exhibit_10-2.htm


    FHLMC
Loan No. 534381219

    Willows
of Plainview

    


    MULTIFAMILY
NOTE-CME

    MULTISTATE
– FIXED RATE

    (REVISION
DATE 8-14-2009)

    


    
      	US
      $17,920,000.00	 
      Effective
      Date: As of December 16, 2009


    

    


    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 HOLLIDAY FENOGLIO FOWLER,
L.P., a Texas limited partnership, the principal sum of Seventeen Million
Nine Hundred Twenty Thousand and 00/100 Dollars (US $17,920,000.00), 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 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 or the national
banking associations are not open for business.

    


    “Cut-off Date” means the
twelfth (12th)
Installment Due Date.

    


    “Default Rate” means an annual
interest rate equal to four (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 five and forty hundredths percent (5.40%).

    


    “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 February 1, 2010.

    


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

    


    “Loan” means the loan evidenced
by this Note.

    


    “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


    
      
         


      

      
        
          
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    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) January 1, 2020 (the
“Scheduled 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 under any Loan Document.

    


    “Maximum Interest Rate” means
the rate of interest that 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 the earlier to occur of the following (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.  The
Prepayment Premium Period only applies 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.

    


    “Treasury Security” means the
3.625% U.S. Treasury Security due August 15, 2019.

    


    “Window Period” means the three
(3) consecutive calendar month period prior to the Scheduled Maturity
Date.

    


    “Yield Maintenance Period”
means the period from and including the date of this Note until but not
including the earlier to occur of the following (i) the first day that the Note
is assigned to a REMIC trust or (ii) July 1, 2019 (the “Yield Maintenance Expiration
Date”).  The Yield Maintenance Period only applies 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 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
(i) if by regular mail – Holliday Fenoglio Fowler, L.P., Post Office Box 840637,
Dallas, Texas 75284-0637, or (ii) if by overnight mail – Bank of America Lockbox
Services, Lockbox 840637, 1950 N. Stemmons Freeway, Suite 5010, Dallas, Texas
75207, 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.

    


    
      
         


      

      
        
          
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    (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 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 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 1(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.

    


    (d)           Beginning
on the First Installment Due Date, and continuing until and including the
monthly installment due on the 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(d) on
an Installment Due Date shall be One Hundred Thousand Six Hundred Twenty-Six and
32/100 Dollars ($100,626.32).

    


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

    


    (f)           All
payments under this Note shall 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 shall 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” shall refer to accrued interest which has
not become part of the unpaid principal balance.  Any amount added to
principal pursuant to the Loan Documents shall bear interest at the applicable
rate or rates specified in this Note and shall be payable with such interest
upon demand by Lender and absent such demand, as provided in this Note for the
payment of principal and interest.

    


        4.            Application of
Payments.  If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender 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


    
      
         


      

      
        
          
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    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 Section 11, 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 received in full by Lender within ten (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 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.


    
      
         


      

      
        
          
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    (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 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.

              


      

       

    

    
      
         


      

      
        
          
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               (iii)

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

            


    

    


    
      	
               
      

            	
               (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,

                  


          

          [Collect]               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)

                  


          

           

        

      

    

    
      	
               
      

            	
               (v)

            	
              Borrower
      engages in any willful act of material waste of 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
      or any SPE Equity Owner fails to comply with 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;

              


      



    
      
         


      

      
        
          
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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;

            


    

    


    
      	
               
      

            	
              (iv)

            	
              Borrower
      or any SPE Equity Owner voluntarily files for bankruptcy protection under
      the United States Bankruptcy Code;

            


    

    


    
      	
               
      

            	
              (v)

            	
              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;

            


    

    


    
      	
               
      

            	
              (vi)

            	
              The
      Mortgaged Property or any part thereof becomes an asset in a voluntary
      bankruptcy or 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)

            	
              an
      order of relief is entered against Borrower or any SPE Equity Owner
      pursuant to the United States 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;”
      or

            


    

    


    
      	
               
      

            	
              (viii)

            	
              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.

            


    

    
      
         

        
                For
purposes of this Section, the term “Related Party” means:

          
            
              
                
                  


                  
                    
                      	 	
                              (A)

                            	
                              Borrower,
      any guarantor or any SPE Equity Owner;
and

                            


                    

                     

                    
                      	
                               

                               

                            	
                              (B)

                            	
                              any
      Person that holds, directly or indirectly, any ownership interest in or
      right to manage Borrower, any guarantor or any SPE Equity Owner, including
      without limitation, any shareholder, member or partner of Borrower, any
      guarantor or any SPE Equity Owner;
and

                            


                    

                     

                    
                      	 	
                              (C)

                            	
                              any
      Person in which any ownership interest (direct or indirect) or right to
      manage is held by Borrower, any guarantor, any SPE Equity Owner or any
      partner, shareholder or member of, or any other Person holding an interest
      in, Borrower, any guarantor or any SPE Equity Owner;
  and

                            


                    

                     

                  

                  
                    
                      	 	
                              (D)

                            	
                              any
      other creditor of Borrower that is related by blood, marriage or adoption
      to Borrower, any guarantor, any SPE Equity Owner or any partner,
      shareholder or member of, or any other Person holding an interest in,
      Borrower, any guarantor or any SPE Equity
Owner.

                            


                    

                  

                  


                       
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
this Section 9, regardless
of

                

              

            

          

        

      

    


    
      
         


      

      
        
          
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      whether
any of the creditors solicited actually initiates or participates in the
proceeding, then such proceeding shall be considered as having been initiated by
a Related Party.

    (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 During the Prepayment Premium Period (Section
      Applies Prior to Securitization and if Loan is Assigned to REMIC Trust On
      or After the Cut-off Date).

              


      

      

    (a)           This
Section 10 shall apply (i) prior to the date that this Note is assigned to a
REMIC trust and (ii) if this Note is assigned to a REMIC trust on or after the
Cut-off Date.  This Section 10 shall be of no effect if 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, the 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 and the Prepayment Premium Period has
expired.  If an Installment Due Date (as defined in Section 1(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” shall mean the
Business Day immediately preceding the scheduled Installment Due
Date.

    


    (d)           Notwithstanding
Section 10(c) above, 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 10(c) above and
meets the other requirements set forth in this subsection.  Borrower
acknowledges that Lender has agreed that Borrower may prepay principal on a
Business Day other than an Installment Due Date only because Lender shall 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 shall 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) below, a prepayment premium shall be due and
payable by Borrower in connection with any prepayment of principal under this
Note during the Prepayment Premium Period.  The prepayment premium
shall be in the form of U.S. currency.  The prepayment premium shall
be computed as follows:

      


      
        	
                 
      

              	
                 (i)

              	
                For
      any prepayment made during the Yield Maintenance Period, the prepayment
      premium shall be equal to the
following:

              


      

      


      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 this Section 10(f)(i), 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 close of
the trading session which is 5 Business Days before the Prepayment Date, on the
Treasury Security, 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, Lender,
in its discretion, shall select the non-callable Treasury Security maturing in
the same year as the Treasury Security 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.  The selection of an alternate security pursuant to
this Section 10 shall be made in Lender’s discretion.

       

    

    
      
         


      

      
        
          
 Page 9

        
        

      

      
         


      

    

    
      


      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:

      


      


      
        	
                 
      

              	
                n = the number of months
      remaining in the 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 shall 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 shall 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 shall be 1.0% of the amount of principal being
      prepaid.

              


      

      

(g)           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.

    


    (h)           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.

    


    (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 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.


    
      
         


      

      
        
          
 Page 10

        
        

      

      
         


      

    

    
      


      
        	
                 
      

              	
                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 shall apply in the event this Note is assigned to a REMIC trust prior
to the Cut-off Date.  This Section 11 shall be of no effect if this
Note is assigned to a REMIC trust on or after 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)           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 Security Instrument shall 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 five percent (5.0%)
of the amount of principal being prepaid.

    


    (d)           Notwithstanding
any other provision of this Section 11, 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.

    


    (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
1(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” shall mean the
Business Day immediately preceding the scheduled Installment Due
Date.

    


        (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 11(e) and meets the other
requirements set forth in this subsection.  Borrower
acknowledges that Lender has agreed that Borrower may prepay principal on a
Business Day other than an Installment Due Date only because Lender shall 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 shall 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.

      


    


    
      
         


      

      
        
          
 Page 11

        
        

      

      
         


      

    


        (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 shall 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 11(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.

    


    (j)           If,
after the expiration of the Lockout Period, the Borrower defeases the Loan as
described in Section 44 of the Security Instrument during the Defeasance Period,
Borrower shall 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 shall apply in the event this Note is assigned to a REMIC trust prior
to the Cut-off Date.  This Section 12 shall be of no effect if this
Note is assigned to a REMIC trust on or after the Cut-off Date.

      


      (b)          Section
5 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 44 of the Security Instrument, the
Indebtedness shall be secured by the Pledge Agreement and reference shall 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 44 of the Security Instrument, Borrower shall have no
personal liability under this Note or the Pledge Agreement for the

    

    
      
         


      

      
        
          
 Page 12

        
        

      

      
         


      

    

    


      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
18 of the Security Instrument 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 shall 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 thereof as
follows:

      


      If
Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 44 of the Security Instrument, all
Notices, demands and other communications required or permitted to be given
pursuant to this Note shall be given in accordance with the Pledge
Agreement.

       

    

    13.          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.  Borrower
acknowledges and agrees that, in connection with each request by Borrower under
this Note or any Loan Document, Borrower shall 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
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.

    


    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
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 


    
      
         


      

      
        
          
 Page 13

        
        

      

      
         


      

    


    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.

    


    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.  Except where otherwise specifically provided, any
reference in this Note to a period of “days” means calendar days, not Business
Days.

    


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

    


    20.          Captions.  The
captions of the Sections of this Note are for convenience only and shall 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 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, 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.

    


    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 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.

     

    
          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

    


    
      
         


      

      
        
          
 Page 14

        
        

      

      
         


      

    


    
       WAIVER OF RIGHT TO TRIAL BY
JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE
BENEFIT OF COMPETENT LEGAL COUNSEL.

       

      24.          State-Specific Provisions.
N/A.

    

    


    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.


    
      
         


      

      
        
          
 Page 15

        
        

      

      
         


      

    

     

    
      
        

          
            	
                     
      

                  	
                    NLP WILLOW LAKE,
      LLC, Delaware limited

                        liability
      company

                  


          

           

          
            	 	By:	
                    NTS
      Realty Holdings Limited Partnership, a

                    Delaware
      limited partnership, its sole
member

                  


          

           

          
            	 	By:	
                    NTS
      Realty Capital, Inc., a Delaware

                    corporation,
      its managing general

                    partner

                  


          

           

          
            	 	By:	
                     /s/
      Neil A. Mitchell   

                    Name: Neil A. Mitchell

                    Title: Sr Vice Pres

                  


          

           

        

        
          
            
              
                
                  
                    
                      	 	
                              27-1213238

                              
                                Borrower’s
      Social Security/Employer ID
Number

                              

                            


                    

                  

                

              

            

          

           

           

            
              

            

          

          
            	 Note	 Page
    16


          

           

          
            
               


            

            
              
              

            

            
               


            

          

           

          

            PAY TO
THE ORDER OF FEDERAL HOME

            LOAN
MORTGAGE CORPORATION,

            WITHOUT
RECOURSE

            


            
              	
                      HOLLIDAY FENOGLIO FOWLER,
      L.P., a

                           Texas
      limited partnership

                    


            

            


            
              	
                      By:

                    	
                      Holliday
      GP Corp., a Delaware

                      
                        corporation,
      its general partner

                      

                    	
                       

                    


            

            


                 By: /s/ Patrick V.
Kinlan   
       Patick V.
Kinlan

                   Vice
President

          

        

      

      
        
           

          FHLMC
Loan No. 534381219 (Willows of Plainview)

          
 

        

      

    

    
      
         


      

      
        
          
 Page 17

        
        

      

      
         


      

    


    EXHIBIT
A

    


    MODIFICATIONS
TO MULTIFAMILY NOTE

    


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

    


    


    
      	
              1.

            	
              Section
      1(a) is amended to delete the definition of “Security Instrument” in its
      entirety and replace it with the
following:

            


    

    


    “Security Instrument” means,
collectively, 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, together with all other Mortgages (as defined in that certain
Master Cross-Collateralization Agreement dated as of the date of this Note, by
and among the Lender, the Borrower and the other entities identified as Borrower
on Exhibit A attached thereto), each of which is securing the payment and
performance of the Borrower’s obligations under this Note.

    


    
      	
              2.

            	
              Paragraph
      9 is modified to add the following to subsection 9(d)(i) before the
      semi-colon:

            


    

    


    “and
under Section 17 of the Security Instrument relating to galvanized steel
piping/polybutylene piping; as well as for any costs, loss or damage incurred or
suffered by Lender as a result of the existence at the Mortgaged Property of
galvanized steel piping/polybutylene piping, such loss or damage to include the
cost of replacing all such piping and the cost of repairing any damage
associated with the leaks in or other failure of any galvanized steel
piping/polybutylene piping”

     

    3.           Section
9(c) is revised to add the following new subsection (vii):

     

    
      
        	
                   

              	
                “(vii)

              	
                A
      casualty loss affecting the Mortgaged Property which results in loss or
      damage to Lender because (A) the Mortgaged Property is a legal
      non-conforming use or contains legal non-conforming improvements or
      structures under the applicable zoning laws, ordinances and/or regulations
      in the Property Jurisdiction (the "Zoning Code"), (B) the affected
      Improvements cannot be rebuilt to its pre-casualty condition under the
      terms of the Zoning Code, and (C) the Hazard Insurance proceeds available
      to Lender under the terms of the Security Instrument are insufficient to
      repay the Indebtedness in full. This section 9(c)(vii) will terminate and
      be of no further force or effect upon Borrower’s delivery to Lender of
      confirmation acceptable to Lender that the use of and improvements and
      structures comprising the  Mortgaged Property are legal conforming
      under applicable zoning laws, ordinances and regulations, or that the only
      legal non-conformity consists of minor setback violations which do not
      prohibit reconstruction following a casualty and for which adequate
      building law or ordinance insurance is maintained by Borrower.  The
      termination of this Section 9(c)(vii) will not affect Borrower’s liability
      under any other provision of this Section 9 or otherwise under the Loan
      Documents.”

              


      

       

    

    

      
        
          

        

        Page A-1