Document:

ex10-1.htm

Exhibit 10.1

    Statement

     

    

     

    To:  Osler
      Incorporated

           1864
      Portage Avenue

           Winnipeg,
      Manitoba R3J 0H2, Canada

           Attention:
      Mr. Greg Chapman

    

    

    From:
      James Mcleod

    5342
      Aspen Way

    Delta,
      BC V4K 3S3

    

    

    Re:  Far
      1-4 Minerals Claims, Esmeralda County, Nevada

    

    

    

    

    Cost
      of
      Far 1-4 mineral claims
      acquisition                                                                                                           $3,500
      US

    

    Cost
      of
      Far 1-4 mineral claims
      report                                                                                                                   
$3,500

    

    

                                             
      Total                                $7,000

    

    

    

    

    

    

    

    Respectfully
      submitted,

    

    /s/James
      W. McLeod

    

    James
      W. McLeod, P Geo.

    April
      5, 2007exh4-1.htm

    
      

    

    Freddie
      Mac Loan Number 981208630

    

    MULTIFAMILY
      NOTE

    MULTISTATE
–
FIXED
      TO
      FLOAT

    (REVISION
      DATE 03-30-2006)

    

    

    
      	
              US
                $8,070,000.00

            	
              Effective
                Date: as of September 14, 2007

            

    

    

    

    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 NorthMarq Capital, Inc., a Minnesota corporation, the
      principal sum of Eight Million Seventy Thousand and No/100 Dollars
      (US $8,070,000.00), with interest on the unpaid principal balance, as
      hereinafter provided.

    

    1.           Defined
      Terms.

    

    (a)           As
      used in this Note:

    

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

    

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

    

    “Base
      Recourse” means a portion of the Indebtedness
      equal to zero percent (0%) of the original principal balance of this
      Note.

    

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

    

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

    

    “Extended
      Maturity Date” means, if the Extension Period becomes effective
      pursuant to this Note, the earlier of (i) October 1, 2018, and (ii) the date
      on
      which the unpaid principal balance of this Note becomes due and payable by
      acceleration or otherwise pursuant to the Loan Documents or the exercise by
      Lender of any right or remedy thereunder.

    
      
        
           

        

      

      
        PAGE
          1

        
          

        

      

      
        
        

      

    

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

    

    “Fixed
      Interest Rate” means the annual interest rate of five and seventy nine
      hundredths percent (5.79%).

    

    “Fixed
      Rate Period” means the period beginning on the date of this
      Note and continuing through September 30,
      2017.

    

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

    

    “Initial
      Maturity Date” means the earlier
      of (i) October 1, 2017 (the “Scheduled Initial
      Maturity Date”), and (ii) the date on which the unpaid principal
      balance of this Note becomes due and payable by acceleration or otherwise
      pursuant to the Loan Documents or the exercise by Lender of any right or remedy
      thereunder.

    

    “Installment
      Due Date” means, for any monthly installment of interest only or
      principal and interest, the date on which such monthly installment is due and
      payable pursuant to Section 3 of this Note. The “First Installment Due
      Date” under this Note is November 1, 2007.

    

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

    

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

    

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

    

    “LIBOR
      Index Rate” means, for any Interest Adjustment Period after the first
      Interest Adjustment Period, the BBA’s LIBOR Rate for the LIBOR Index released by
      the BBA most recently preceding the first day of such Interest Adjustment
      Period, as such LIBOR Rate is displayed on the LIBOR Index Page.  The
      LIBOR Index Rate for the first Interest Adjustment Period means the British
      Bankers Association’s (BBA) LIBOR Rate for the LIBOR Index released by the BBA
      most recently preceding the first day of the month in which the first Interest
      Adjustment Period begins, as such LIBOR Rate is displayed on the LIBOR Index
      Page.  “LIBOR Index Page” is the Bloomberg L.P., page
“BBAM”, or such other page for the LIBOR Index as may replace page
      BBAM on that
      service, or at the option of Lender (i) the applicable page for the LIBOR Index
      on another

    
      
        
        

      

      
        PAGE
          2

        
          

        

      

      
        
        

      

    

    service
      which electronically transmits or displays BBA LIBOR Rates, or (ii) any
      publication of LIBOR rates available from the BBA.  In the event the
      BBA ceases to set or publish a LIBOR rate/interest settlement rate for the
      LIBOR
      Index, Lender will designate an alternative index, and such alternative index
      shall constitute the LIBOR Index Page.

    

    “Loan”
      means the loan evidenced by this Note.

    

    
      	
               

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

            

    

    

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

    

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

    

    “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 first day of the
      Window Period.  For this Note, the Prepayment Premium Period equals
      the Yield Maintenance Period.

    

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

    

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

    

    “Reference
      Bill Index Rate” means, for any Interest Adjustment Period after the
      first Interest Adjustment Period, the Money Market Yield for the Reference
      Bills

    
      
        
        

      

      
        PAGE
          3

        
          

        

      

      
        
        

      

    

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

    

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

    

    “Security
      Instrument” means the multifamily mortgage, deed to secure debt or deed
      of trust effective as of the effective date of this Note, from Borrower to
      or
      for the benefit of Lender and securing this Note.

    

    
      	
               

            	
              “Treasury
                Security” means the 9.25% U.S. Treasury Security due
                May 15, 2018.

            

    

    

    “Window
      Period” means the Extension Period.

    

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

    

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

    

    2.           Address
      for Payment.  All payments due under this Note shall be
      payable at 3500 American Boulevard West, Suite 500, Bloomington,
      Minnesota  55431, or such other place as may be designated by Notice
      to Borrower from or on behalf of Lender.

    

    3.           Payments.

    

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

    
      
        
        

      

      
        PAGE
          4

        
          

        

      

      
        
        

      

    

    (b)           Interest
      under this Note shall be computed, payable and allocated on the basis of an
      actual/360 interest calculation schedule (interest is payable for the actual
      number of days in each month, and each month’s interest is calculated by
      multiplying the unpaid principal amount of this Note as of the first day of
      the
      month for which interest in being calculated by the Fixed Interest Rate (during
      the Fixed Rate Period) or the applicable Adjustable Interest Rate (during the
      Extension Period), dividing the product by 360, and multiplying the quotient
      by
      the number of days in the month for which interest is being
      calculated).  For convenience in determining the amount of a monthly
      installment of principal and interest under this Note, Lender will use a 30/360
      interest calculation payment schedule (each year is treated as consisting of
      twelve 30-day months).  However, as provided above, the portion of the
      monthly installment actually payable as and allocated to interest will be based
      upon an actual/360 interest calculation schedule, and the amount of each
      installment attributable to principal and the amount attributable to interest
      will vary based upon the number of days in the month for which such installment
      is paid.  Each monthly payment of principal and interest will first be
      applied to pay in full interest due, and the balance of the monthly payment
      paid
      by Borrower will be credited to principal.

    

    (c)           Unless
      disbursement of principal is made by Lender to Borrower on the first day of
      a
      calendar month, interest for the period beginning on the date of disbursement
      and ending on and including the last day of such calendar month shall be payable
      by Borrower simultaneously with the execution of this Note.  If
      disbursement of principal is made by Lender to Borrower on the first day of
      a
      calendar month, then no payment will be due from Borrower at the time of the
      execution of this Note.  The Installment Due Date for the first
      monthly installment payment under Section 3(d) of interest only or principal
      and
      interest, as applicable, will be the First Installment Due Date set forth in
      Section 1(a) of this Note.  Except as provided in this Section 3(c)
      and in Section 10, accrued interest will be payable in arrears.

    

    (d)           Beginning
      on the First Installment Due Date, and continuing until and including the
      monthly installment due on the Initial Maturity Date, principal and accrued
      interest 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 Forty Seven Thousand Two
      Hundred Ninety Nine and 59/100 Dollars ($47,299.59).

    

    (e)           Except
      as otherwise provided in this Section 3(e), all remaining Indebtedness,
      including all principal and interest, shall be due and payable by Borrower
      on
      the Initial Maturity Date.  However, so long as (i) the Initial
      Maturity Date has not occurred prior to the Scheduled Initial Maturity Date,
      and
      (ii) no Event of Default or event or circumstance which, with the giving of
      notice or passage of time or both, could constitute an Event of Default exists
      on the Scheduled Initial Maturity Date, then the Extension Period automatically
      will become effective and the date for full payment of the Indebtedness
      automatically shall be extended until the Extended Maturity Date.  If
      the Extension Period becomes effective, monthly installments of principal and
      interest or interest only will be payable during the Extension Period as
      provided in Section 3(f).  Anything in Section 21 of the Security
      Instrument to the contrary notwithstanding,

    
      
        
        

      

      
        PAGE
          5

        
          

        

      

      
        
        

      

    

    during
      the Extension Period, Borrower will not request that Lender consent to, and
      Lender will not consent to, a Transfer that, absent such consent, would
      constitute an Event of Default.

    

    (f)           If
      the Extension Period becomes effective, beginning on November 1,
      2017,  and continuing until and including the monthly installment due
      on the Extended Maturity Date, principal and accrued interest shall be payable
      by Borrower in consecutive monthly installments due and payable on the first
      day
      of each calendar month.  The amount of the monthly installment of
      principal and interest payable pursuant to this Section 3(f) on an Installment
      Due Date shall be calculated so as to equal the monthly payment amount which
      would be payable on the Installment Due Date as if the unpaid principal balance
      of this Note as of the first day of the Interest Adjustment Period immediately
      preceding the Installment Due Date was to be fully amortized, together with
      interest thereon at the Adjustable Interest Rate in effect for such Interest
      Adjustment Period, in equal consecutive monthly payments paid on the first
      day
      of each calendar month over the Remaining Amortization Period.

    

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

    

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

    

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

    

    (j)           Any
      accrued interest remaining past due for 30 days or more, at Lender’s discretion,
      may be added to and become part of the unpaid principal balance of this Note
      and
      any reference to “accrued interest” shall refer to accrued interest which has
      not become part of the unpaid principal balance.  Any amount added to
      principal pursuant to the Loan Documents shall bear interest at the applicable
      rate or rates specified in this Note and shall be payable with
      such

    
      
        
        

      

      
        PAGE
          6

        
          

        

      

      
        
        

      

    

    interest
      upon demand by Lender and absent such demand, as provided in this Note for
      the
      payment of principal and interest.

    

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

    

    4.           Application
      of Payments.  If at any time Lender receives, from Borrower
      or otherwise, any amount applicable to the Indebtedness which is less than
      all
      amounts due and payable at such time, Lender may apply the amount received
      to
      amounts then due and payable in any manner and in any order determined by
      Lender, in Lender’s discretion.  Borrower agrees that neither Lender’s
      acceptance of a payment from Borrower in an amount that is less than all amounts
      then due and payable nor Lender’s application of such payment shall constitute
      or be deemed to constitute either a waiver of the unpaid amounts or an accord
      and satisfaction.

    

    5.           Security.  The
      Indebtedness is secured by, among other things, the Security Instrument, and
      reference is made to the Security Instrument for other rights of Lender as
      to
      collateral for the Indebtedness.

    

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

    

    7.           Late
      Charge.

    

    (a)          If
      any monthly installment of interest or principal and interest or other amount
      payable under this Note or under the Security Instrument or any other Loan
      Document is not received in full by Lender (i) during the Fixed Rate Period,
      within ten (10) days after the installment or other amount is due, or (ii)
      during the Extension Period, within five (5) days after the installment or
      other
      amount is due, counting from and including the date such installment or other
      amount is due (unless applicable law requires a longer period of time before
      a
      late charge may be imposed, in which event such longer period shall be
      substituted), Borrower shall pay to Lender, immediately and without demand
      by
      Lender, a late charge equal to five percent (5%) of

    
      
        
        

      

      
        PAGE
          7

        
          

        

      

      
        
        

      

    

    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

    
      
        
        

      

      
        PAGE
          8

        
          

        

      

      
        
        

      

    

    of
      the
      Indebtedness or for the performance of any other obligations of Borrower under
      the Loan Documents and Lender’s only recourse for the satisfaction of the
      Indebtedness and the performance of such obligations shall be Lender’s exercise
      of its rights and remedies with respect to the Mortgaged Property and to any
      other collateral held by Lender as security for the
      Indebtedness.  This limitation on Borrower’s liability shall not limit
      or impair Lender’s enforcement of its rights against any guarantor of the
      Indebtedness or any guarantor of any other obligations of Borrower.

    

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

    

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

    

    
      	
               

            	
              (i)

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

            

    

    

    
      	
               

            	
              (ii)

            	
              Borrower
                fails to apply all insurance proceeds and condemnation proceeds as
                required by the Security Instrument.  However, Borrower will not
                be personally liable for any failure described in this
                subsection (ii) if Borrower is unable to apply insurance or
                condemnation proceeds as required by the Security Instrument because
                of a
                valid order issued in a bankruptcy, receivership, or similar judicial
                proceeding.

            

    

    

    
      	
               

            	
              (iii)

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

            

    

    

    
      	
               

            	
              (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,

              

            

    

                     

    
      
        
        

      

      
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          9

        
          

        

      

      
        
        

      

    

    [Deferred]            assessments
      or other charges (that could become a lien on the Mortgaged
      Property)

    

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

    

    
      	
               

            	
              (i)

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

            

    

    

    
      	
               

            	
              (ii)

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

            

    

    

    
      	
               

            	
              (iii)

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

            

    

    

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

    

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

    

    
      	
               

            	
              (i)

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

            

    

    

    
      	
               

            	
              (ii)

            	
              a
                Transfer (including, but not limited to, a lien or encumbrance) that
                is an
                Event of Default under Section 21 of the Security Instrument, other
                than a Transfer consisting solely of the involuntary removal or
                involuntary withdrawal of a general partner in a limited partnership
                or a
                manager in a limited liability company;
                or

            

    

    

    
      	
               

            	
              (iii)

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

            

    

    

    (g)          To
      the extent that Borrower has personal liability under this Section 9,
      Lender may exercise its rights against Borrower personally without regard to
      whether Lender has exercised any rights against the Mortgaged Property or any
      other security, or pursued any rights against any guarantor, or pursued any
      other rights available to Lender under this Note, the

    
      
        
        

      

      
        PAGE
          10

        
          

        

      

      
        
        

      

    

    Security
      Instrument, any other Loan Document or applicable law. To
      the fullest extent permitted by applicable law, in any action to enforce
      Borrower’s personal liability under this Section 9, Borrower waives any
      right to set off the value of the Mortgaged Property against such personal
      liability.

    

    10.           Voluntary
      and Involuntary Prepayments.

    

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

    
 

    (b)           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 10 only, the term “Installment Due Date” shall mean the
      Business Day immediately preceding the scheduled Installment Due
      Date.

    

    (c)           Notwithstanding
      subsection (b) 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 subsection (b)
      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.

    

    (d)           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 or any part of the principal of this Note,
      Borrower must also pay to Lender, together with the amount of principal being
      prepaid, (i) all accrued and unpaid interest due under this Note, plus (ii)
      all
      other sums due to Lender at the time of such prepayment, plus (iii) any
      prepayment premium calculated pursuant to Section 10(e).

    

    (e)           Except
      as provided in Section 10(f), a prepayment premium shall be due and payable
      by
      Borrower in connection with any prepayment of principal under this Note during
      the Prepayment Premium Period.  The prepayment premium shall be
      whichever is the greater of subsections (A) and (B) below:

    
      
        
        

      

      
        PAGE
          11

        
          

        

      

      
        
        

      

    

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

     

              (B)           the
      product obtained by multiplying:

    

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

    by

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

    by

    (3)          the
      Present Value Factor.

    

          
For
      purposes of subsection (B), the following definitions shall
      apply:

    

    
      	
               

            	
              Monthly
                Note Rate: one-twelfth (1/12) of the Fixed Interest Rate,
                expressed as a decimal calculated to five
                digits.

            

    

    

    
      	
               

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

            

    

    

    
      	
               

            	
              Assumed
                Reinvestment Rate:  one-twelfth (1/12) of the yield
                rate, as of the date 5 Business Days before the Prepayment Date,
                on the
                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 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:

            

    

    
      
        
        

      

      
        PAGE
          12

        
          

        

      

      
        
        

      

    

     

    
      

       

    

    
      	
               

            	
              n
                = the number of months remaining in Yield Maintenance Period; provided,
                however, if a prepayment occurs on an Installment Due Date, then
                the
                number of months remaining in the Yield Maintenance Period 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

    

    (f)           Notwithstanding
      any other provision of this Section 10, no prepayment premium shall be
      payable with respect to (i) any prepayment made during the Window Period,
      or (ii) any prepayment occurring as a result of the application of any
      insurance proceeds or condemnation award under the Security
      Instrument.

    

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

    

    (h)           Borrower
      recognizes that any prepayment of any of the unpaid principal balance of this
      Note, whether voluntary or involuntary or resulting from an Event of Default
      by
      Borrower, will result in Lender’s incurring loss, including reinvestment loss,
      additional expense and frustration or impairment of Lender’s ability to meet its
      commitments to third parties.  Borrower agrees to pay to Lender upon
      demand damages for the detriment caused by any prepayment, and agrees that
      it is
      extremely difficult and impractical to ascertain the extent of such
      damages.  Borrower therefore acknowledges and agrees that the formula
      for calculating prepayment premiums set forth in this Note represents a
      reasonable estimate of the damages Lender will incur because of a
      prepayment.  Borrower further acknowledges that any lockout and the
      prepayment premium provisions of this Note are a material part of the
      consideration for the Loan, and that the terms of this Note are in other
      respects more favorable to Borrower as a result of the Borrower’s voluntary
      agreement to the lockout and prepayment premium provisions.

    

    11.           Costs
      and Expenses.  To the fullest extent allowed by applicable
      law, Borrower shall pay all expenses and costs, including Attorneys’ Fees and
      Costs incurred by Lender as a result of any default under this Note or in
      connection with efforts to collect any amount due under this Note, or to enforce
      the provisions of any of the other Loan Documents, including

    
      
        
        

      

      
        PAGE
          13

        
          

        

      

      
        
        

      

    

    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.

    

    12.           Forbearance.  Any
      forbearance by Lender in exercising any right or remedy under this Note, the
      Security Instrument, or any other Loan Document or otherwise afforded by
      applicable law, shall not be a waiver of or preclude the exercise of that or
      any
      other right or remedy.  The acceptance by Lender of any payment after
      the due date of such payment, or in an amount which is less than the required
      payment, shall not be a waiver of Lender’s right to require prompt payment when
      due of all other payments or to exercise any right or remedy with respect to
      any
      failure to make prompt payment.  Enforcement by Lender of any security
      for Borrower’s obligations under this Note shall not constitute an election by
      Lender of remedies so as to preclude the exercise of any other right or remedy
      available to Lender.

    

    13.           Waivers.  Borrower
      and all endorsers and guarantors of this Note and all other third party obligors
      waive presentment, demand, notice of dishonor, protest, notice of acceleration,
      notice of intent to demand or accelerate payment or maturity, presentment for
      payment, notice of nonpayment, grace, and diligence in collecting the
      Indebtedness.

    

    14.           Loan
      Charges.  Neither this Note nor any of the other Loan
      Documents shall be construed to create a contract for the use, forbearance
      or
      detention of money requiring payment of interest at a rate greater than the
      Maximum Interest Rate.  If any applicable law limiting the amount of
      interest or other charges permitted to be collected from Borrower in connection
      with the Loan is interpreted so that any interest or other charge provided
      for
      in any Loan Document, whether considered separately or together with other
      charges provided for in any other Loan Document, violates that law, and Borrower
      is entitled to the benefit of that law, that interest or charge is hereby
      reduced to the extent necessary to eliminate that violation.  The
      amounts, if any, previously paid to Lender in excess of the permitted amounts
      shall be applied by Lender to reduce the unpaid principal balance of this Note.
      For the purpose of determining whether any applicable law limiting the amount
      of
      interest or other charges permitted to be collected from Borrower has been
      violated, all Indebtedness that constitutes interest, as well as all other
      charges made in connection with the Indebtedness that constitute interest,
      shall
      be deemed to be allocated and spread ratably over the stated term of this
      Note.  Unless otherwise required by applicable law, such allocation
      and spreading shall be effected in such a manner that the rate of interest
      so
      computed is uniform throughout the stated term of this Note.

    

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

    

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

    
      
        
        

      

      
        PAGE
          14

        
          

        

      

      
        
        

      

    

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

    

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

    

    19.           Notices;
      Written Modifications. 

    

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

    

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

    

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

    

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

    
      

    

    
      22.            State-Specific
        Provisions.  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

     

    
 

    
      
        
        

      

      
        PAGE
          15

        
          

        

      

      
        
        

      

    

    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.

    

    
      	
               

            	
              BORROWER:

            

    

    

    
      	
               

            	
              Chalet
                I Acquisition, L.L.C.,

            

    

    
      	
               

            	
              a
                Kansas limited liability company

            

      	 	 

      	 	 

      	 	 By:  /s/
              John W.
              Alvey

      	 	 Name:  John
              W. Alvey

      	 	 Title:    Manager

      	 	 

      	 	 

      	 	 Borrower’s
              Social Security/Employer ID Number:

      	 	 43-1938918

    

    

    

     

     

     

    

    

     
                                                         
    
      
        
        

      

      
        Signature
          Page - Chalet I & II Apartments -
          Note                                                           PAGE
          S-1

        
          

        

      

      
        
        

      

    

    FHLMC
      Loan No. 981208630

    

    PAY
      TO
      THE ORDER
      OF ____________________________________________________ ,

    WITHOUT
      RECOURSE, AS OF THE 14TH DAY OF
      SEPTEMBER,
      2007.

    

    

    NorthMarq
      Capital, Inc.,

    a
      Minnesota corporation

     

    By:      _______________                                                          

    Paul
      W. Cairns

    Its:              Vice
      President

    

    

    
      
        
        

      

      
        PAGE
          S-2

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    MODIFICATIONS
      TO MULTIFAMILY NOTE

    

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

    

    

    NONE.

     

     

     

     

     

     

     

     

     

    PAGE
      A-1

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