Exhibit
10.42

 

Freddie Mac Loan Number
534382037

 

MULTIFAMILY NOTE-CME

MULTISTATE – FIXED RATE

(REVISION DATE 8-14-2009)

 

 

	
US
$27,000,000.00
	
Effective Date: as of March 25, 2010



 

 

           
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 KEYCORP REAL ESTATE CAPITAL MARKETS,
INC., an Ohio corporation, the principal sum of Twenty-Seven Million and
No/100ths Dollars (US $27,000,000.00), 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-nine
hundredths percent (5.49%). 

 

“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 May 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 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) April 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 3.375% U.S. Treasury Security due November
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) October 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 KeyBank
Real Estate Capital, P.O. Box 145404, Cincinnati, Ohio 45250, or such other
place as may be designated by Notice to Borrower from or on behalf of
Lender.

 

           
3.         Payments.  

 

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

           


           
(b)        Interest under this Note shall be
computed, payable and allocated on the basis of a 360-day year consisting of
twelve 30-day months. 

           


           
(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 Fifty-Three Thousand One Hundred Thirty-Three and 67/100ths
Dollars ($153,133.67).

 

           
(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 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.  

 

           
(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.

 

(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; 

 

(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 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.

 

(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.

 

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:

 

 [1-{1/(1+ARR)}n]/ARR

 

                       
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.

 

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. 


 

           
(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 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
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
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 

 

 

[DOCUMENT EXECUTION OCCURS ON THE FOLLOWING PAGE]

 


 

           
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.  

 

AP
XII TWIN LAKE TOWERS, LLC

a
Delaware limited liability company

 

By:      
ANGELES PARTNERS XII

           
a California limited partnership

           
Sole Member

 

           
By:       Angeles Realty Corporation II

                       
a California corporation

                       
Managing General Partner

 

                       


                       
By:       /s/Patti K. Fielding

                                   
Patti K. Fielding

                                   
Executive Vice President and 

                                   
Treasurer

 

 

                                                                       


                                               





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 modified to delete the definition of “Lockout Period” in its
entirety and insert the following in its place:

 

“Lockout
Period” means the period beginning on the day that this Note is assigned to
a REMIC trust until and including the earlier of either (i) the Defeasance Date
or (ii) the fourth (4th) anniversary of the date of this Note. 
The Lockout Period only applies if this Note is assigned to a REMIC trust prior
to the Cut-off Date.

 

2.        
Section 9(f) is modified to delete clauses (v), (vi), and (vii) and replace them
with the following:

‎

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

 

(vi)‎      
The Mortgaged Property or any part thereof becomes an asset in a voluntary
proceeding under the United States Bankruptcy Code or becomes subject to any
voluntary or involuntary reorganization, receivership, insolvency proceeding, or
other similar proceeding pursuant to any other federal law or state law
affecting debtor and creditor rights  however, with respect to any such
involuntary proceedings. only if Borrower has failed to use commercially
reasonable efforts to dismiss any such proceeding or has consented to such
proceeding;  

 

(vii)            
an order for relief is entered against
Borrower or any SPE Equity Owner pursuant to the United States Bankruptcy Code
or other federal law or state law affecting debtor and creditor rights in any
involuntary bankruptcy proceeding initiated or joined in by a “Related
Party”; or

 

3.        
Section 9(f) is modified to replace clause (D) of the definition of the term
“Related Party” with the following:

 

(D)      
any creditor of Borrower that is a member of the immediate family (which for
purposes hereof shall mean solely a parent, sibling, child or spouse), by blood,
marriage or adoption, of 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

 

4.        
Section 9(f) is modified to add the following unnumbered sentence at the end of
the term “Related Party”:

 

For
purposes of the preceding clauses (B) or (C), no Person shall be considered a
Related Party on the basis of the provisions thereof unless such Person holds a
Controlling Interest or has more than a 11% equity interest in the applicable
entity.  

 

5.        
The last paragraph of Section 9(f) is deleted and replaced with the
following:

If Borrower, any guarantor, any SPE
Equity Owner or any other Related Party has solicited creditors to initiate or
participate in support of initiating or not dismissing any proceeding referred
to in this Section 9, regardless of whether any of the creditors solicited
actually initiates or participates in support of initiating or not dismissing
the proceeding, then such proceeding shall be considered as having been
initiated by a Related Party.



6.        
Section 10(a) is modified to add the following at the end thereof:

If
this Note is partially assigned to a REMIC trust prior to the Cut-off Date,
Section 11 hereof shall apply with respect to the portion of this Note that is
so assigned prior to the Cut-off Date, and any portion of this Note that is not
assigned to a REMIC trust prior to the Cut-off Date shall be governed by this
Section 10.  

 

7.        
Section 11(a) is modified to add the following at the end thereof:

If
this Note is partially assigned to a REMIC trust prior to the Cut-off Date, this
Section 11 shall apply with respect to the portion of this Note that is so
assigned prior to the Cut-off Date, and any portion of this Note that is not
assigned to a REMIC trust prior to the Cut-off Date shall be governed by Section
10 hereof.  

 

8.        
Section 9(c) is hereby modified to add the following new subsection (vi):

 

(vi)       The Declaration of
Easements and Agreement for Maintenance dated May 1, 1986 and recorded in the
land records of DuPage County, Illinois as instrument number R86-68461
("Declaration") not having been terminated and a release recorded in the land
records of DuPage County, Illinois. 

 

9.        
Section 9(c) is hereby modified add the following new subsection (vii):

 

(vii)     
A casualty occurs resulting in damage to the Mortgaged Property, as a result of
which, the Mortgaged Property, due to its legal non-conforming zoning status,
cannot be rebuilt in whole or in part, and proceeds from Hazard Insurance
available to Lender under the terms of the Security Instrument are not
sufficient to repay the Indebtedness.

 

10.       Section 9(d)(i) is
hereby deleted in its entirety and replaced with the following:

 

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




FHLMC Loan No. 534382037

 

ENDORSEMENT

 

TO MULTIFAMILY
NOTE

 

Dated as of
March 25, 2010,

 

Given
by

 

AP XII TWIN
LAKE TOWERS, LLC,
a Delaware limited liability company,

 

to

 

KEYCORP REAL
ESTATE CAPITAL MARKETS, INC.,

an Ohio
corporation,

 

in the original
principal amount of $27,000,000.00

 

 

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

 

KEYCORP REAL ESTATE
CAPITAL

MARKETS, INC.

an Ohio corporation

 

 

By:      
/s/Crystal L. Williams

           
Crystal L. Williams

           
Vice President

 

 

Date: as of March 25,
2010