Exhibit 10.20


 


Freddie Mac Loan Number 002669129


 


MULTIFAMILY NOTE

MULTISTATE - FIXED TO FLOAT

(REVISION DATE 3-25-2004)


 


	
  US $52,000,000

  	
   

  	
  Effective Date: April 01,
  2004

  



 


FOR VALUE RECEIVED, the undersigned (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 Berkshire Mortgage Finance Limited Partnership, the principal
sum of fifty-two million dollars (US $52,000,000), with interest
on the unpaid principal balance, as hereinafter provided.


 


1.        Defined
Terms.


 


(a)       As used in this Note:


 


“Adjustable Interest Rate” means the
variable annual interest rate calculated for each Interest Adjustment Period so
as to equal the Index Rate for such Interest Adjustment Period (truncated at
the fifth (5th) decimal
place if necessary) plus the Margin.


 


“Amortization Period” means a period of 360
full consecutive calendar months.


 


“Base Recourse” means a portion of the
Indebtedness equal to zero percent (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 is not open for business.


 


“Default Rate” means (i) during the
Fixed Rate Period, an annual interest rate equal to four (4) percentage
points above the Fixed Interest Rate; and (ii) during the Extension
Period, a variable annual interest rate equal to four (4) percentage
points above the Adjustable Interest Rate in effect from time to time. However,
at no time will the Default Rate exceed the Maximum Interest Rate.


 


“Extended Maturity Date” means, if the
Extension Period becomes effective pursuant to this Note, the earlier of (i) May 01,
2014, and (ii) the date on which the unpaid principal balance of this
Note becomes due and payable by acceleration or


 


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otherwise
pursuant to the Loan Documents or the exercise by Lender of any right or remedy
thereunder.


 


“Extension Period” means the twelve (12)
consecutive calendar months period commencing on the Scheduled Initial Maturity
Date.


 


“Fixed Interest Rate” means the annual
interest rate of four and sixty-seven percent (4.67%).


 


“Fixed Rate Period” means the period
beginning on the date of this Note and continuing through May 01, 2013.


 


“Index Rate” means, for any Interest
Adjustment Period, the Reference Bill® Index Rate for such Interest Adjustment
Period.


 


“Initial Maturity Date” means the earlier
of (i) May 01, 2013 (the “Scheduled
Initial Maturity Date”), and (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 thereunder.


 


“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 June 01, 2004.


 


“Interest Adjustment Period” means each
successive one calendar month period during the Extension Period and until the
entire Indebtedness is paid in full.


 


“Lender” means the holder from time to time
of this Note.


 


“LIBOR Index” means the British Bankers
Association’s (BBA) one (1) month LIBOR Rate for United States Dollar
deposits, as displayed on the LIBOR Index Page used to establish the LIBOR
Index Rate.


 


“LIBOR Index Rate” means, for any Interest
Adjustment Period after the first Interest Adjustment Period, the BBA’s LIBOR
Rate for the LIBOR Index released by the BBA most recently preceding the first
day of such Interest Adjustment Period, as such LIBOR Rate is displayed on the
LIBOR Index Page. The LIBOR Index Rate for the first Interest Adjustment Period
means the British Bankers Association’s (BBA) LIBOR Rate for the LIBOR Index
released by the BBA most recently preceding the first day of the month in which
the first Interest Adjustment Period begins, as such LIBOR Rate is displayed on
the LIBOR Index Page.


 


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“LIBOR Index Page” is the Bloomberg L.P., page “BBAM”,
or such other page for the LIBOR Index as may replace page BBAM on
that service, or at the option of Lender (i) the applicable page for
the LIBOR Index on another service which electronically transmits or displays
BBA LIBOR Rates, or (ii) any publication of LIBOR rates available from the
BBA. In the event the BBA ceases to set or publish a LIBOR rate/interest
settlement rate for the LIBOR Index, Lender will designate an alternative
index, and such alternative index shall constitute the LIBOR Index Rate.


 


“Loan” means the loan evidenced by this
Note.


 


“Margin” means two and one-half (2.5)
percentage points (250 basis points).


 


“Maturity Date” means the Extended Maturity
Date unless pursuant to Section 3(f) of this Note the Extension
Period does not or cannot become effective, in which case the Maturity Date
means the Initial Maturity Date.


 


“Maximum Interest Rate” means the rate of
interest that results in the maximum amount of interest allowed by applicable
law.


 


“Reference Bills®” means the unsecured
general obligations of the Federal Home Loan Mortgage Corporation (“Freddie Mac”) designated by Freddie Mac
as “Reference Bills®” and having original durations to maturity most comparable
to the term of the Reference Bill Index, and issued by Freddie Mac at regularly
scheduled auctions. In the event Freddie Mac shall at any time cease to
designate any unsecured general obligations of Freddie Mac as “Reference Bills”,
then at the option of Lender (i) Lender may select from time to time
another unsecured general obligation of Freddie Mac having original durations
to maturity most comparable to the term of the Reference Bill Index and issued
by Freddie Mac at regularly scheduled auctions, and the term “Reference Bills”
as used in this Note shall mean such other unsecured general obligations as
selected by Lender; or (ii) for any one or more Interest Adjustment
Periods, Lender may use the applicable LIBOR Index Rate as the Index Rate for
such Interest Adjustment Period(s).


 


“Reference Bill Index” means the one-month
Reference Bills. One-month reference bills have original durations to maturity
of approximately 30 days.


 


“Reference Bill Index Rate” means, for any
Interest Adjustment Period after the first Interest Adjustment Period, the
Money Market Yield for the Reference Bills as established by the Reference Bill
auction conducted by Freddie Mac most recently preceding the first day of such
Interest Adjustment Period, as displayed on the Reference Bill Index Page. The
Reference Bill Index Rate for the first


 


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Interest
Adjustment Period means the Money Market Yield for the Reference Bills as
established by the Reference Bill auction conducted by Freddie Mac most
recently preceding the first day of the month in which the first Interest
Adjustment Period begins, as displayed on the Reference Bill Index Page. The “Reference Bill Index Page” is the Freddie
Mac Debt Securities Web Page (accessed via the Freddie Mac internet site at
www.freddiemac.com), or at the option of Lender, any publication of Reference
Bills auction results available from Freddie Mac. However, if Freddie Mac has
not conducted a Reference Bill auction within the 60-calendar day period prior
to the first day of an Interest Adjustment Period, the Reference Bill Index
Rate for such Interest Adjustment Period will be the LIBOR Index Rate for such
Interest Adjustment Period.


 


“Remaining Amortization Period” means, at
any point in time, the number of consecutive calendar months equal to the
number of months in the Amortization Period minus the number of scheduled
monthly installments of principal and interest that have elapsed since
the date of this Note.


 


“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.


 


“Window Period” means the Extension Period.


 


“Yield Maintenance Period” means the period
from and including the date of this Note until but not including the Scheduled
Initial Maturity Date.


 


(b)       Other capitalized terms
used but not defined in this Note shall have the meanings given to such terms
in the Security Instrument.


 


2.        Address
for Payment. All payments due under this Note shall be
payable at Berkshire Mortgage Finance Limited Partnership, One Beacon
Street, 14th Floor, Boston, MA 02108, or such other
place as may be designated by Notice to Borrower from or on behalf of Lender.


 


3.        Payments.


 


(a)       During the Fixed Rate
Period, 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.


 


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During the
Extension Period, interest will accrue on the outstanding principal balance of
this Note at the Adjustable Interest Rate, subject to the provisions of Section 8
of this Note.


 


(b)       Interest under this Note
shall 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 in being calculated by the Fixed Interest Rate (during the Fixed Rate
Period) or the applicable Adjustable Interest Rate (during the Extension
Period), dividing the product by 360, and multiplying the quotient by the
number of days in the month for which interest is being calculated). For
convenience in determining the amount of a monthly installment of principal and
interest under this Note, Lender will use a 30/360 interest calculation payment
schedule (each year is treated as consisting of twelve 30-day months). However,
as provided above, the portion of the monthly installment actually payable as
and allocated to interest will be based upon an actual/360 interest calculation
schedule, and the amount of each installment attributable to principal and the
amount 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 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 shall 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) and in Section 10, accrued
interest will be payable in arrears.


 


(d)       Beginning on the First
Installment Due Date, and continuing until and including the monthly
installment due on the Initial Maturity Date, principal and accrued interest
only shall 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) on
an Installment Due Date shall be two hundred sixty-eight thousand seven
hundred fifty-four and 82/100 dollars ($268.754.82).


 


(e)       Except as otherwise
provided in this Section 3(e), all remaining Indebtedness, including all
principal and interest, shall be due and payable by Borrower on the Initial
Maturity Date. However, so long as (i) the Initial Maturity Date has not
occurred prior to the Scheduled Initial Maturity Date, and (ii) no Event
of Default or event or circumstance which, with the giving of notice or passage
of time or both, could constitute an Event of Default exists on the Scheduled
Initial Maturity Date, then the Extension Period automatically will become
effective and the date for full payment of the Indebtedness automatically shall
be extended until the


 


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Extended Maturity
Date. If the Extension Period becomes effective, monthly installments of
principal and interest or interest only will be payable during the Extension
Period as provided in Section 3(f). Anything in Section 21 of the
Security Instrument to the contrary notwithstanding, during the Extension
Period, Borrower will not request that Lender consent to, and Lender will not
consent to, a Transfer that, absent such consent, would constitute an Event of
Default.


 


(f)        If the Extension Period
becomes effective, beginning on June 01, 2013 and continuing until
and including the monthly installment due on the Extended Maturity Date,
principal and accrued interest shall 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(f) on an Installment Due Date shall be calculated so
as to equal the monthly payment amount which would be payable on the
Installment Due Date as if the unpaid principal balance of this Note as of the
first day of the Interest Adjustment Period immediately preceding the
Installment Due Date was to be fully amortized, together with interest thereon
at the Adjustable Interest Rate in effect for such Interest Adjustment Period,
in equal consecutive monthly payments paid on the first day of each calendar
month over the Remaining Amortization Period.


 


(g)       During the Extension
Period, Lender shall provide Borrower with notice, given in the manner
specified in the Security Instrument, of the amount of each monthly installment
due under this Note. However, if Lender has not provided Borrower with prior
notice of the monthly payment due on any Installment Due Date, then Borrower
shall pay on that Installment Due Date an amount equal to the monthly
installment payment for which Borrower last received notice. If Lender at any
time determines that Borrower has paid one or more monthly installments in an
incorrect amount because of the operation of the preceding sentence, or because
Lender has miscalculated the Adjustable Interest Rate or has otherwise
miscalculated the amount of any monthly installment, then Lender shall give
notice to Borrower of such determination. If such determination discloses that
Borrower has paid less than the full amount due for the period for which the
determination was made, Borrower, within 30 calendar days after receipt of the
notice from Lender, shall pay to Lender the full amount of the deficiency. If
such determination discloses that Borrower has paid more than the full amount
due for the period for which the determination was made, then the amount of the
overpayment shall be credited to the next installment(s) of interest only
or principal and interest, as applicable, due under this Note (or, if an Event
of Default has occurred and is continuing, such overpayment shall be credited
against any amount owing by Borrower to Lender).


 


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


 


(i)        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
shall be deemed to have been received on the due date for the purpose of
calculating interest due.


 


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(j)        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” 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.


 


(k)       In accordance with Section 14,
interest charged under this Note cannot exceed the Maximum Interest Rate. If
the Adjustable Interest Rate at any time exceeds the Maximum Interest Rate,
resulting in the charging of interest hereunder to be limited to the Maximum
Interest Rate, then any subsequent reduction in the Adjustable Interest Rate
shall not reduce the rate at which interest under this Note accrues below the
Maximum Interest Rate until the total amount of interest accrued hereunder
equals the amount of interest which would have accrued had the Adjustable Interest
Rate at all times been in effect.


 


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 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 shall
constitute or be deemed to constitute either a waiver of the unpaid amounts or
an accord and satisfaction.


 


5.        Security.
The Indebtedness is secured by, among other things, the
Security Instrument, and reference is made to the Security Instrument 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 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 (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 shall calculate the prepayment premium as if
prepayment occurred on the date of acceleration. If prepayment occurs
thereafter, lender shall 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 Security Instrument or any other Loan Document is not


 


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received in full
by Lender (i) during the Fixed Rate Period, within ten (10) days
after the installment or other amount is due, or (ii) during the Extension Period,
within five (5) 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 shall be substituted),
Borrower shall pay to Lender, immediately and without demand by Lender, a late
charge equal to five percent (5%) of such installment or other amount due
(unless applicable law requires a lesser amount be charged, in which event such
lesser amount shall be substituted).


 


(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 thirty (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 shall 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.


 


(b)       From and after the
Maturity Date, the unpaid principal balance shall 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 thirty (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
thirty (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


 


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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 shall have no personal liability
under this Note, the Security Instrument or any other Loan Document for the
repayment of the Indebtedness or for the performance of 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 shall
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 shall 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 shall 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 shall 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:


 


(i)                        Borrower
fails to pay to Lender upon demand after an Event of Default all Rents to which
Lender is entitled under Section 3(a) 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 subsection (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 Security Instrument. However, Borrower will not be personally liable for
any failure described in this subsection (ii) if Borrower is unable to
apply insurance or condemnation proceeds as required by the Security Instrument
because of a valid order issued in a bankruptcy, receivership, or similar
judicial proceeding.


 


(iii)                  Borrower fails
to comply with Section 14(g) or (h) of the Security Instrument
relating to the delivery of books and records, statements, schedules and
reports.


 


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


 


[Deferred]      Hazard Insurance
premiums or other insurance premiums,


[Deferred]      Taxes,


[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)


 


(d)       In addition to the Base
Recourse, Borrower shall be personally liable to Lender for:


 


(i)                        the
performance of all of Borrower’s obligations under Section 18 of the
Security Instrument (relating to environmental matters);


 


(ii)                     the costs of
any audit under Section 14(g) of the Security Instrument; and


 


(iii)                  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 Security Instrument and the other
Loan Documents shall be applied first to the portion of the Indebtedness for
which Borrower has no personal liability.


 


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


 


(i)                        Borrower’s
ownership of any property or operation of any business not permitted by Section 33
of the Security Instrument;


 


(ii)                     a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than 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; or


 


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(iii)                  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 any request for any action or consent by
Lender.


 


(g)       To the extent that Borrower has personal
liability under this Section 9, Lender may 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 Security Instrument, 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.


 


10.      Voluntary and Involuntary Prepayments.


 


(a)       Any receipt by Lender of principal due
under this Note prior to the Scheduled Initial 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 Scheduled Initial 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.


 


(b)       Borrower may voluntarily prepay all of
the unpaid principal balance of this Note on a Business Day designated as 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 otherwise expressly provided
in the Loan Documents, Borrower may not voluntarily prepay less than all of the
unpaid principal balance of this Note.


 


(c)       Borrower acknowledges that Lender has
agreed that principal may be prepaid other than on the last calendar day of a
month only because, for the purposes of the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of the month in
which the prepayment occurs.


 


(d)       In order to voluntarily prepay all or any
part 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, plus (ii) any prepayment premium calculated
pursuant to Section 10(e).


 


(e)       Except as provided in Section 10(f),
a prepayment premium shall be due and payable by Borrower in connection with
any prepayment of principal under this Note during the


 


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Yield Maintenance Period.
The prepayment premium shall 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
subsection (B), the following definitions shall apply:


 


Monthly
Note Rate: one-twelfth (1/12) of the Fixed Interest Rate,
expressed as a decimal calculated to five 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: one-twelfth (1/12) of the yield rate, as
of the date 5 Business Days before the Prepayment Date, on the 3.625%
U.S. Treasury Security due May 15, 2013, as reported in The Wall Street Journal, expressed as a
decimal calculated to five digits. In the event that no yield is published on
the applicable date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the non-callable
Treasury Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The
Wall Street Journal as of the applicable date. If the publication of
such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a comparable
rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this Section shall
be made in Lender’s discretion.


 


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


 


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Reinvestment Rate as the
discount rate, with monthly compounding, expressed numerically as follows:


 


	
   

  	
  

  



 


n =
number of months or partial months remaining in Yield Maintenance Period


 


ARR =
Assumed Reinvestment Rate


 


(f)        Notwithstanding any other provision of
this Section 10, no prepayment premium shall 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 Security Instrument.


 


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


 


(h)       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 this Note represents a reasonable estimate of the damages Lender
will incur because of a prepayment. Borrower further acknowledges that any
lockout and 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 lockout and prepayment premium provisions.


 


11.      Costs and Expenses. To
the fullest extent allowed by applicable law, Borrower shall 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.


 


13

















 


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. 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.


 


14.      Loan
Charges. Neither this Note nor any of the other Loan 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. 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 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 this 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 this Note.


 


15.      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.


 


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


 


14

















 


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


 


19.      Notices; Written Modifications.


 


(a)       All Notices, demands and other
communications required or permitted to be given pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.


 


(b)       Any modification or amendment to this
Note shall be ineffective unless in writing signed by the party sought to be
charged with such modification or amendment; provided, however, that in the
event of a Transfer under the terms of the Security Instrument 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.


 


20.      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 shall have jurisdiction
over all controversies that shall 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.


 


21.      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.


 


22.      State-Specific Provisions.


 


A.                      If a
guarantor is liable for only a portion of the Indebtedness, Borrower hereby
waives its rights under California Civil Code Section 2822(a) to
designate the portion of the Indebtedness that shall be satisfied by Borrower’s
partial payment.


 


15

















 


ATTACHED
EXHIBIT. The Exhibit noted below, if marked with an “X” in the space
provided, is attached to this Note:


 


x         Exhibit A   Modifications
to Multifamily Note


 


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.


 


95-4869325


Borrower’s Social
Security/Employer ID Number


 


 


	
  Waterford Place
  Apartments, LLC, 

  a California limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Shea Properties
  Management Company, Inc.

  a Delaware corporation 

  Its Manage

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Treasurer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  PAY TO
  THE ORDER OF

  
	
   

  	
   

  	
   

  	
                                                                                          
  WITHOUT RECOURSE THIS
                                  
  OF                         
  20         

  INTEREST ON THIS WITHIN NOTE TO ACCRUE FROM

  
	
   

  	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
                                                                                       ,
  20           

  
	
   

  	
   

  	
   

  	
  BERKSHIRE
  MORTGAGE FINANCE LIMITED PARTNERSHIP

  BY: BRF CORPORATION, ITS GENERAL PARTNER

  
	
   

  	
   

  	
   

  	
  BY:

  	
  /s/ Authorized
  Signatory

  
	
   

  	
   

  	
   

  	
   

  	
  SUE
  NELSON, SENIOR VICE PRESIDENT-IRVINE

  



 


16

















 


EXHIBIT A


 


MODIFICATIONS TO MULTIFAMILY NOTE


 


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


 


1.                         After the
word “prepayment” in the last sentence of Paragraph 10(e), insert the
following: “, and such prepayment premium shall be the only amount payable by
Borrower with respect to any damages Lender may incur because of a prepayment.”


 


2.                         After the
second reference to “Lender” in the third sentence of Paragraph 14, insert the
following: “.without prepayment premium or penalty,”.


 


3.                         The
Modifications set forth in this Exhibit A shall become ineffective upon a
Transfer under the Security Instrument that requires Lender’s consent or upon
any Transfer that constitutes an Event of Default under Section 21(a) of
the Security Instrument. .


 


 


	
   

  	
   

  	
  INITIAL:

  	
  /s/ Authorized
  Signatory

  



 


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