Exhibit 10.8

 

Freddie Mac Loan Number: 708060749

Property Name: Village Green of Ann Arbor

 

MULTIFAMILY NOTE

(CME)

 

MULTISTATE - FIXED RATE

DEFEASANCE

 

(Revised 2-2-2012)

 

US $43,200,000.00 Effective Date: as of September 12, 2012

 

FOR VALUE RECEIVED, VILLAGE GREEN OF ANN ARBOR ASSOCIATES, LLC, a Michigan
limited liability Company (together with such party’s or parties’ successors and
assigns, “Borrower” jointly and severally (if more than one) promises to pay to
the order of KEYCORP REAL ESTATE CAPITAL MARKETS, INC., an Ohio corporation, the
principal sum of $43,200,000.00, with interest on the unpaid principal balance,
as hereinafter provided.

 

1.            Defined Terms.

 

(a)           As used in this Note:

 

"Base Recourse" means a portion of the Indebtedness equal to 0% of the original
principal balance of this Note.

 

"Business Day" means any day other than a Saturday, a Sunday or any other day on
which Lender or the national banking associations are not open for business.

 

"Cut-off Date" means the 12th Installment Due Date.

 

"Defeasance Date" means the 2nd anniversary of the "startup date" of the last
REMIC within the meaning of Section 860G(a)(9) of the Tax Code which holds all
or any portion of the Loan.

 

"Default Rate" means an annual interest rate equal to 4 percentage points above
the Fixed Interest Rate. However, at no time will the Default Rate exceed the
Maximum Interest Rate.

 

"Defeasance Period" is the period beginning the day after the Defeasance Date
until but not including the first day of the Window Period. The Defeasance
Period only applies if this Note is assigned to a REMIC trust prior to the
Cut-off Date.

 

"Fixed Interest Rate" means the annual interest rate of 3.92%.

 

 

 

 

"Installment Due Date" means, for any monthly installment of interest-only or
principal and interest, the date on which such monthly installment is due and
payable pursuant to Section 3 of this Note. The "First Installment Due Date"
under this Note is November 1, 2012.

 

"Lender" means the holder from time to time of this Note.

 

"Loan" means the loan evidenced by this Note.

 

"Loan Agreement" means the Multifamily Loan and Security Agreement entered into
by and between Borrower and Lender, effective as of the effective date of this
Note, as amended, modified or supplemented from time to time.

 

"Lockout Period" means the period beginning on the day that this Note is
assigned to a REMIC trust until and including the Defeasance Date. The Lockout
Period only applies if this Note is assigned to a REMIC trust prior to the
Cut-off Date.

 

"Maturity Date" means the earlier of (i) October 1, 2022 ("Scheduled Maturity
Date"), or (ii) the date on which the unpaid principal balance of this Note
becomes due and payable by acceleration or otherwise pursuant to the Loan
Documents or the exercise by Lender of any right or remedy under any Loan
Document; provided, however, that if the unpaid principal balance of this Note
becomes due and payable by acceleration but such acceleration is rendered null
and void and of no further force and effect by operation of law or agreement by
Lender, such acceleration will have no effect on the Maturity Date.

 

"Maximum Interest Rate" means the rate of interest which results in the maximum
amount of interest allowed by applicable law.

 

"Prepayment Premium Period" means the period during which, if a prepayment of
principal occurs, a prepayment premium will be payable by Borrower to Lender.
The Prepayment Premium Period is the period from and including the date of this
Note until but not including (i) the day that this Note is assigned to a REMIC
trust, if this Note is assigned to a REMIC trust prior to the Cut-off Date, or
(ii) the first day of the Window Period, if this Note is not assigned to a REMIC
trust or if this Note is assigned to a REMIC trust on or after the Cut-off Date.

 

"Security Instrument" means the multifamily mortgage, deed to secure debt or
deed of trust effective as of the effective date of this Note, from Borrower to
or for the benefit of Lender and securing this Note, as amended, modified or
supplemented from time to time.

 

"Window Period" means the 3 consecutive calendar month period prior to the
Scheduled Maturity Date.

 

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"Yield Maintenance Expiration Date" means April 1, 2022.

 

"Yield Maintenance Period" means the period from and including the date of this
Note until but not including (i) the day that this Note is assigned to a REMIC
trust, if this Note is assigned to a REMIC trust prior to the Cut-off Date, or
(ii) the Yield Maintenance Expiration Date, if this Note is not assigned to a
REMIC trust or if this Note is assigned to a REMIC trust on or after the Cut-off
Date.

 

(b)          Other capitalized terms used but not defined in this Note will have
the meanings given to such terms in the Loan Agreement.

 

2.            Address for Payment. All payments due under this Note will be
payable at KeyBank Real Estate Capital, P.O. Box 145404, Cincinnati, Ohio,
45250, or such other place as may be designated by Notice to Borrower from or on
behalf of Lender.

 

3.            Payments.

 

(a)          Interest will accrue on the outstanding principal balance of this
Note at the Fixed Interest Rate, subject to the provisions of Section 8 of this
Note.

 

(b)          Interest under this Note will be computed, payable and allocated on
the basis of an actual/360 interest calculation schedule (interest is payable
for the actual number of days in each month, and each month's interest is
calculated by multiplying the unpaid principal amount of this Note as of the
first day of the month for which interest is being calculated by the Fixed
Interest Rate, dividing the product by 360, and multiplying the quotient by the
number of days in the month for which interest is being calculated). The portion
of the monthly installment of principal and interest under this Note
attributable to principal and the portion attributable to interest will vary
based upon the number of days in the month for which such installment is paid.
Each monthly payment of principal and interest will first be applied to pay in
full interest due, and the balance of the monthly installment payment paid by
Borrower will be credited to principal.

 

(c)          Unless disbursement of principal is made by Lender to Borrower on
the first day of a calendar month, interest for the period beginning on the date
of disbursement and ending on and including the last day of such calendar month
will be payable by Borrower simultaneously with the execution of this Note. If
disbursement of principal is made by Lender to Borrower on the first day of a
calendar month, then no payment will be due from Borrower at the time of the
execution of this Note. The Installment Due Date for the first monthly
installment payment under Section 3(d) of interest-only or principal and
interest, as applicable, will be the First Installment Due Date set forth in
Section l (a) of this Note. Except as provided in this Section 3(c), Section 10
and in Section 11, accrued interest will be payable in arrears.

 

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(d)           (i)          Beginning on the First Installment Due Date, and
continuing until and including the monthly installment due on October 1, 2014,
accrued interest-only will be payable by Borrower in consecutive monthly
installments due and payable on the first day of each calendar month. The amount
of each monthly installment of interest-only payable pursuant to this Section
3(d)(i) on an Installment Due Date will vary, and will equal $4,704.00000
multiplied by the number of days in the month prior to the Installment Due Date.

 

(ii)          Beginning on November I , 2014, and continuing until and including
the monthly installment due on the Maturity Date, principal and accrued interest
will be payable by Borrower in consecutive monthly installments due and payable
on the first day of each calendar month. The amount of the monthly installment
of principal and interest payable pursuant to this Section 3(d)(ii) on an
Installment Due Date will be $204,255,96.

 

(e)          All remaining Indebtedness, including all principal and interest,
will be due and payable by Borrower on the Maturity Date.

 

(f)           All payments under this Note must be made in immediately available
U.S. funds.

 

(g)          Any regularly scheduled monthly installment of interest-only or
principal and interest payable pursuant to this Section 3 that is received by
Lender before the date it is due will be deemed to have been received on the due
date for the purpose of calculating interest due.

 

(h)          Any accrued interest remaining past due for 30 days or more, at
Lender's discretion, may be added to and become part of the unpaid principal
balance of this Note and any reference to "accrued interest" will refer to
accrued interest which has not become part of the unpaid principal balance. Any
amount added to principal pursuant to the Loan Documents will bear interest at
the applicable rate or rates specified in this Note and will 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 Partial 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 may apply the amount
received to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. 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 will
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 by, among other things, the
Security Instrument and reference is made to the Security Instrument and Loan
Agreement for other rights of Lender as to collateral for the Indebtedness.

 

6.          Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, any prepayment
premium payable under Section 10 and Section 11, and all other amounts payable
under this Note and any other Loan Document, will at once become due and
payable, at the option of Lender, without any prior Notice to Borrower (except
if notice is required by applicable law, then after such notice). Lender may
exercise this option to accelerate regardless of any prior forbearance. For
purposes of exercising such option, Lender will calculate the prepayment premium
as if prepayment occurred on the date of acceleration. If prepayment occurs
thereafter, Lender will recalculate the prepayment premium as of the actual
prepayment date.

 

7.           Late Charge.

 

(a)          If any monthly installment of interest or principal and interest or
other amount payable under this Note or under the Loan Agreement or any other
Loan Document is not received in full by Lender within 10 days after the
installment or other amount is due, counting from and including the date such
installment or other amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period will be substituted), Borrower must pay to Lender, immediately and
without demand by Lender, a late charge equal to 5% of such installment or other
amount due (unless applicable law requires a lesser amount be charged, in which
event such lesser amount will be substituted). If the Loan is not fully
amortizing, the late charge will not be due on the final payment of principal
owed on the Maturity Date if such payment is not timely made.

 

(b)          Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the Loan
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.

 

(a)          So long as (i) any monthly installment under this Note remains past
due for 30 days or more or (ii) any other Event of Default has occurred and is
continuing, then notwithstanding anything in Section 3 of this Note to the
contrary, interest under this Note will accrue on the unpaid principal balance
from the Installment Due Date of the first such unpaid monthly installment or
the occurrence of such other Event of Default, as applicable, at the Default
Rate.

 

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(b)          From and after the Maturity Date, the unpaid principal balance will
continue to bear interest at the Default Rate until and including the date on
which the entire principal balance is paid in full.

 

(c)          Borrower acknowledges that (i) its failure to make timely payments
will cause Lender to incur additional expenses in servicing and processing the
Loan, (ii) during the time that any monthly installment under this Note is
delinquent for 30 days or more, 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 (iii) it is extremely difficult and impractical to
determine those additional costs and expenses. Borrower also acknowledges that,
during the time that any monthly installment under this Note is delinquent for
30 days or more or any other Event of Default has occurred and is continuing,
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 costs and expenses Lender
will incur by reason of the Borrower's delinquent payment and the additional
compensation Lender is entitled to receive for the increased risks of nonpayment
associated with a delinquent loan.

 

9.            Limits on Personal Liability.

 

(a)          Except as otherwise provided in this Section 9, Borrower will have
no personal liability under this Note, the Loan Agreement or any other Loan
Document for the repayment of the Indebtedness or for the performance of or
compliance with any other obligations of Borrower under the Loan Documents and
Lender's only recourse for the satisfaction of the Indebtedness and the
performance of such obligations will be Lender's exercise of its rights and
remedies with respect to the Mortgaged Property and to any other collateral held
by Lender as security for the Indebtedness. This limitation on Borrower's
liability will not limit or impair Lender's enforcement of its rights against
any Guarantor of the Indebtedness or any Guarantor of any other obligations of
Borrower.

 

(b)          Borrower will be personally liable to Lender for the amount of the
Base Recourse, plus any other amounts for which Borrower has personal liability
under this Section 9.

 

(c)          In addition to the Base Recourse, Borrower will be personally
liable to Lender for the repayment of a further portion of the Indebtedness
equal to any loss or damage suffered by Lender as a result of the occurrence of
any of the following events:

 

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(i)           Borrower fails to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3 of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence. However, Borrower will not be personally liable for
any failure described in this Section 9(c)(i) if Borrower is unable to pay to
Lender all Rents and security deposits as required by the Security Instrument
because of a valid order issued in a bankruptcy, receivership,

or similar judicial proceeding.

 

(ii)          Borrower fails to apply all Insurance proceeds and Condemnation
proceeds as required by the Loan Agreement. However, Borrower will not be
personally liable for any failure described in this Section 9(c)(ii) if Borrower
is unable to apply Insurance or Condemnation proceeds as required by the Loan
Agreement because of a valid order issued in a bankruptcy, receivership, or
similar judicial proceeding.

 

(iii)         Either of the following occurs:

 

(A)         Borrower fails to deliver the statements, schedules and reports
required by Section 6.07 of the Loan Agreement and Lender exercises its right to
audit those statements, schedules and reports.

 

(B)          If an Event of Default has occurred and is continuing, Borrower
fails to deliver all books and records relating to the Mortgaged Property or its
operation in accordance with the provisions of Section 6.07 of the Loan
Agreement.

 

(iv)         Borrower fails to pay when due in accordance with the terms of the
Loan Agreement the amount of any item below marked "Deferred"; provided however,
that if no item is marked "Deferred", this Section 9(c)(iv) will be of no force
or effect.

 

[Collect] Hazard Insurance premiums or other Insurance premiums [Collect] Taxes
or payments in lieu of truces (PILOT) [Deferred] water and sewer charges (that
could become a lien on the Mortgaged Property) [N/A] Ground Rents [Deferred]
assessments or other charges (that could become a lien on the Mortgaged
Property)

 

(v)          Borrower engages in any willful act of material waste of the
Mortgaged Property.

 

(vi)         Borrower fails to comply with any provision of Section 6. l
3(a)(iii) through (xxvi) of the Loan Agreement or any SPE Equity Owner fails to
comply with any provision of Section 6.13(b)(iii) through (v) of the Loan
Agreement (subject to possible full recourse liability as set forth in Section
9(f)(ii)).

 

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(vii)         Any of the following Transfers occurs:

 

(A)         Any Person that is not an Affiliate creates a mechanic's lien or
other involuntary lien or encumbrance against the Mortgaged Property and
Borrower has not complied with the provisions of the Loan Agreement.

 

(B)         A Transfer of property by devise, descent or operation of law occurs
upon the death of a natural person and such Transfer does not meet the
requirements set forth in the Loan Agreement.

 

(C)         Borrower grants an easement that does not meet the requirements set
forth in the Loan Agreement.

 

(D)          Borrower executes a Lease that does not meet the requirements set
forth in the Loan Agreement.

 

(d)           In addition to the Base Recourse, Borrower will be personally
liable to Lender for all of the following:

 

(i)           Borrower will be personally liable for the performance of and
compliance with all of Borrower's obligations under Sections 6.12 and 10.02(b)
of the Loan Agreement (relating to environmental matters).

 

(ii)          Borrower will be personally liable for the costs of any audit
under Section 6.07 of the Loan Agreement.

 

(iii)         Borrower will be personally liable for any costs and expenses
incurred by Lender in connection with the collection of any amount for which
Borrower is personally liable under this Section 9, including Attorneys' Fees
and Costs and the costs of conducting any independent audit of Borrower's books
and records to determine the amount for which Borrower has personal liability.

 

(e)          All payments made by Borrower with respect to the Indebtedness and
all amounts received by Lender from the enforcement of its rights under the Loan
Agreement and the other Loan Documents will be applied first to the portion of
the Indebtedness for which Borrower has no personal liability.

 

(f)           Notwithstanding the Base Recourse, Borrower will become personally
liable to Lender for the repayment of all of the Indebtedness upon the
occurrence of any of the following Events of Default:

 

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(i)           Borrower fails to comply with Section 6.13(a)(i) or (ii) of the
Loan Agreement or any SPE Equity Owner fails to comply with Section 6.13(b)(i)
or (ii) of the Loan Agreement.

 

(ii)          Borrower fails to comply with any provision of Section 6. l
3(a)(iii) through (xxvi) of the Loan Agreement or any SPE Equity Owner fails to
comply with any provision of Section 6.13(b)(iii) through (v) of the Loan
Agreement and a court of competent jurisdiction holds or determines that such
failure or combination of failures is the basis, in whole or in part, for the
substantive consolidation of the assets and liabilities of Borrower or any SPE
Equity Owner with the assets and liabilities of a debtor pursuant to Title 11 of
the Bankruptcy Code.

 

(iii)         A Transfer that is an Event of Default under Section 7.02 of the
Loan Agreement occurs other than a Transfer set forth in Section 9(c)(vii) above
(for which Borrower will have personal liability for Lender's loss or damage);
provided, however, that Borrower will not have any personal liability for a
Transfer consisting solely of the involuntary removal or involuntary withdrawal
of a general partner in a limited partnership or a manager in a limited
liability company).

 

(iv)         There was fraud or written material misrepresentation by Borrower
or any officer, director, partner, member or employee of Borrower in connection
with the application for or creation of the Indebtedness or there is fraud in
connection with any request for any action or consent by Lender.

 

(v)          Borrower or any SPE Equity Owner voluntarily files for bankruptcy
protection under the Bankruptcy Code.

 

(vi)         Borrower or any SPE Equity Owner voluntarily becomes subject to any
reorganization, receivership, insolvency proceeding, or other similar proceeding
pursuant to any other federal or state law affecting debtor and creditor rights.

 

(vii)        The Mortgaged Property or any part of the Mortgaged Property
becomes an asset in a voluntary bankruptcy or becomes subject to any voluntary
reorganization, receivership, insolvency proceeding, or other similar voluntary
proceeding pursuant to any other federal or state law affecting debtor and
creditor rights.

 

(viii)       An order of relief is entered against Borrower or any SPE Equity
Owner pursuant to the Bankruptcy Code or other federal or state law affecting
debtor and creditor rights in any involuntary bankruptcy proceeding initiated or
joined in by a Related Party.

 

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(ix)         An involuntary bankruptcy or other involuntary insolvency
proceeding is commenced against Borrower or any SPE Equity Owner (by a party
other than Lender) but only if Borrower or such SPE Equity Owner has failed to
use commercially reasonable efforts to dismiss such proceeding or has consented
to such proceeding. "Commercially reasonable efforts" will not require any
direct or indirect interest holders in Borrower or any SPE Equity Owner to
contribute or cause the contribution of additional capital to Borrower or any
SPE Equity Owner.

 

(g)          For purposes of Section 9(f) the term "Related Party" will include
all of the following:

 

(i)           Borrower, any Guarantor or any SPE Equity Owner.

 

(ii)          Any Person that holds, directly or indirectly, any ownership
interest (including any shareholder, member or partner) in Borrower, any
Guarantor or any SPE Equity Owner or any Person that has a right to manage
Borrower, any Guarantor or any SPE Equity Owner.

 

(iii)         Any Person in which Borrower, any Guarantor or any SPE Equity
Owner has any ownership interest (direct or indirect) or right to manage.

 

(iv)         Any Person in which any partner, shareholder or member of Borrower,
any Guarantor or any SPE equity Owner has an ownership interest or right to
manage.

 

(v)          Any Person in which any Person holding an interest in Borrower, any
Guarantor or any SPE Equity Owner also has any ownership interest.

 

(vi)         Any creditor of Borrower that is related by blood, marriage or
adoption to Borrower, any Guarantor or any SPE Equity Owner.

 

(vii)        Any creditor of Borrower that is related to any partner,
shareholder or member of, or any other Person holding an interest in, Borrower,
any Guarantor or any SPE Equity Owner.

 

(h)          If Borrower, any Guarantor, any SPE Equity Owner or any Related
Party has solicited creditors to initiate or participate in any proceeding
referred to in Section 9(f), regardless of whether any of the creditors
solicited actually initiates or participates in the proceeding, then such
proceeding will be considered as having been initiated by a Related Party.

 

(i)           To the extent that Borrower has personal liability under this
Section 9, Lender may, to the fullest extent permitted by applicable law,
exercise its rights against Borrower personally without regard to whether Lender
has exercised any rights against the Mortgaged Property or any other security,
or pursued any rights against any Guarantor, or pursued any other rights
available to Lender under this Note, the Loan Agreement, any other Loan Document
or applicable law. To the fullest extent permitted by applicable law, in any
action to enforce Borrower's personal liability under this Section 9, Borrower
waives any right to set off the value of the Mortgaged Property against such
personal liability.

 

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10.         Voluntary and Involuntary Prepayments During the Prepayment Premium
Period (Section Applies unless and until Loan is Assigned to REMIC Trust Prior
to the Cut-off Date).

 

(a)         This Section 10 will apply unless and until this Note is assigned to
a REMIC trust prior to the Cut-off Date.

 

(b)         Any receipt by Lender of principal due under this Note prior to the
Maturity Date, other than principal required to be paid in monthly installments
pursuant to Section 3, constitutes a prepayment of principal under this Note.
Without limiting the foregoing, any application by Lender, prior to the Maturity
Date, of any proceeds of collateral or other security to the repayment of any
portion of the unpaid principal balance of this Note constitutes a prepayment
under this Note.

 

(c)          During the Prepayment Premium Period, Borrower may voluntarily
prepay all of the unpaid principal balance of this Note on an Installment Due
Date so long as Borrower designates the date for such prepayment in a Notice
from Borrower to Lender given at least 30 days prior to the date of such
prepayment. Unless Lender has previously notified Borrower of the expiration of
the Prepayment Premium Period, upon receipt of such Notice from Borrower, Lender
will notify Borrower if the Note has been assigned to a REMIC trust prior to the
Cut-off Date and the Prepayment Premium Period has expired. If an Installment
Due Date (as defined in Section l (a)) falls on a day which is not a Business
Day, then with respect to payments made under this Section 10 only, the term
"Installment Due Date" will mean the Business Day immediately preceding the
scheduled Installment Due Date.

 

(d)          Notwithstanding Section l O(c), Borrower may voluntarily prepay all
of the unpaid principal balance of this Note on a Business Day other than an
Installment Due Date if Borrower provides Lender with the Notice set forth in
Section l O(c) above and meets the other requirements set forth in this Section
10(d). Borrower acknowledges that Lender has agreed that Borrower may prepay
principal on a Business Day other than an Installment Due Date only because
Lender will deem any prepayment received by Lender on any day other than an
Installment Due Date to have been received on the Installment Due Date
immediately following such prepayment and Borrower will be responsible for all
interest that would have been due if the prepayment had actually been made on
the Installment Due Date immediately following such prepayment.

 

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(e)          Unless otherwise expressly provided in the Loan Documents, Borrower
may not voluntarily prepay less than all of the unpaid principal balance of this
Note. In order to voluntarily prepay all of the principal of this Note, Borrower
must pay to Lender, together with the amount of principal being prepaid, (i) all
accrued and unpaid interest due under this Note, plus (ii) all other sums due to
Lender at the time of such prepayment, plus (iii) any prepayment premium
calculated pursuant to Section 10(f).

 

(f)           Except as provided in Section 10(g), a prepayment premium will be
due and payable by Borrower in connection with any prepayment of principal under
this Note during the Prepayment Premium Period. The prepayment premium will be
computed as follows:

 

(i)           For any prepayment made during the Yield Maintenance Period, the
prepayment premium will be whichever is the greater of subsections (A) and (B)
below:

 

(A)         1.0% of the amount of principal being prepaid; or

 

(B)         the product obtained by multiplying:

 

(1)          the amount of principal being prepaid or accelerated,
by

(2)          the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate,
by

(3)          the Present Value Factor.

 

For purposes of Section 10(f)(i)(B), the following definitions will apply:

 

Monthly Note Rate: 1/12 of the Fixed Interest Rate, expressed as a decimal
calculated to 5 digits.

 

Prepayment Date: in the case of a voluntary prepayment, the date on which the
prepayment is made; in the case of the application by Lender of collateral or
security to a portion of the principal balance, the date of such application.

 

Assumed Reinvestment Rate: 1/12 of the yield rate expressed as a decimal to 2
digits, as of the close of the trading session which is 5 Business Days before
the Prepayment Date, found among the Daily Treasury Yield Curve Rates, commonly
known as Constant Maturity Treasury ("CMT") rates, with a maturity equal to the
remaining Yield Maintenance Period, as reported on the U.S. Department of the
Treasury website.

 

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If no published CMT maturity matches the remaining Yield Maintenance Period,
Lender will interpolate as a decimal to 2 digits the yield rate between (a) the
CMT with a maturity closest to, but shorter than, the remaining Yield
Maintenance Period, and (b) the CMT with a maturity closest to, but longer than,
the remaining Yield Maintenance Period, as follows:

 

[tex10-8pg13.jpg]

 

A =yield rate for the CMT with a maturity shorter than the remaining Yield
Maintenance Period B=yield rate for the CMT with a maturity longer than the
remaining Yield Maintenance Period C =number of months to maturity for the CMT
maturity shorter than the remaining Yield Maintenance Period D =number of months
to maturity for the CMT maturity longer than the remaining Yield Maintenance
Period E =number of months remaining in the Yield Maintenance Period

 

In the event the U.S. Department of the Treasury ceases publication of the CMT
rates, the Assumed Reinvestment Rate will equal the yield rate on the first U.S.
Treasury security which is not callable or indexed to inflation and which
matures after the expiration of the Yield Maintenance Period.

 

The Assumed Reinvestment Rate may be a positive number, a negative number or
zero.

 

If the Assumed Reinvestment Rate is a positive number or a negative number,
Lender will calculate the prepayment premium using such positive number or
negative number, as appropriate, as the Assumed Reinvestment Rate in
10(t)(i)(B)(2) and in the calculation of the Present Value Factor.

 

If the Assumed Reinvestment Rate is zero, Lender will calculate the prepayment
premium twice as set forth in (I) and (II) below and will average the results to
determine the actual prepayment premium.

 

(I)           Lender will calculate the prepayment premium using an Assumed
Reinvestment Rate of one basis point (+0.01%) in Section 10(t)(i)(B)(2) and in
the calculation of the Present Value Factor.

 

(II)          Lender will calculate the prepayment premium using an Assumed
Reinvestment Rate of negative one basis point (-0.01%) in Section 10(t)(i)(B)(2)
and in the calculation of the Present Value Factor.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 13

 

 

Present Value Factor: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:

 

[tex10-8pg14.jpg]

 

n = the number of months remaining in Yield Maintenance Period; provided,
however, if a prepayment occurs on an Installment Due Date, then the number of
months remaining in the Yield Maintenance Period will be calculated beginning
with the month in which such prepayment occurs and if such prepayment occurs on
a Business Day other than an Installment Due Date, then the number of months
remaining in the Yield Maintenance Period will be calculated beginning with the
month immediately following the date of such prepayment.

 

ARR = Assumed Reinvestment Rate

 

(ii)          For any prepayment made after the expiration of the Yield
Maintenance Period but during the remainder of the Prepayment Premium Period,
the prepayment premium will be 1.0% of the amount of principal being prepaid.

 

(g)          Notwithstanding any other provision of this Section 10, no
prepayment premium will be payable with respect to (i) any prepayment made
during the Window Period, or (ii) any prepayment occurring as a result of the
application of any Insurance proceeds or Condemnation award under the Loan
Agreement.

 

(h)          Unless Lender agrees otherwise in writing, a permitted or required
prepayment of less than the unpaid principal balance of this Note will not
extend or postpone the due date of any subsequent monthly installments or change
the amount of such installments.

 

(i)           Borrower recognizes that any prepayment of any of the unpaid
principal balance of this Note, whether voluntary or involuntary or resulting
from an Event of 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 impractica1 to ascertain the
extent of such damages. Borrower therefore acknowledges and agrees that the
formula for calculating prepayment premiums set forth in this Note represents a
reasonable estimate of the damages Lender will incur because of a prepayment.
Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and that the terms
of this Note are in other respects more favorable to Borrower as a result of the
Borrower's voluntary agreement to the prepayment premium provisions.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 14

 

 

11.          Voluntary and Involuntary Prepayments During the Lockout Period and
During the Defeasance Period (Section Applies if Loan is Assigned to REMIC Trust
Prior to the Cut-off Date).

 

(a)          This Section 11 will apply in the event this Note is assigned to a
REMIC trust prior to the Cut-off Date. This Section 11 will be of no effect if
this Note is assigned to a REMIC trust on or after the Cut-off Date or if this
Note is not assigned to a REMIC trust.

 

(b)          Any receipt by Lender of principal due under this Note prior to the
Maturity Date, other than principal required to be paid in monthly installments
pursuant to Section 3, constitutes a prepayment of principal under this Note.
Without limiting the foregoing, any application by Lender, prior to the Maturity
Date, of any proceeds of collateral or other security to the repayment of any
portion of the unpaid principal balance of this Note constitutes a prepayment
under this Note.

 

(c)          Borrower may not voluntarily prepay any portion of the principal
balance of this Note during the Lockout Period or during the Defeasance Period;
provided, however, any prepayment occurring as a result of the application of
any Insurance proceeds or Condemnation award under the Loan Agreement will be
permitted during the Lockout Period and during the Defeasance Period. If any
portion of the principal balance of this Note is prepaid during the Lockout
Period or during the Defeasance Period by reason of the application by Lender of
any proceeds of collateral or other security to any portion of the unpaid
principal balance of this Note or following a determination that the prohibition
on voluntary prepayments during the Lockout Period or during the Defeasance
Period is in contravention of applicable law, then Borrower must also pay to
Lender upon demand by Lender, a prepayment premium equal to 5.0% of the amount
of principal being prepaid.

 

(d)          Notwithstanding any other provision of this Section 11, no
prepayment premium will be payable with respect to (i) any prepayment made
during the Window Period, or (ii) any prepayment occurring as a result of the
application of any Insurance proceeds or Condemnation award under the Loan
Agreement.

 

(e)          After the expiration of the Lockout Period and the Defeasance
Period, Borrower may voluntarily prepay all of the unpaid principal balance of
this Note on an Installment Due Date so long as Borrower designates the date for
such prepayment in a Notice from Borrower to Lender given at least 30 days prior
to the date of such prepayment. If an Installment Due Date (as defined in
Section l (a)) falls on a day which is not a Business Day, then with respect to
payments made under this Section 11 only, the term "Installment Due Date" will
mean the Business Day immediately preceding the scheduled Installment Due Date.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 15

 

 

(f)           Notwithstanding Section 11 (e) above, following the end of the
Lockout Period and the Defeasance Period, Borrower may voluntarily prepay all of
the unpaid principal balance of this Note on a Business Day other than an
Installment Due Date if Borrower provides Lender with the Notice set forth in
Section 1l (e) and meets the other requirements set forth in this Section 11
(f). Borrower acknowledges that Lender has agreed that Borrower may prepay
principal on a Business Day other than an Installment Due Date only because
Lender will deem any prepayment received by Lender on any day other than an
Installment Due Date to have been received on the Installment Due Date
immediately following such prepayment and Borrower will be responsible for all
interest that would have been due if the prepayment had actually been made on
the Installment Due Date immediately following such prepayment.

 

(g)          Unless otherwise expressly provided in the Loan Documents, Borrower
may not voluntarily prepay less than all of the unpaid principal balance of this
Note. In order to voluntarily prepay all of the principal of this Note, Borrower
must also pay to Lender, together with the amount of principal being prepaid,
(i) all accrued and unpaid interest due under this Note, plus (ii) all other
sums due to Lender at the time of such prepayment.

 

(h)          Unless Lender agrees otherwise in writing, a permitted or required
prepayment of less than the unpaid principal balance of this Note will not
extend or postpone the due date of any subsequent monthly installments or change
the amount of such installments.

 

(i)           Borrower recognizes that any prepayment of any of the unpaid
principal balance of this Note, whether voluntary or involuntary or resulting
from an Event of 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 in Section 1l(c) of this
Note represents a reasonable estimate of the damages Lender will incur because
of a prepayment. Borrower further acknowledges that the lockout and prepayment
premium provisions of this Note are a material part of the consideration for the
Loan, and that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment

premium provisions.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 16

 

 

(j)           If, after the expiration of the Lockout Period, Borrower defeases
the Loan as described in Section 11.12 of the Loan Agreement during the
Defeasance Period, Borrower will not have the right to voluntarily prepay any of
the principal of this Note at any time.

 

12.          Defeasance (Section Applies if Loan is Assigned to REMIC Trust
Prior to the Cut-off Date).

 

(a)          This Section 12 will apply in the event this Note is assigned to a
REMIC trust prior to the Cut-off Date. This Section 12 will be of no effect if
this Note is assigned to a REMIC trust on or after the Cut-off Date or if this
Note is not assigned to a REMIC trust.

 

(b)          Section 5 of this Note is amended by adding a new paragraph at the
end of the Section as follows:

 

If Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 11.12 of the Loan Agreement, the
Indebtedness will be secured by the Pledge Agreement and reference will be made
to the Pledge Agreement for other rights of Lender as to collateral for the
Indebtedness.

 

(c)          Section 9 of this Note is amended by adding a new paragraph at the
end thereof as follows:

 

If Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 11.12 of the Loan Agreement, Borrower
will have no personal liability under this Note or the Pledge Agreement for the
repayment of the Indebtedness or for the performance of any other obligations of
Borrower under this Note or the Pledge Agreement (other than any liability under
Section 6. 12 or Section 10.02 of the Loan Agreement for events that occur prior
to the Defeasance Closing Date, whether discovered before or after the
Defeasance Closing Date), and Lender's only recourse for the satisfaction of the
Indebtedness and the performance of such obligations will be Lender's exercise
of its rights and remedies with respect to the collateral held by Lender under
the Pledge Agreement as security for the Indebtedness.

 

(d)          Section 21(a) of this Note is amended by adding a new paragraph at
the end of that subsection as follows:

 

If Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 11.12 of the Loan Agreement, all
Notices, demands and other communications required or permitted to be given
pursuant to this Note will be given in accordance with the Pledge Agreement.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 17

 

 

13.         Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower must pay all expenses and costs, including Attorneys' Fees and Costs
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. Borrower acknowledges and
agrees that, in connection with each request by Borrower under this Note or any
Loan Document, Borrower must pay all reasonable Attorneys' Fees and Costs and
expenses incurred by Lender, including any fees charged by the Rating Agencies,
regardless of whether the matter is approved, denied or withdrawn.

 

14.          Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note, the Loan Agreement, or any other Loan Document or
otherwise afforded by applicable law, will 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, will 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 will not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.

 

15.          Waivers. Borrower and all endorsers and Guarantors of this Note and
all other third party obligors waive 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.

 

16.          Loan Charges. Neither this Note nor any of the other Loan Documents
will 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. If any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower in connection with the Loan 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 will 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, will be deemed to be allocated and spread
ratably over the stated term of this Note. Unless otherwise required by
applicable law, such allocation and spreading will be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
this Note.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 18

 

 

17.          Commercial Purpose. Borrower represents that Borrower is incurring
the Indebtedness solely for the purpose of carrying on a business or commercial
enterprise, and not for personal, family, household, or agricultural purposes.

 

18.          Counting of Days. Any reference in this Note to a period of "days"
means calendar days, not Business Days except where otherwise specifically
provided.

 

19.          Governing Law. This Note will be governed by the law of the
Property Jurisdiction.

 

20.          Captions. The captions of the Sections of this Note are for
convenience only and will be disregarded in construing this Note.

 

21.          Notices; Written Modifications.

 

(a)          All Notices, demands and other communications required or permitted
to be given pursuant to this Note will be given in accordance with Section 11.03
of the Loan Agreement.

 

(b)          Any modification or amendment to this Note will be ineffective
unless in writing and signed by the party sought to be charged with such
modification or amendment; provided, however, in the event of a Transfer under
the terms of the Loan Agreement that requires Lender's consent, any or some or
all of the Modifications to Multifamily Note set forth in Exhibit A to this Note
may be modified or rendered void by Lender at Lender's option, by Notice to
Borrower and the transferee, as a condition of Lender's consent.

 

22.          Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note may be litigated in the
Property Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction will have jurisdiction over all
controversies that will arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise. However, nothing in this
Note is intended to limit any right that Lender may have to bring any suit,
action or proceeding relating to matters arising under this Note in any court of
any other jurisdiction.

 

23.          WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (a) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (b) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 19

 

 

24.          State-Specific Provisions. N/A.

 

25.          Attached Riders. The following Riders are attached to this Note:

 

•Rider to Multifamily Note (CME) Recycled Borrower and/or Recycled SPE Equity
Owner

•Rider to Multifamily Note (CME and Portfolio) Recourse for Non- conforming
Property

 

26.         Attached Exhibit. The following Exhibit, if marked with an "X" in
the space provided, is attached to this Note:

 

[__]   Exhibit A      Modifications to Multifamily Note

 

[DOCUMENT EXECUTION OCCURS ON THE FOLLOWING PAGE]

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 20

 

 

IN WITNESS WHEREOF, and in consideration of the Lender's agreement to lend
Borrower the principal amount set forth above, 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.

 

  VILLAGE GREEN OF ANN ARBOR ASSOCIATES, LLC,   a Michigan limited liability
company         By: JH VILLAGE GREEN LLC,     a Delaware limited liability
company     Co-Manager

 

    By: /s/ Jonathan Holtzman       Jonathan Holtzman       Sole Member

 

Borrower’s Employer ID Number: 38-2740759

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage 21

 

 

RIDER TO MULTIFAMILY NOTE

(CME)

 

RECYCLED BORROWER AND/OR RECYCLED SPE EQUITY OWNER

 

(Revised 1-11-2012)

 

The following changes are made to the Note which precedes this Rider:

 

A.           The following is added as a new subsection to Section 9(c):

 

Any of the Underwriting Representations set forth in Section 5.26 (a) of the
Loan Agreement or any of the Separateness Representations set forth in Section
5.26(b) of the Loan Agreement are false or misleading in any material respect.

 

Rider to Multifamily Note (CME and Portfolio)
Recourse for Non-Conforming Property 

 

 

RIDER TO MULTIFAMILY NOTE

(CME AND PORTFOLIO)

 

RECOURSE FOR NON-CONFORMING PROPERTY

 

(Revised 9-1-2011)

 

The following changes are made to the Note which precedes this Rider:

 

A.           The following is added as a new subsection to Section 9(c):

 

A casualty occurs affecting the Mortgaged Property, which results in loss or
damage to Lender because of either of the following:

 

(A)          (1) the Mortgaged Property is legally non-conforming under the
applicable zoning laws, ordinances and/or regulations in the Property
Jurisdiction ("Zoning Code"), (2) the affected Improvements cannot be rebuilt to
their pre-casualty condition under the terms of the Zoning Code, and (3) the
Hazard Insurance proceeds available to Lender under the terms of the Loan
Agreement are insufficient to repay the Indebtedness in full.

 

(B)           Borrower fails to commence and diligently pursue completion of any
Restoration within the time frame required by the Zoning Code and any permits
issued pursuant thereto as necessary to allow the Restoration to the
pre-casualty condition described in (A)(2) above.

 

Rider to Multifamily Note (CME and Portfolio)
Recourse for Non-Conforming Property 

 

 

EXHIBIT A

 

MODIFICATIONS TO MULTIFAMILY NOTE

 

The following modifications are made to the text of the Note that precedes this
Exhibit.

 

NONE

 

Multifamily Multistate Fixed Rate Note (CME)
DefeasancePage A-1

 

 

FHLMC Loan No. 708060749

 

ENDORSEMENT

 

TO MULTIFAMILY NOTE (CME)

 

dated as of September 12, 2012,

 

given by

 

VILLAGE GREEN OF ANN ARBOR ASSOCIATES, LLC,

a Michigan limited liability company,

 

to

 

KEYCORP REAL ESTATE CAPITAL MARKETS, INC.,

an Ohio corporation,

 

in the original principal amount of $43,200,000.00

 

 

 

Pay to the order of FEDERAL HOME LOAN MORTGAGE CORPORATION, without recourse.

 

  KEYCORP REAL ESTATE CAPITAL MARKETS, INC.   an Ohio corporation            
By: /s/ Randall W. Conley       Randall W. Conley       Vice President

 

Date: as of September 12 , 2012