FHA FORM NO. 4165-D (CORPORATE)
Rev. November 1974
                                                                                                                    
EXHIBIT 10.6

 
MORTGAGE NOTE
 
 
     
$31,800,400.00
 
 
 
Columbus, Ohio
 
 
 
 
 
as of July 27, 2010

FOR VALUE RECEIVED, the undersigned, HILLIARD GRAND APARTMENTS, LLC, an Ohio
limited liability company, promise(s) to pay to Red Mortgage Capital, LLC, a
limited liability company, of the State of Delaware , or order, at its principal
place of business at Two Miranova Place, 12th Floor, Columbus, Ohio 43215, or at
such other place as may be designated in writing by the holder of this Note, the
principal sum of Thirty-One Million Eight Hundred Thousand Four Hundred and
No/100 Dollars ($31,800,400.00), with interest from date at the rate of five and
59/100ths per centum (5.59%) per annum on the unpaid balance until paid. The
said principal and interest shall be payable in monthly installments as follows:
Commencing on the first day of August, 2010 and continuing on the first day of
each month thereafter up to and including August 1, 2012, interest on the
outstanding principal balance. Commencing on the first day of September, 2012,
monthly installments of interest and principal shall be paid in the sum of One
Hundred Sixty-Five Thousand Nine Hundred Sixty-Eight and 81/100 Dollars
($165,968.81) each, such payments to continue monthly thereafter on the first
day of each succeeding month until the entire indebtedness has been paid. In any
event, the balance of the principal, if any remaining unpaid, plus accrued
interest shall be due and payable on August 1, 2052. The installments of
interest and principal shall be applied first to interest at the rate of five
and 59/100ths percent (5.59%) per annum upon the principal sum or so much
thereof as shall from time to time remain unpaid and the balance thereof shall
be applied on account of principal.
See Rider to Mortgage Note attached hereto and incorporated by reference herein.
This Note is secured by Mortgage upon real estate in the City of Hilliard,
Franklin County, Ohio, and is to be construed according to the laws of the State
of Ohio.
If default be made in the payment of any installment under this Note, and if
such default is not made good prior to the due date on the next such
installment, the entire principal sum and accrued interest shall at once become
due and payable without notice, at the option of the holder of this Note.
Failure to exercise this option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default. In the event of
default in the payment of this Note, and if the same is collected by an attorney
at law, the undersigned hereby agree(s) to pay all costs of collection,
including a reasonable attorney's fee.

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RIDER TO MORTGAGE NOTE
This Rider to Mortgage Note (this "Rider") is attached to and made a part of the
Mortgage Note (the "Note") from HILLIARD GRAND APARTMENTS, LLC, an Ohio limited
liability company (the "Maker"), to RED MORTGAGE CAPITAL, LLC, a Delaware
limited liability company, dated as of July 27, 2010.
1. Prepayment. (a) Except as hereinafter set forth, Maker shall not have the
right to prepay the indebtedness evidenced hereby in whole or in part at any
time. Maker shall have the right, on or after August 31, 2015, (the "Lockout
Termination Date") to prepay the indebtedness evidenced hereby in whole or in
part on the last business day of any calendar month on or after such date during
the term hereof upon at least thirty (30) days prior written notice to the
holder of this Note, which notice shall specify the date on which the prepayment
is to be made, the principal amount of such prepayment and the total amount to
be paid. In the event of any prepayment of principal at any time on or after the
Lockout Termination Date, the Maker shall concurrently pay to the holder of this
Note (i) interest on the amount prepaid through and including the last day of
the month in which the prepayment is made and (ii) a prepayment premium equal to
the following designated percentages of the amount of the principal of this Note
to be so prepaid with respect to any prepayment which occurs during the
following indicated time periods:

from August 31, 2015 through August 30, 2016
7.0%
from August 31, 2016 through August 30,2017
6.0%
from August 31,2017 through August 30, 2018
5.0%
from August 31, 2018 through August 30, 2019
4.0%
from August 31, 2019 through August 30, 2020
3.0%
from August 31,2020 through August 30, 2021
2.0%
from August 31,2021 through August 30,2022
1.0%
from August 31, 2022 and thereafter
0.0%

Notwithstanding any partial prepayment of principal made pursuant to the
privilege of prepayment set forth in this Note, without the prior written
consent of the holder of this Note (which consent such holder shall have no
obligation to give), the Maker shall not be relieved of its obligations to make
scheduled monthly installments of principal and interest as and when such
payments are due and payable under this Note.
(b) Notwithstanding any prepayment prohibition imposed and/or premium required
by this Note with respect to prepayments made prior to August 31, 2021, the
indebtedness evidenced by this Note may be prepaid in whole or in part: on the
last business day of any calendar month without the consent of the holder of
this Note and without prepayment premium if the Federal Housing Commissioner
(the "Commissioner") determines that prepayment will avoid a mortgage insurance
claim and is therefore in the best interests of the Federal Government. The
holder of this Note understands that the Commissioner would consider exercising
its right to override the prepayment prohibition and/or prepayment premium
contained herein only upon satisfaction of all of the following terms and
conditions:

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(i) Maker has defaulted under this .Note and the Commissioner has received
notice of such default, as required by 24 C.F.R. §207.256;
(ii) The Commissioner determines that the project financed with the proceeds of
this Note has been experiencing a net income deficiency, which has not been
caused solely by management inadequacy or lack of interest by Maker, and which
is of such magnitude that Maker is currently unable to make required debt
service payments, pay all project operating expenses and fund all required HUD
reserves;
(iii) The Commissioner finds there is reasonable likelihood that Maker can
arrange to refinance the loan evidenced by this Note at a lower interest rate or
otherwise reduce the debt service payments through partial prepayment; and
(iv) The Commissioner determines that refinancing the loan evidenced by this
Note at a lower rate or partial prepayment is necessary to restore the said
project to a financially viable condition and to avoid an insurance claim.
In addition, the Maker shall not be charged any prepayment premium in connection
with the partial prepayment of the Loan required by the Commissioner in
connection with the partial release of mortgage resulting from the dedication of
a portion of the mortgaged premises to the City of Hilliard for a public
thoroughfare.
(c) Notwithstanding the provisions of Paragraph lea) above, the provisions of
Paragraph l(a) shall not apply, and no prepayment premium shall be collected by
the holder of this Note, with respect to any prepayment which is made by or on
behalf of the Maker from insurance proceeds as a result of damage to the
mortgaged premises or condemnation awards which, at the option of the holder of
this Note, may be applied to reduce the indebtedness of Maker evidenced hereby
pursuant to the terms and provisions of the Open-End Mortgage Deed (the
"Mortgage") of even date given by Maker to the holder of this Note to secure
said indebtedness. Any prepayment made pursuant to this Paragraph 1 (c) shall be
deemed to have been made on the last day of the month in which such payment is
received by holder and shall include interest on the amount prepaid through and
including the last day of the month in which the prepayment is made.
(d) Notwithstanding the provisions of Paragraph l(a) above, the provisions of
Paragraph lea) shall not apply, and no prepayment premium shall be collected by
the holder of this Note, in the event that the maximum principal amount of this
Note is reduced (or a partial prepayment is made) solely as the result of a
mortgage reduction (or a partial prepayment) required by the Commissioner based
upon any cost certification or other report required to be provided by the Maker
to the Commissioner subsequent to the date hereof. Any prepayment made pursuant
to this Paragraph 1(d) shall be deemed to have been made on the last day of the
month in which such payment is received by holder and shall include interest on
the amount prepaid through and including the last day of the month in which the
prepayment is made.

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2. Late Charges. In the event any installment or part of any installment due
under this Note becomes delinquent for more than fifteen (15) days, there shall
be due, at the option of the holder of this Note, in addition to other sums due
hereunder, a late charge in an amount equal to two percent (2%) of the amount of
principal and/or interest so delinquent. Whenever, under the law of the
jurisdiction where the property is located, the amount of any such late charge
is considered to be additional interest, this provision shall not be effective
if the rate of interest specified in this Note, together with the amount of the
late charge, would aggregate an amount in excess of the maximum rate of interest
permitted and would constitute usury.
3. Method of Payment. All payments to reduce the principal balance hereunder,
other than regularly scheduled payments of principal, and all late charges and
other amounts required to be paid hereunder, other than regularly scheduled
installments of interest, shall be made to the holder of this Note in
immediately available Federal Funds. Payments received after 12:00 noon Eastern
time will be deemed to have been received on the next following business day.
4. Non-Recourse. Notwithstanding any other provision contained in this Note or
the Mortgage to the contrary, it is agreed that the execution of this Note shall
impose no personal liability on the Maker hereof for payment of the indebtedness
evidenced hereby and in the event of a default, the holder of this Note shall
look solely to the property described in the Mortgage and/or any security
agreement and to the rents, issues and profits thereof in satisfaction of the
indebtedness evidenced hereby and will not seek or obtain any deficiency or
personal judgment against the Maker hereof except such judgment or decree as may
be necessary to foreclose and bar its interest in the property described in the
Mortgage and all other property mortgaged, pledged, conveyed or assigned to
secure payment of this Note except as set out in the Mortgage.

IN WITNESS WHEREOF, the undersigned Maker has executed this Rider as of the date
first above written.
MAKER:
HILLIARD GRAND APARTMENTS, LLC,
an Ohio limited liability company
    
By:
/s/ Gary L. Schottenstein
 
Gary L. Schottenstein, Managing Member