FIVE HUNDRED AND NO/100
DOLLARS (US $152,362,500.00), with interest on the unpaid principal balance from
the Effective Date until fully paid at the rates applicable from time to time
set forth in this Variable Facility Note (“Note”).
 
This Note is executed and delivered by Borrower pursuant to that certain Second
Amended and Restated Master Credit Facility Agreement, dated as of July 27,
2011, by and among Borrower, Lender and Fannie Mae (as amended, restated or
otherwise modified from time to time, the “Master Agreement”), to evidence the
obligation of Borrower to repay a Variable Advance made by Lender to Borrower in
accordance with the terms of the Master Agreement.  This Note is entitled to the
benefit and security of the Loan Documents provided for in the Master Agreement,
to which reference is hereby made for a statement of all of the terms and
conditions under which the Variable Advance evidenced hereby is made.
 
1.    Defined Terms.  In addition to defined terms found elsewhere in this Note,
as used in this Note, the following definitions shall apply:
 
Adjustable Rate.  The Initial Adjustable Rate shall be 2.414% per annum until
the first Rate Change Date.  From and after each Rate Change Date until the next
Rate Change Date, the Adjustable Rate shall be the sum of (a) the Current Index,
and (b) the Margin, which sum is then rounded to three decimal places, subject
to the limitations that the Adjustable Rate shall not be less than the Margin.
 
Advance:  The advance evidenced by this Note.
 
Amortization Period:  Three hundred sixty (360) months.
 
Business Day: Any day other than a Saturday, Sunday or any other day on which
Lender is not open for business.
 
Current Index:  The published Index that is effective on the Business Day
immediately preceding the applicable Rate Change Date.
 
Default Rate:  A rate equal to the lesser of four (4) percentage points above
the then-applicable Adjustable Rate or the maximum interest rate which may be
collected from Borrower under applicable law.
 
Effective Date:  The date of this Note.
 
First Interest Only Payment Date: The first day of February, 2012.
 
 
 

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First Principal and Interest Payment Date:  The first day of June, 2014.
 
Indebtedness:  The principal of, interest on, or any other amounts due at any
time under, this Note, the Security Instrument or any other Loan Document,
including prepayment premiums, late charges, default interest, and advances to
protect the security of the Security Instrument under Section 12 of the Security
Instrument.
 
Index:  The British Bankers Association fixing of the London Inter-Bank Offered
Rate for 3-month U.S. Dollar-denominated deposits as reported by Reuters through
electronic transmission.  If the Index is no longer available, or is no longer
posted through electronic transmission, Lender will choose a new index that is
based upon comparable information and provide notice thereof to Borrower.
 
Initial Adjustable Rate:  2.414% per annum until the first Rate Change Date.
 
Last Interest Only Payment Date:  The first day of May, 2014.
 
Lender:  The holder of this Note.
 
Loan Year:  The period beginning on the Effective Date and ending on the day
before the fourth Rate Change Date and each successive twelve- (12) month period
thereafter.
 
Margin: 1.87%, which amount includes the Variable Facility Fee.
 
Master Agreement:  The Second Amended and Restated Master Credit Facility
Agreement dated as of July 27, 2011, and executed by (or joined into by) and
among Borrower and Lender, as the same may be amended, modified or supplemented
from time to time.
 
Maturity Date: The first day of May, 2023, or any earlier date on which the
unpaid principal balance of this Note becomes due and payable by acceleration or
otherwise.
 
Payment Change Date:  The first day of each month following the First Interest
Only Payment Date until this Note is repaid in full.
 
Prepayment Lockout Period:  That period of time as may be stated in Schedule A
attached hereto, if any.
 
Prepayment Premium Term:  The period beginning on the Effective Date and ending
on the last calendar day of the fourth (4th) month prior to the month in which
the Maturity Date occurs.
 
Rate Change Date:  The first day of the month which is the second month
following the First Interest Only Payment Date and the first day of every third
month thereafter until this Note is repaid in full.
 
 
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Security Instrument:  Individually and collectively, various multifamily
mortgages, deeds to secure debt or deeds of trust described in the Master
Agreement.
 
Servicing Payment Date:  Two (2) Business Days prior to the date each monthly
payment is due under this Note.
 
Variable Facility Fee:  Has the meaning set forth in the Master Agreement.
 
Event of Default and other capitalized terms used but not defined in this Note
shall have the meanings given to such terms in the Master Agreement or, if not
defined in the Master Agreement, as defined in the Security Instrument.
 
2. Address for Payment.  All payments due under this Note shall be payable at
PNC Bank, National Association, 26901 Agoura Road, Suite 200, Calabasas Hills,
California 91301, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
 
3. Payment of Principal and Interest.  This Note will accrue interest on the
outstanding principal balance at the Adjustable Rate.  Principal and interest
shall be paid as follows:
 
(a) Short Month Interest.  If disbursement of principal is made by Lender to
Borrower on any day other than the first day of the month, interest for the
period beginning on the Effective Date and ending on and including the last day
of the month in which such disbursement is made shall be payable simultaneously
with the execution of this Note.  Notwithstanding the foregoing, for the
purposes of this Note, January 3, 2012 (as the first Business Day of the month)
shall be deemed the first date of the month and no stub interest shall be due
upon the execution of this Note.
 
(b) Interest Accrual.  Interest shall accrue on the unpaid principal balance of
this Note at the Adjustable Rate and shall be computed on an actual/360
basis.  The amount of interest payable each month by Borrower pursuant to
Section 3(d) below will be based on the actual number of calendar days during
such month and shall be calculated by multiplying the unpaid principal balance
of this Note by the applicable Adjustable Rate, dividing the product by three
hundred sixty (360) and multiplying the quotient by the actual number of days
elapsed during the month.  Borrower understands that the amount of interest
payable each month will vary based on the unpaid principal balance of this Note,
the Adjustable Rate and the actual number of calendar days during such month.
 
(c) Adjustable Rate.  The Initial Adjustable Rate shall be in effect until the
first Rate Change Date.  On the first Rate Change Date and each Rate Change Date
thereafter, the Adjustable Rate shall change until the Loan is repaid in
full.  From and after each Rate Change Date until the next Rate Change Date, the
Adjustable Rate shall be the sum of (i) the Current Index, and (ii) the Margin,
which sum is then rounded to three (3) decimal places, subject to the
limitations that the Adjustable Rate shall not be less than the Margin.  Accrued
interest on this Note shall be paid in arrears.
 
 
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(d) Monthly Payments.  Borrower acknowledges and agrees to pay all payments
required each month as set forth below (the “Required Monthly Payments”) due
under this Note to Lender on the Servicing Payment Date even though such
Required Monthly Payments are due on the first day of every month.  Select one
(1) only:
 
 
 o
Amortizing Advance.  If the Advance is an amortizing Advance, consecutive
monthly installments of principal and interest, each in the amount of the
Required Monthly Payment, shall be payable on the First Payment Date and on the
first day of each month thereafter until the entire unpaid principal balance
evidenced by this Note is fully paid.  Any remaining principal and accrued but
unpaid interest, if not sooner paid, shall be due and payable on the Maturity
Date.    The initial Required Monthly Payment shall be
___________________________________ Dollars (US $____________).  Thereafter, on
each Payment Change Date the Required Monthly Payment shall change based on the
then-current unpaid principal balance of this Note, the then-applicable
Adjustable Rate and the actual number of calendar days during the applicable
month, and shall be in an amount equal to the sum of (i) a principal payment
equal to  ____________________________________ Dollars (US $_____________) plus
(ii) an interest payment calculated utilizing the accrual method stated in
Section 3(b) above.

 
 
 x
Partial Interest Only Advance.  If the Advance is a partial interest only
Advance, consecutive monthly installments of interest only, each in the amount
of the Required Monthly Interest Only Payment (defined below), shall be payable
on the First Interest Only Payment Date and on each Payment Change Date until
and including the Last Interest Only Payment Date.  The initial Required Monthly
Interest Only Payment shall be Three Hundred Sixteen Thousand Seven Hundred
Nineteen and 31/100 Dollars (US $316,719.31) (the “Required Monthly Interest
Only Payment”). Thereafter, on each Payment Change Date until and including the
Last Interest Only Payment Date, the Required Monthly Interest Only Payment
shall change based on the then-applicable Adjustable Rate and the actual number
of calendar days during the applicable month.  Commencing on the First Principal
and Interest Payment Date and on each Payment Change Date thereafter,
consecutive monthly installments of principal and interest, each in the amount
of the Required Monthly Principal and Interest Payment (defined below, and
together with the Required Monthly Interest Only Payment, the “Required Monthly
Payment”), shall be payable until the entire unpaid principal balance evidenced
by this Note is fully paid.  Any remaining principal and accrued but unpaid
interest, if not sooner paid, shall be due and payable on the Maturity Date. The
Required Monthly Principal and Interest Payment shall change based on the
then-current unpaid principal balance of this Note, the then-applicable
Adjustable Rate and the actual number of calendar days during the applicable
month, and shall be in an amount equal to the sum of (i) a

 
 
 
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 a principal payment equal to Two Hundred Two Thousand One Hundred Eight and
42/100 Dollars (US $202,108.42) plus (ii) an interest payment calculated
utilizing the accrual method stated in Section 3(b) above (the “Requirement
Monthly Principal and Interest Payment”).

 
 
 
(e) Notice of Change in Required Monthly Payment. Before each Payment Change
Date, Lender shall calculate the Required Monthly Payment due on the next
Payment Change Date and shall notify Borrower (in the manner specified in the
Master Agreement for giving notices) of the Required Monthly Payment next due.
 
(f) Correction to Required Monthly Payment.  If Lender at any time determines,
in its sole but reasonable discretion, that it has miscalculated the amount of
the Required Monthly Payment (whether because of a miscalculation of the
Adjustable Rate or otherwise), then Lender shall give notice to Borrower of the
corrected amount of the Required Monthly Payment (and the corrected Adjustable
Rate, if applicable) and (i) if the corrected amount of the Required Monthly
Payment represents an increase, then Borrower shall, within thirty (30) calendar
days thereafter, pay to Lender any sums that Borrower would have otherwise been
obligated under this Note to pay to Lender had the amount of the Required
Monthly Payment not been miscalculated, or (ii) if the corrected amount of the
Required Monthly Payment represents a decrease thereof and Borrower is not
otherwise in breach or default under any of the terms and provisions of the
Note, the Security Instrument or any other loan document evidencing or securing
the Note, then Borrower shall thereafter be paid the sums that Borrower would
not have otherwise been obligated to pay to Lender had the amount of the
Required Monthly Payment not been miscalculated.
 
(g) Payments Before Due Date.  Any regularly scheduled monthly installment of
interest only (during the interest-only period set forth in Section 3(d) above)
or principal and interest (during the period in which principal and interest is
due as also set forth in Section 3(d) above) that is received by Lender before
the date it is due shall be deemed to have been received on the due date solely
for the purpose of calculating interest due.
 
(h) Accrued Interest.  Any accrued interest remaining past due for thirty (30)
days or more shall be added to and become part of the unpaid principal balance
and shall bear interest at the rate or rates specified in this Note.  Any
reference herein to “accrued interest” shall refer to accrued interest which has
not become part of the unpaid principal balance.  Any amount added to principal
pursuant to the Loan Documents shall bear interest at the applicable rate or
rates specified in this Note and shall be payable with such interest upon demand
by Lender and absent such demand, as provided in this Note for the payment of
principal and interest.
 
4. Application of Payments.  If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender shall apply that payment in the
manner set forth in the Master Agreement.  Borrower agrees that neither Lender’s
acceptance of a payment from Borrower in an amount that is less than all amounts
then due and payable nor Lender’s application of such payment shall constitute
or be deemed to constitute either a waiver of the unpaid amounts or an accord
and satisfaction.
 
 
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5. Security.  The Indebtedness is secured, among other things, by the Security
Instrument, and reference is made to the Security Instrument for other rights of
Lender concerning the collateral for the Indebtedness.
 
6. Acceleration.  If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Section 10, if any, and all other amounts payable under this Note
and any other Loan Document shall at once become due and payable, at the option
of Lender, without any prior notice to Borrower.  Lender may exercise this
option to accelerate regardless of any prior forbearance.
 
7. Late Charge.  MONTHLY PAYMENTS UNDER THIS NOTE ARE DUE ON THE FIRST DAY OF
EACH AND EVERY MONTH UNTIL THIS NOTE IS PAID IN FULL.  BORROWER HEREBY AGREES
THAT SUCH PAYMENTS SHALL BE MADE TO LENDER ON THE SERVICING PAYMENT DATE.  THERE
IS NO “GRACE” PERIOD FOR ANY MONTHLY INSTALLMENTS DUE HEREUNDER. If any monthly
installment due hereunder is not received by Lender on or before the first day
of each month or if any other amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender before
or on the date such amount is due, counting from and including the date such
amount is due, Borrower shall pay to Lender, immediately and without demand by
Lender, a late charge equal to five percent (5%) of such monthly installment or
other amount due.  Borrower acknowledges that its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Advance and that it is extremely difficult and impractical to
determine those additional expenses.  Borrower agrees that the late charge
payable pursuant to this Section represents a fair and reasonable estimate,
taking into account all circumstances existing on the date of this Note, of the
additional expenses Lender will incur by reason of such late payment.  The late
charge is payable in addition to, and not in lieu of, any interest payable at
the Default Rate pursuant to Section 8.
 
8. Default Rate.  So long as any monthly installment or any other payment due
under this Note remains past due for thirty (30) days or more, interest under
this Note shall accrue on the unpaid principal balance from the earlier of the
due date of the first unpaid monthly installment or other payment due, as
applicable, at the Default Rate.  If the unpaid principal balance and all
accrued interest are not paid in full on the Maturity Date, the unpaid principal
balance and all accrued interest shall bear interest from the Maturity Date at
the Default Rate.  Borrower also acknowledges that its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Advance, that, during the time that any monthly installment or
payment under this Note is delinquent for more than thirty (30) days, Lender
will incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender’s ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses.  Borrower also acknowledges that, during the time that any monthly
installment or other payment due under this Note is delinquent for more than
thirty (30) days, Lender’s risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased
risk.  Borrower agrees that the increase in the rate of interest payable under
this Note to the Default Rate represents a fair and reasonable estimate, taking
into account all circumstances existing on the date of this Note, of the
additional
 
 
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costs and expenses Lender will incur by reason of Borrower’s delinquent payment
and the additional compensation Lender is entitled to receive for the increased
risks of nonpayment associated with a delinquent Advance.
 
9. Limits on Personal Liability.  The provisions of Article 15 of the Master
Agreement (entitled “Personal Liability of Borrower”) concerning the
non-recourse nature of the Indebtedness are hereby incorporated into this Note
by this reference to the fullest extent as if the text of such Article were set
forth in its entirety herein.
 
10. Lockout; Voluntary and Involuntary Prepayments.
 
(a) Subject to the terms of the Master Agreement, Borrower may voluntarily
prepay all or a portion of the indebtedness evidenced hereby subject to the
prepayment provisions and any Prepayment Lockout Period described in Schedule A.
 
(b) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
 
(i) At any time after the expiration of the Prepayment Lockout Period, Borrower
may voluntarily prepay all or a portion of the unpaid principal balance of this
Note only on the last calendar day of a calendar month (the “Last Day of the
Month”) and only if Borrower has complied with all of the following:
 
(A) Borrower must give Lender at least thirty (30) days (if given via U.S.
Postal Service) or twenty (20) days (if given via facsimile, email or overnight
courier), but not more than sixty (60) days, prior written notice of Borrower’s
intention to make a prepayment (the “Prepayment Notice”).  The Prepayment Notice
shall be given in writing (via facsimile, email, U.S. Postal Service or
overnight courier) and addressed to Lender.  The Prepayment Notice shall
include, at a minimum, the Business Day upon which Borrower intends to make the
prepayment (the “Intended Prepayment Date”).
 
(B) Borrower acknowledges that Lender is not required to accept any voluntary
prepayment of this Note on any day other than the Last Day of the Month even if
Borrower has given a Prepayment Notice with an Intended Prepayment Date other
than the Last Day of the Month or if the Last Day of the Month is not a Business
Day.  Therefore, even if Lender accepts a voluntary prepayment on any day other
than the Last Day of the Month, for all purposes (including the accrual of
interest and the calculation of the prepayment premium), any prepayment received
by Lender on any day other than the Last Day of the Month shall be deemed to
have been received by Lender on the Last Day of the Month and any prepayment
calculation will include interest to and including the Last Day of the Month in
which such prepayment occurs.  If the Last Day of the Month is not a Business
Day, then Borrower must make the payment on the Business Day immediately
preceding the Last Day of the Month.
 
(C) Any prepayment shall be made by paying (1) the amount of principal being
prepaid, (2) all accrued interest (calculated to the Last Day of the Month),
 
 
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        (3) all other sums due Lender at the time of such prepayment, and (4)
the prepayment premium calculated pursuant to Schedule A.
 
(D) If, for any reason, Borrower fails to prepay this Note within five (5)
Business Days after the Intended Prepayment Date, then Lender shall have the
right, but not the obligation, to recalculate the prepayment premium pursuant to
Schedule A based upon the date that Borrower actually prepays this
Note.  Notwithstanding the foregoing, if the delayed prepayment occurs in a
month other than the month stated in the original Prepayment Notice, then Lender
shall (1) have the right, but not the obligation, to recalculate the prepayment
premium pursuant to Schedule A based upon the date that Borrower actually
prepays this Note and (2) recalculate the amount of interest payable.  In either
instance, for purposes of recalculation, such new prepayment date shall be
deemed the “Intended Prepayment Date.”
 
(ii) After receipt of a partial prepayment, Lender shall re-calculate the
scheduled monthly installment of interest only or principal and interest, as
applicable, for each subsequent monthly installment due hereunder.  The
subsequent principal payments shall be calculated by amortizing the remaining
unpaid principal balance of this Note over the Remaining Amortization Period (as
defined below) utilizing an interest rate equal to 5.50% and the interest
computation basis selected in Section 3(b) above.  As used herein, “Remaining
Amortization Period” shall mean the Amortization Period minus the number of
scheduled monthly payments that have elapsed since the date of this Note
(excluding scheduled monthly payments of interest only, if any).
 
Lender shall notify Borrower of the new required monthly installment (which
shall replace the amount(s) set forth in Section 3(d) above) following receipt
of a partial prepayment and Borrower shall execute any amendment to this Note
requested by Lender to evidence such new required monthly installment(s).
 
(iii) Upon Lender’s exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender under this Note and the other Loan
Documents, and (B) the prepayment premium calculated pursuant to Schedule A.
 
(iv) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
 
(c) Notwithstanding the provisions of Section 10(b), no prepayment premium shall
be payable (i) with respect to any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under any Security
Instrument, (ii) as provided in subparagraph (c) of Schedule A, or (iii) in
connection with a conversion of this Note to a Fixed Facility Note pursuant to
the terms of the Master Agreement.
 
(d) Schedule A is hereby incorporated by reference into this Note.
 
 
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(e) Any prepayment of less than the unpaid principal balance of this Note shall
not extend or postpone the due date of any subsequent monthly installments.
 
(f) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender’s incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender’s ability to meet its
commitments to third parties.  Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such
damages.  Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
 
(g) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Advance evidenced by this
Note, and acknowledges that the terms of this Note are in other respects more
favorable to Borrower as a result of Borrower’s voluntary agreement to the
prepayment premium provisions.
 
11. Costs and Expenses.  Borrower shall pay on demand all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
 
12. Forbearance.  Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy.  The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender’s right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment.  Enforcement by Lender of any
security for Borrower’s obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
 
13. Waivers.  Except as expressly provided in the Master Agreement, presentment,
demand, notice of dishonor, protest, notice of acceleration, notice of intent to
demand or accelerate payment or maturity, presentment for payment, notice of
nonpayment, grace, and diligence in collecting the Indebtedness are waived by
Borrower and all endorsers and guarantors of this Note and all other third party
obligors.
 
14. Advance Charges.  Borrower agrees to pay an effective rate of interest equal
to the sum of the interest rate provided for in this Note and any additional
rate of interest resulting from any other charges of interest or in the nature
of interest paid or to be paid in connection with the Advance evidenced by this
Note and any other fees or amounts to be paid by Borrower pursuant to any of the
other Loan Documents.  Neither this Note nor any of the other Loan
 
 
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Documents shall be construed to create a contract for the use, forbearance or
detention of money requiring payment of interest at a rate greater than the
maximum interest rate permitted to be charged under applicable law.  If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower in connection with the Advance is interpreted so that
any interest or other charge provided for in any Loan Document, whether
considered separately or together with other charges provided for in any other
Loan Document, violates that law, and Borrower is entitled to the benefit of
that law, that interest or charge is hereby reduced to the extent necessary to
eliminate that violation.  The amounts, if any, previously paid to Lender in
excess of the permitted amounts shall be applied by Lender to reduce the unpaid
principal balance of this Note.  For the purpose of determining whether any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower has been violated, all Indebtedness that constitutes
interest, as well as all other charges made in connection with the Indebtedness
that constitute interest, shall be deemed to be allocated and spread ratably
over the stated term of the Note.  Unless otherwise required by applicable law,
such allocation and spreading shall be effected in such a manner that the rate
of interest so computed is uniform throughout the stated term of the Note.
 
15. Commercial Purpose.  Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
 
16. Counting of Days.  Except where otherwise specifically provided, any
reference in this Note to a period of “days” means calendar days, not Business
Days.
 
17. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.  The
provisions of Section 17.06 of the Master Agreement (entitled “Choice of Law;
Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into
this Note by this reference to the fullest extent as if the text of such Section
were set forth in its entirety herein.
 
18. Captions.  The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
 
19. Notices.  All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be given
in accordance with Section 17.08 of the Master Agreement.
 
20. Security for this Note.   The indebtedness evidenced by this Note is secured
by other Security Documents executed by Borrower or its Affiliates.  Reference
is made hereby to the Master Agreement and the Security Documents for additional
rights and remedies of Lender relating to the Indebtedness evidenced by this
Note.  Each Security Document shall be released in accordance with the
provisions of the Master Agreement and the Security Documents.
 
21. Variable Facility.  This Note is issued as part of the Variable Facility
established in accordance with the terms of the Master Agreement.  Borrower may
not re-borrow any amounts under this Note which it has previously borrowed and
repaid under this Note provided that Borrower may preserve Unused Capacity
pursuant to the terms of the Master Agreement.
 
 
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22. Cross-Default with Master Agreement.  The occurrence of an Event of Default
under the Master Agreement shall constitute an “Event of Default” under this
Note, and, accordingly, upon the occurrence of an Event of Default under the
Master Agreement, the entire principal amount outstanding hereunder and accrued
interest thereon shall at once become due and payable, at the option of the
holder hereof.
 
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IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal or
has caused this Note to be signed and delivered under seal by its duly
authorized representative.  Borrower intends that this Note shall be deemed to
be signed and delivered as a sealed instrument.
 
BORROWER:
 
SUN SECURED FINANCING LLC, a Michigan limited liability company
 
 
By:
Sun Communities Operating Limited Partnership, a Michigan limited partnership,
its managing member

 
 
By:
Sun Communities, Inc., a Maryland Corporation, its general partner

 
By:           /s/ Jonathan M. Colman
Name:     Jonathan M. Colman
 
Title:
Executive Vice President

 
ASPEN – FT. COLLINS LIMITED PARTNERSHIP, a Michigan limited partnership
 
 
By:
Sun GP L.L.C., a Michigan limited liability company, its general partner

 
 
By:
Sun Communities, Inc., a Maryland Corporation, its manager

 
By:           /s/ Jonathan M. Colman
Name:      Jonathan M. Colman
 
Title:
Executive Vice President

 
SUN SECURED FINANCING HOUSTON LIMITED PARTNERSHIP, a Michigan limited
partnership
 
 
By:
Sun Secured Financing GP, Inc., a Michigan corporation, its general partner

 
By:           /s/ Jonathan M. Colman
Name:       Jonathan M. Colman
 
Title:
Executive Vice President

 

 
 
S-1

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SUN COMMUNITIES FINANCE, LLC, a Michigan limited liability company
 
 
By:
Sun Communities Operating Limited Partnership, a Michigan limited partnership,
its managing member

 
 
By:
Sun Communities, Inc., a Maryland Corporation, its general partner

 
By:         /s/ Jonathan M. Colman  
Name:     Jonathan M. Colman
 
Title:
Executive Vice President

 
SUN HOLLY FOREST LLC, a Michigan limited liability company
 
 
By:
Sun Communities Operating Limited Partnership, a Michigan limited partnership,
its managing member

 
 
By:
Sun Communities, Inc., a Maryland Corporation, its general partner

 
By:          /s/ Jonathan M. Colman
Name:     Jonathan M. Colman
 
Title:
Executive Vice President

 
SUN SADDLE OAK LLC, a Michigan limited liability company
 
 
By:
Sun Communities Operating Limited Partnership, a Michigan limited partnership,
its managing member

 
 
By:
Sun Communities, Inc., a Maryland Corporation, its general partner

 
By:           /s/ Jonathan M. Colman
Name:     Jonathan M. Colman
 
Title:
Executive Vice President

 

 
 
S-2

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Pay to the order of ________________________________________, without recourse.
 
 
PNC BANK, NATIONAL ASSOCIATION

 
By:           /s/ Tim White              
Name:      Tim White                  
Title:        EVP                             
 

 
 
S-3

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SCHEDULE A
 
PREPAYMENT PREMIUM
 
[1% PREPAYMENT PREMIUM]
 
Notwithstanding Section 10 of this Note, Borrower shall not have the right
voluntarily to prepay any of the principal of this Note before the first
anniversary of the date of this Note (the “Prepayment Lockout Period”).  The
preceding sentence shall not apply to a prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
 
Any prepayment premium payable under Section 10 of this Note shall be computed
as follows:
 
(a)           Borrower shall have no right to make a voluntary prepayment of
this Note, in whole or in part, during the Prepayment Lockout Period.  If,
during the Prepayment Lockout Period, Lender accelerates the unpaid principal
balance of this Note or otherwise applies collateral held by Lender to the
repayment of any portion of the unpaid principal balance as permitted in Section
10(b)(ii) of the Note (if any), the prepayment premium shall be equal to the
following percentage of the amount of principal being prepaid at the time of
such acceleration or application:
 
5.00%
 
(b)           If, during the second Loan Year through the Maturity Date,
Borrower makes a voluntary prepayment of this Note, Lender accelerates the
unpaid principal balance of this Note, or the Lender applies collateral held by
Lender to the repayment of any portion of the unpaid principal balance as
permitted in Section 10(b)(ii) of the Note (if any), the prepayment premium
shall be equal to the following percentage of the amount of principal being
prepaid at the time of such prepayment, acceleration or application:
 
Second Loan Year
    1.00 %
Third Loan Year
    1.00 %
Fourth Loan Year
    1.00 %
Fifth Loan Year through Maturity Date
    1.00 %

 
(c)         Notwithstanding the foregoing or the provisions of Section 10(b) of
this Note, no prepayment premium shall be payable with respect to any prepayment
made on or after the last calendar day of the fourth (4th) month prior to the
month in which the Maturity Date occurs.
 
 
[Initial page follows.]

 
 
A-1

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INITIAL PAGE TO SCHEDULE A

 
TO VARIABLE FACILITY NOTE

 
                           INITIAL(S)
 
                          ______JC________
 
 

 
 
A-2

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