Exhibit 10 DDD

Prepared by, and after recording

return to:

Amy B. Connelly, Esq.

Krooth & Altman LLP

1850 M Street, NW, Suite 400

Washington, DC 20036

 

 

 

 

 

 

 

 

 

 

 

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS

AND SECURITY AGREEMENT AND FIXTURE FILING

 

(TEXAS)

            TABLE OF CONTENTS

 

                                                                                                                                                 
PAGE

 

1.        
DEFINITIONS.....................................................................................................................
2

2.         UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT....................................... 6

3.         ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.......................................................................................................................7

4.         ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.. 9

5.         PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT
PREMIUM..............................................................................................
11

6.        
EXCULPATION................................................................................................................
11

7.         DEPOSITS FOR TAXES, INSURANCE AND OTHER
CHARGES................................ 12

8.         COLLATERAL
AGREEMENTS.......................................................................................
13

9.         APPLICATION OF
PAYMENTS.....................................................................................
13

10.       COMPLIANCE WITH
LAWS..........................................................................................
13

11.       USE OF
PROPERTY.........................................................................................................
14

12.       PROTECTION OF LENDER'S
SECURITY......................................................................
14

13.      
INSPECTION....................................................................................................................
14

14.       BOOKS AND RECORDS; FINANCIAL
REPORTING................................................... 15

15.       TAXES; OPERATING
EXPENSES...................................................................................
16

16.       LIENS;
ENCUMBRANCES..............................................................................................
17

17.       PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED
PROPERTY........................................................................................................................17

18.       ENVIRONMENTAL
HAZARDS......................................................................................
18

19.       PROPERTY AND LIABILITY
INSURANCE................................................................... 24

20.      
CONDEMNATION...........................................................................................................
25

21.       TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER. 26

22.       EVENTS OF
DEFAULT....................................................................................................
29

23.       REMEDIES
CUMULATIVE..............................................................................................
31

24.      
FORBEARANCE...............................................................................................................
31

25.       [INTENTIONALLY
DELETED]........................................................................................
31

26.       WAIVER OF STATUTE OF
LIMITATIONS....................................................................
31

27.       WAIVER OF
MARSHALLING.........................................................................................
31

28.       FURTHER
ASSURANCES...............................................................................................
32

29.       ESTOPPEL
CERTIFICATE...............................................................................................
32

30.       GOVERNING LAW; CONSENT TO JURISDICTION AND
VENUE............................ 32

31.      
NOTICE.............................................................................................................................
33

32.       SALE OF NOTE; CHANGE IN
SERVICER..................................................................... 33

33.       SINGLE ASSET
BORROWER..........................................................................................
33

34.       SUCCESSORS AND ASSIGNS
BOUND........................................................................ 34

35.       JOINT AND SEVERAL
LIABILITY.................................................................................
34

36.       RELATIONSHIP OF PARTIES; NO THIRD PARTY
BENEFICIARY............................ 34

37.       SEVERABILITY;
AMENDMENTS...................................................................................
34

38.      
CONSTRUCTION............................................................................................................
34

39.       LOAN
SERVICING..........................................................................................................
35

40.       DISCLOSURE OF
INFORMATION................................................................................
35

41.       NO CHANGE IN FACTS OR
CIRCUMSTANCES......................................................... 35

42.      
SUBROGATION...............................................................................................................
35

43.       ACCELERATION;
REMEDIES........................................................................................
35

44.      
RELEASE...........................................................................................................................
39

45.      
TRUSTEE...........................................................................................................................
39

46.       VENDOR’S LIEN; RENEWAL AND
EXTENSION........................................................ 40

47.       NO FIDUCIARY
DUTY....................................................................................................
40

48.       FIXTURE
FILING.............................................................................................................
40

49.       ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF
RENTS..................... 40

50.       LOAN
CHARGES.............................................................................................................
40

51.       PROPERTY AND LIABILITY INSURANCE — DELIVERY OF POLICY TO LENDER. 41

52.       ENTIRE
AGREEMENT.....................................................................................................
41

53.       WAIVER OF TRIAL BY
JURY.........................................................................................
42

 

 

 

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS

SECURITY AGREEMENT AND FIXTURE FILING

 

 

            THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (the “Instrument”) is dated as of the 31st day of March, 2009, by
AIMCO COVINGTON POINTE, L.P.,a limited partnership organized and existing under
the laws of Delaware, whose address is Stanford Place 3, 4582 South Ulster
Street Parkway, Suite 1100, Denver, Colorado 80237,  as trustor (“Borrower”), to
J. Paxton, Esq., as trustee (“Trustee”), for the benefit of KeyCorp Real Estate
Capital Markets, Inc., a corporation organized and existing under the laws of
Ohio, whose address is 911 Main Street, Suite 1500, Kansas City, Missouri 64105,
as beneficiary (“Lender”).

 

            Borrower, in consideration of the Indebtedness and the trust created
by this Instrument, irrevocably grants, conveys and assigns to Trustee, in
trust, with power of sale, the Mortgaged Property, including the Land located in
Dallas County, State of Texas and described in Exhibit A attached to this
Instrument.  To have and to hold the Mortgaged Property unto Trustee, Trustee’s
successor in trust and Trustee’s assigns forever.

 

            TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrower’s Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on February 1, 2016, in the principal amount of
$1,500,000, and all renewals, extensions and modifications of the Indebtedness,
and the performance of the covenants and agreements of Borrower contained in the
Loan Documents.

 

            Borrower warrants and represents that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to grant, convey
and assign the Mortgaged Property, and that the Mortgaged Property is
unencumbered.  Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and demands,
subject to any easements and restrictions listed in a schedule of exceptions to
coverage in any title insurance policy issued to Lender contemporaneously with
the execution and recordation of this Instrument and insuring Lender’s interest
in the Mortgaged Property.

 

Covenants.  Borrower and Lender covenant and agree as follows:

 

            1.         DEFINITIONS.

 

            The following terms, when used in this Instrument (including when
used in the above recitals), shall have the following meanings:

 

            (a)        "Borrower" means all persons or entities identified as
"Borrower" in the first paragraph of this Instrument, together with their
successors and assigns.

 

            (b)        "Collateral Agreement" means any separate agreement
between Borrower and Lender for the purpose of establishing replacement reserves
for the Mortgaged Property, establishing a fund to assure completion of repairs
or improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the occupancy of or income
from the Mortgaged Property does not increase to a level specified in that
agreement, or any other agreement or agreements between Borrower and Lender
which provide for the establishment of any other fund, reserve or account.

 

            (c)        "Environmental Permit" means any permit, license, or
other authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.

 

            (d)        "Event of Default" means the occurrence of any event
listed in Section 22.

 

            (e)        "Fixtures" means all property which is so attached to the
Land or the Improvements as to constitute a fixture under applicable law,
including: machinery, equipment, engines, boilers, incinerators, installed
building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light; antennas,
cable, wiring and conduits used in connection with radio, television, security,
fire prevention, or fire detection or otherwise used to carry electronic
signals; telephone systems and equipment; elevators and related machinery and
equipment; fire detection, prevention and extinguishing systems and apparatus;
security and access control systems and apparatus; plumbing systems; water
heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage
disposers, washers, dryers and other appliances; light fixtures, awnings, storm
windows and storm doors; pictures, screens, blinds, shades, curtains and curtain
rods; mirrors; cabinets, paneling, rugs and floor and wall coverings; fences,
trees and plants; swimming pools; and exercise equipment.

 

            (f)         "Governmental Authority" means any board, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision of any of them, that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the Mortgaged
Property.

 

            (g)        "Hazardous Materials" means petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground or above-ground storage tanks, whether empty or containing
any substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.

 

            (h)        "Hazardous Materials Laws" means all federal, state, and
local laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials and apply to Borrower or to the Mortgaged Property.
Hazardous Materials Laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the
Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, et seq., and their state analogs.

 

            (i)         "Impositions" and "Imposition Deposits" are defined in
Section 7(a).

 

            (j)         "Improvements" means the buildings, structures,
improvements, and alterations now constructed or at any time in the future
constructed or placed upon the Land, including any future replacements and
additions.

 

            (k)        "Indebtedness" means the principal of, interest on, and
all other amounts due at any time under, the Note, this Instrument or any other
Loan Document, including prepayment premiums, late charges, default interest,
and advances as provided in Section 12 to protect the security of this
Instrument.

 

            (l)         [Intentionally omitted]

 

            (m)       "Key Principal" means the natural person(s) or entity
identified as such at the foot of this Instrument, and any person or entity who
becomes a Key Principal after the date of this Instrument and is identified as
such in an amendment or supplement to this Instrument.

 

            (n)        "Land" means the land described in Exhibit A.

 

            (o)        "Leases" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or hereafter
in force, whether oral or written, covering or affecting the Mortgaged Property,
or any portion of the Mortgaged Property (including proprietary leases or
occupancy agreements if Borrower is a cooperative housing corporation), and all
modifications, extensions or renewals.

 

            (p)        "Lender" means the entity identified as "Lender" in the
first paragraph of this Instrument and its successors and assigns, or any
subsequent holder of the Note.

 

            (q)        "Loan Documents" means the Note, this Instrument, all
guaranties, all indemnity agreements, all Collateral Agreements, O&M Programs,
and any other documents now or in the future executed by Borrower, Key
Principal, any guarantor or any other person in connection with the loan
evidenced by the Note, as such documents may be amended from time to time.

 

            (r)        "Loan Servicer" means the entity that from time to time
is designated by Lender to collect payments and deposits and receive notices
under the Note, this Instrument and any other Loan Document, and otherwise to
service the loan evidenced by the Note for the benefit of Lender.  Unless
Borrower receives notice to the contrary, the Loan Servicer is the entity
identified as "Lender" in the first paragraph of this Instrument.

 

            (s)        "Mortgaged Property" means all of Borrower's present and
future right, title and interest in and to all of the following:

 

                        (1)        the Land;

 

                        (2)        the Improvements;

 

                        (3)        the Fixtures;

 

                        (4)        the Personalty;

 

                        (5)        all current and future rights, including air
rights, development rights, zoning rights and other similar rights or interests,
easements, tenements, rights-of-way, strips and gores of land, streets, alleys,
roads, sewer rights, waters, watercourses, and appurtenances related to or
benefitting the Land or the Improvements, or both, and all rights-of-way,
streets, alleys and roads which may have been or may in the future be vacated;

 

                        (6)        all proceeds paid or to be paid by any
insurer of the Land, the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, whether or not Borrower obtained the insurance
pursuant to Lender's requirement;

 

                        (7)        all awards, payments and other compensation
made or to be made by any municipal, state or federal authority with respect to
the Land, the Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property, including any awards or settlements resulting from
condemnation proceedings or the total or partial taking of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property under the power of eminent domain or otherwise and including any
conveyance in lieu thereof;

 

                        (8)        all contracts, options and other agreements
for the sale of the Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property entered into by Borrower now or in the
future, including cash or securities deposited to secure performance by parties
of their obligations;

 

                        (9)        all proceeds from the conversion, voluntary
or involuntary, of any of the above into cash or liquidated claims, and the
right to collect such proceeds;

 

                        (10)      all Rents and Leases;

 

                        (11)      all earnings, royalties, accounts receivable,
issues and profits from the Land, the Improvements or any other part of the
Mortgaged Property, and all undisbursed proceeds of the loan secured by this
Instrument and, if Borrower is a cooperative housing corporation, maintenance
charges or assessments payable by shareholders or residents;

 

                        (12)      all Imposition Deposits;

 

                        (13)      all refunds or rebates of Impositions by any
municipal, state or federal authority or insurance company (other than refunds
applicable to periods before the real property tax year in which this Instrument
is dated);

 

                        (14)      all tenant security deposits which have not
been forfeited by any tenant under any Lease; and

 

                        (15)      all names under or by which any of the above
Mortgaged Property may be operated or known, and all trademarks, trade names,
and goodwill relating to any of the Mortgaged Property.

 

            (t)         "Note" means the Multifamily Note described on page 1 of
this Instrument, including the Acknowledgment and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability (if any), and all
schedules, riders, allonges and addenda, as such Multifamily Note may be amended
from time to time.

 

            (u)        "O&M Program" is defined in Section 18(a).

 

            (v)        "Personalty" means all equipment, inventory, general
intangibles which are used now or in the future in connection with the
ownership, management or operation of the Land or the Improvements or are
located on the Land or in the Improvements, including furniture, furnishings,
machinery, building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment (hardware
and software) and other tangible personal property (other than Fixtures) which
are used now or in the future in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land or in the
Improvements, and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements and all other intangible property and rights relating to the
operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land.

 

            (w)       "Property Jurisdiction" is defined in Section 30(a).

 

            (x)        "Rents" means all rents (whether from residential or
non-residential space), revenues and other income of the Land or the
Improvements, including subsidy payments received from any sources (including,
but not limited to payments under any Housing Assistance Payments Contract),
parking fees, laundry and vending machine income and fees and charges for food,
health care and other services provided at the Mortgaged Property, whether now
due, past due, or to become due, and deposits forfeited by tenants.

 

            (y)        "Taxes" means all taxes, assessments, vault rentals and
other charges, if any, general, special or otherwise, including all assessments
for schools, public betterments and general or local improvements, which are
levied, assessed or imposed by any public authority or quasi-public authority,
and which, if not paid, will become a lien, on the Land or the Improvements.

 

            (z)        "Transfer" means (A) a sale, assignment, transfer or
other disposition (whether voluntary, involuntary or by operation of law); (B)
the granting, creating or attachment of a lien, encumbrance or security interest
(whether voluntary, involuntary or by operation of law); (C) the issuance or
other creation of an ownership interest in a legal entity, including a
partnership interest, interest in a limited liability company or corporate
stock; (D) the withdrawal, retirement, removal or involuntary resignation of a
partner in a partnership or a member or manager in a limited liability company;
or (E) the merger, dissolution, liquidation, or consolidation of a legal
entity.  "Transfer" does not include (i) a conveyance of the Mortgaged Property
at a judicial or non-judicial foreclosure sale under this Instrument or (ii) the
Mortgaged Property becoming part of a bankruptcy estate by operation of law
under the United States Bankruptcy Code.  For purposes of defining the term
"Transfer," the term "partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability partnership, and the term
"partner" shall mean a general partner, a limited partner and a joint venturer.

 

            2.         UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

 

            This Instrument is also a security agreement under the Uniform
Commercial Code for any of the Mortgaged Property which, under applicable law,
may be subject to a security interest under the Uniform Commercial Code, whether
acquired now or in the future, and all products and cash and non-cash proceeds
thereof (collectively, "UCC Collateral"), and Borrower hereby grants to Lender a
security interest in the UCC Collateral.  Borrower hereby authorizes Lender to
file financing statements, continuation statements and financing statement
amendments in such form as Lender may require to perfect or continue the
perfection of this security interest and Borrower agrees, if Lender so requests,
to execute and deliver to Lender such financing statements, continuation
statements and amendments.  Borrower shall pay all filing costs and all costs
and expenses of any record searches for financing statements that Lender may
require.  Without the prior written consent of Lender, Borrower shall not create
or permit to exist any other lien or security interest in any of the UCC
Collateral.  If an Event of Default has occurred and is continuing, Lender shall
have the remedies of a secured party under the Uniform Commercial Code, in
addition to all remedies provided by this Instrument or existing under
applicable law.  In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender's other remedies.  This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.

 

            3.         ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.

 

            (a)        As part of the consideration for the Indebtedness,
Borrower absolutely and unconditionally assigns and transfers to Lender all
Rents. It is the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all Rents and to authorize and
empower Lender to collect and receive all Rents without the necessity of further
action on the part of Borrower.  Promptly upon request by Lender, Borrower
agrees to execute and deliver such further assignments as Lender may from time
to time require.  Borrower and Lender intend this assignment of Rents to be
immediately effective and to constitute an absolute present assignment and not
an assignment for additional security only.  For purposes of giving effect to
this absolute assignment of Rents, and for no other purpose, Rents shall not be
deemed to be a part of the "Mortgaged Property," as that term is defined in
Section 1(s).  However, if this present, absolute and unconditional assignment
of Rents is not enforceable by its terms under the laws of the Property
Jurisdiction, then the Rents shall be included as a part of the Mortgaged
Property and it is the intention of the Borrower that in this circumstance this
Instrument create and perfect a lien on Rents in favor of Lender, which lien
shall be effective as of the date of this Instrument.

 

            (b)        After the occurrence of an Event of Default, Borrower
authorizes Lender to collect, sue for and compromise Rents and directs each
tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender,
and Borrower shall, upon Borrower's receipt of any Rents from any sources
(including, but not limited to subsidy payments under any Housing Assistance
Payments Contract), pay the total amount of such receipts to the Lender. 
However, until the occurrence of an Event of Default, Lender hereby grants to
Borrower a revocable license to collect and receive all Rents, to hold all Rents
in trust for the benefit of Lender and to apply all Rents to pay the
installments of interest and principal then due and payable under the Note and
the other amounts then due and payable under the other Loan Documents, including
Imposition Deposits, and to pay the current costs and expenses of managing,
operating and maintaining the Mortgaged Property, including utilities, Taxes and
insurance premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures.  So long as no Event of Default has
occurred and is continuing, the Rents remaining after application pursuant to
the preceding sentence may be retained by Borrower free and clear of, and
released from, Lender's rights with respect to Rents under this Instrument. 
From and after the occurrence of an Event of Default, and without the necessity
of Lender entering upon and taking and maintaining control of the Mortgaged
Property directly, or by a receiver, Borrower's license to collect Rents shall
automatically terminate and Lender shall without notice be entitled to all Rents
as they become due and payable, including Rents then due and unpaid.  Borrower
shall pay to Lender upon demand all Rents to which Lender is entitled.  At any
time after the occurrence of an Event of Default, Lender may give, and Borrower
hereby irrevocably authorizes Lender to give, notice to all tenants of the
Mortgaged Property instructing them to pay all Rents to Lender; provided,
however, that the giving of any such notice by Lender shall not affect, in any
way, Lender’s entitlement to the Rents as of the date on which the Event of
Default occurs.  No tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and no tenant shall be
obligated to pay to Borrower any amounts which are actually paid to Lender in
response to such a notice.  Any such notice by Lender shall be delivered to each
tenant personally, by mail or by delivering such demand to each rental unit. 
Borrower shall not interfere with and shall cooperate with Lender's collection
of such Rents.

 

            (c)        Borrower represents and warrants to Lender that Borrower
has not executed any prior assignment of Rents (other than an assignment of
Rents securing indebtedness that will be paid off and discharged with the
proceeds of the loan evidenced by the Note), that Borrower has not performed,
and Borrower covenants and agrees that it will not perform, any acts and has not
executed, and shall not execute, any instrument which would prevent Lender from
exercising its rights under this Section 3, and that at the time of execution of
this Instrument there has been no anticipation or prepayment of any Rents for
more than two months prior to the due dates of such Rents.  Borrower shall not
collect or accept payment of any Rents more than two months prior to the due
dates of such Rents.

 

            (d)        If an Event of Default has occurred and is continuing,
Lender may, regardless of the adequacy of Lender's security or the solvency of
Borrower and even in the absence of waste, enter upon and take and maintain full
control of the Mortgaged Property in order to perform all acts that Lender in
its discretion determines to be necessary or desirable for the operation and
maintenance of the Mortgaged Property, including the execution, cancellation or
modification of Leases, the collection of all Rents, the making of repairs to
the Mortgaged Property and the execution or termination of contracts providing
for the management, operation or maintenance of the Mortgaged Property, for the
purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for
such other purposes as Lender in its discretion may deem necessary or
desirable.  Alternatively, if an Event of Default has occurred and is
continuing, regardless of the adequacy of Lender's security, without regard to
Borrower's solvency and without the necessity of giving prior notice (oral or
written) to Borrower, Lender may apply to any court having jurisdiction for the
appointment of a receiver for the Mortgaged Property to take any or all of the
actions set forth in the preceding sentence.  If Lender elects to seek the
appointment of a receiver for the Mortgaged Property at any time after an Event
of Default has occurred and is continuing, Borrower, by its execution of this
Instrument, expressly consents to the appointment of such receiver, including
the appointment of a receiver ex parte if permitted by applicable law.  Lender
or the receiver, as the case may be, shall be entitled to receive a reasonable
fee for managing the Mortgaged Property.  Immediately upon appointment of a
receiver or immediately upon the Lender's entering upon and taking possession
and control of the Mortgaged Property, Borrower shall surrender possession of
the Mortgaged Property to Lender or the receiver, as the case may be, and shall
deliver to Lender or the receiver, as the case may be, all documents, records
(including records on electronic or magnetic media), accounts, surveys, plans,
and specifications relating to the Mortgaged Property and all security deposits
and prepaid Rents.  In the event Lender takes possession and control of the
Mortgaged Property, Lender may exclude Borrower and its representatives from the
Mortgaged Property.  Borrower acknowledges and agrees that the exercise by
Lender of any of the rights conferred under this Section 3 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property so
long as Lender has not itself entered into actual possession of the Land and
Improvements.

 

            (e)        If Lender enters the Mortgaged Property, Lender shall be
liable to account only to Borrower and only for those Rents actually received. 
Lender shall not be liable to Borrower, anyone claiming under or through
Borrower or anyone having an interest in the Mortgaged Property, by reason of
any act or omission of Lender under this Section 3, and Borrower hereby releases
and discharges Lender from any such liability to the fullest extent permitted by
law.

 

            (f)         If the Rents are not sufficient to meet the costs of
taking control of and managing the Mortgaged Property and collecting the Rents,
any funds expended by Lender for such purposes shall become an additional part
of the Indebtedness as provided in Section 12.

 

            (g)        Any entering upon and taking of control of the Mortgaged
Property by Lender or the receiver, as the case may be, and any application of
Rents as provided in this Instrument shall not cure or waive any Event of
Default or invalidate any other right or remedy of Lender under applicable law
or provided for in this Instrument.

 

            4.         ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED
PROPERTY.

 

            (a)        As part of the consideration for the Indebtedness,
Borrower absolutely and unconditionally assigns and transfers to Lender all of
Borrower's right, title and interest in, to and under the Leases, including
Borrower's right, power and authority to modify the terms of any such Lease, or
extend or terminate any such Lease.   It is the intention of Borrower to
establish a present, absolute and irrevocable transfer and assignment to Lender
of all of Borrower's right, title and interest in, to and under the Leases. 
Borrower and Lender intend this assignment of the Leases to be immediately
effective and to constitute an absolute present assignment and not an assignment
for additional security only.  For purposes of giving effect to this absolute
assignment of the Leases, and for no other purpose, the Leases shall not be
deemed to be a part of the "Mortgaged Property," as that term is defined in
Section 1(s).  However, if this present, absolute and unconditional assignment
of the Leases is not enforceable by its terms under the laws of the Property
Jurisdiction, then the Leases shall be included as a part of the Mortgaged
Property and it is the intention of the Borrower that in this circumstance this
Instrument create and perfect a lien on the Leases in favor of Lender, which
lien shall be effective as of the date of this Instrument.

 

            (b)        Until the occurrence of an Event of Default, Borrower
shall have all rights, power and authority granted to Borrower under any Lease
(except as otherwise limited by this Section or any other provision of this
Instrument), including the right, power and authority to modify the terms of any
Lease or extend or terminate any Lease.  Upon the occurrence of an Event of
Default, the permission given to Borrower pursuant to the preceding sentence to
exercise all rights, power and authority under Leases shall automatically
terminate.  Borrower shall comply with and observe Borrower's obligations under
all Leases, including Borrower's obligations pertaining to the maintenance and
disposition of tenant security deposits.

 

            (c)        Borrower acknowledges and agrees that the exercise by
Lender, either directly or by a receiver, of any of the rights conferred under
this Section 4 shall not be construed to make Lender a mortgagee-in-possession
of the Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and the Improvements.  The acceptance by Lender of the
assignment of the Leases pursuant to Section 4(a) shall not at any time or in
any event obligate Lender to take any action under this Instrument or to expend
any money or to incur any expenses.  Lender shall not be liable in any way for
any injury or damage to person or property sustained by any person or persons,
firm or corporation in or about the Mortgaged Property.  Prior to Lender's
actual entry into and taking possession of the Mortgaged Property, Lender shall
not (i) be obligated to perform any of the terms, covenants and conditions
contained in any Lease (or otherwise have any obligation with respect to any
Lease); (ii) be obligated to appear in or defend any action or proceeding
relating to the Lease or the Mortgaged Property; or (iii) be responsible for the
operation, control, care, management or repair of the Mortgaged Property or any
portion of the Mortgaged Property.  The execution of this Instrument by Borrower
shall constitute conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property is and shall be
that of Borrower, prior to such actual entry and taking of possession.

 

            (d)        From and after the occurrence of an Event of Default, and
without the necessity of Lender entering upon and taking and maintaining control
of the Mortgaged Property directly, by a receiver, or by any other manner or
proceeding permitted by the laws of the Property Jurisdiction, Lender
immediately shall have all rights, powers and authority granted to Borrower
under any Lease, including the right, power and authority to modify the terms of
any such Lease, or extend or terminate any such Lease.

 

            (e)        Borrower shall, promptly upon Lender's request, deliver
to Lender an executed copy of each residential Lease then in effect. All Leases
for residential dwelling units shall be on forms approved by Lender, shall be
for initial terms of at least six months and not more than two years, and shall
not include options to purchase.  If customary in the applicable market,
residential Leases with terms of less than six months may be permitted with
Lender's prior written consent.

 

            (f)         Borrower shall not lease any portion of the Mortgaged
Property for non-residential use except with the prior written consent of Lender
and Lender's prior written approval of the Lease agreement.  Borrower shall not
modify the terms of, or extend or terminate, any Lease for non-residential use
(including any Lease in existence on the date of this Instrument) without the
prior written consent of Lender.  Borrower shall, without request by Lender,
deliver an executed copy of each non-residential Lease to Lender promptly after
such Lease is signed.  All non-residential Leases, including renewals or
extensions of existing Leases, shall specifically provide that (1) such Leases
are subordinate to the lien of this Instrument (unless waived in writing by
Lender); (2) the tenant shall attorn to Lender and any purchaser at a
foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a foreclosure
sale or by Lender in any manner; (3) the tenant agrees to execute such further
evidences of attornment as Lender or any purchaser at a foreclosure sale may
from time to time request; (4) the Lease shall not be terminated by foreclosure
or any other transfer of the Mortgaged Property; (5) after a foreclosure sale of
the Mortgaged Property, Lender or any other purchaser at such foreclosure sale
may, at Lender's or such purchaser's option, accept or terminate such Lease; and
(6) the tenant shall, upon receipt after the occurrence of an Event of Default
of a written request from Lender, pay all Rents payable under the Lease to
Lender.

 

            (g)        Borrower shall not receive or accept Rent under any Lease
(whether residential or non-residential) for more than two months in advance.

 

            5.         PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN
DOCUMENTS; PREPAYMENT PREMIUM. 

 

            Borrower shall pay the Indebtedness when due in accordance with the
terms of the Note and the other Loan Documents and shall perform, observe and
comply with all other provisions of the Note and the other Loan Documents. 
Borrower shall pay a prepayment premium in connection with certain prepayments
of the Indebtedness, including a payment made after Lender's exercise of any
right of acceleration of the Indebtedness, as provided in the Note.

 

            6.         EXCULPATION. 

 

            Borrower's personal liability for payment of the Indebtedness and
for performance of the other obligations to be performed by it under this
Instrument is limited in the manner, and to the extent, provided in the Note.

 

            7.         DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

 

            (a)        Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or on
another day designated in writing by Lender), until the Indebtedness is paid in
full, an additional amount sufficient to accumulate with Lender the entire sum
required to pay, when due (1) any water and sewer charges which, if not paid,
may result in a lien on all or any part of the Mortgaged Property, (2) the
premiums for fire and other hazard insurance, rent loss insurance and such other
insurance as Lender may require under Section 19, (3) Taxes, and (4) amounts for
other charges and expenses which Lender at any time reasonably deems necessary
to protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect Lender's interests, all as
reasonably estimated from time to time by Lender.  The amounts deposited under
the preceding sentence are collectively referred to in this Instrument as the
"Imposition Deposits".  The obligations of Borrower for which the Imposition
Deposits are required are collectively referred to in this Instrument as
"Impositions".  The amount of the Imposition Deposits shall be sufficient to
enable Lender to pay each Imposition before the last date upon which such
payment may be made without any penalty or interest charge being added.  Lender
shall maintain records indicating how much of the monthly Imposition Deposits
and how much of the aggregate Imposition Deposits held by Lender are held for
the purpose of paying Taxes, insurance premiums and each other obligation of
Borrower for which Imposition Deposits are required.  Any waiver by Lender of
the requirement that Borrower remit Imposition Deposits to Lender may be revoked
by Lender, in Lender's discretion, at any time upon notice to Borrower.

 

            (b)        Imposition Deposits shall be held in an institution
(which may be Lender, if Lender is such an institution) whose deposits or
accounts are insured or guaranteed by a federal agency.  Lender shall not be
obligated to open additional accounts or deposit Imposition Deposits in
additional institutions when the amount of the Imposition Deposits exceeds the
maximum amount of the federal deposit insurance or guaranty.  Lender shall apply
the Imposition Deposits to pay Impositions so long as no Event of Default has
occurred and is continuing.  Unless applicable law requires, Lender shall not be
required to pay Borrower any interest, earnings or profits on the Imposition
Deposits.  Borrower hereby pledges and grants to Lender a security interest in
the Imposition Deposits as additional security for all of Borrower's obligations
under this Instrument and the other Loan Documents.  Any amounts deposited with
Lender under this Section 7 shall not be trust funds, nor shall they operate to
reduce the Indebtedness, unless applied by Lender for that purpose under
Section 7(e).

 

            (c)        If Lender receives a bill or invoice for an Imposition,
Lender shall pay the Imposition from the Imposition Deposits held by Lender. 
Lender shall have no obligation to pay any Imposition to the extent it exceeds
Imposition Deposits then held by Lender.  Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.

 

            (d)        If at any time the amount of the Imposition Deposits held
by Lender for payment of a specific Imposition exceeds the amount reasonably
deemed necessary by Lender, the excess shall be credited against future
installments of Imposition Deposits.  If at any time the amount of the
Imposition Deposits held by Lender for payment of a specific Imposition is less
than the amount reasonably estimated by Lender to be necessary, Borrower shall
pay to Lender the amount of the deficiency within 15 days after notice from
Lender.

 

            (e)        If an Event of Default has occurred and is continuing,
Lender may apply any Imposition Deposits, in any amounts and in any order as
Lender determines, in Lender's discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, Lender shall
refund to Borrower any Imposition Deposits held by Lender.

 

            8.         COLLATERAL AGREEMENTS. 

 

            Borrower shall deposit with Lender such amounts as may be required
by any Collateral Agreement and shall perform all other obligations of Borrower
under each Collateral Agreement.

 

            9.         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, then Lender may apply that payment to amounts then due and
payable in any manner and in any order determined by Lender, in Lender's
discretion.  Neither Lender's acceptance of an amount which is less than all
amounts then due and payable nor Lender's application of such payment in the
manner authorized shall constitute or be deemed to constitute either a waiver of
the unpaid amounts or an accord and satisfaction.  Notwithstanding the
application of any such amount to the Indebtedness,  Borrower's obligations
under this Instrument and the Note shall remain unchanged.

 

            10.       COMPLIANCE WITH LAWS. 

 

            Borrower shall comply with all laws, ordinances, regulations and
requirements of any Governmental Authority and all recorded lawful covenants and
agreements relating to or affecting the Mortgaged Property, including all laws,
ordinances, regulations, requirements and covenants pertaining to health and
safety, construction of improvements on the Mortgaged Property, fair housing,
zoning and land use, and Leases.  Borrower also shall comply with all applicable
laws that pertain to the maintenance and disposition of tenant security
deposits.  Borrower shall at all times maintain records sufficient to
demonstrate  compliance with the provisions of this Section 10.  Borrower shall
take appropriate measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that could endanger
tenants or visitors, result in damage to the Mortgaged Property, result in
forfeiture of the Mortgaged Property, or otherwise materially impair the lien
created by this Instrument or Lender's interest in the Mortgaged Property. 
Borrower represents and warrants to Lender that no portion of the Mortgaged
Property has been or will be purchased with the proceeds of any illegal
activity.

 

            11.       USE OF PROPERTY. 

 

            Unless required by applicable law, Borrower shall not (a) except for
any change in use approved by Lender, allow changes in the use for which all or
any part of the Mortgaged Property is being used at the time this Instrument was
executed, (b) convert any individual dwelling units or common areas to
commercial use, (c) initiate or acquiesce in a change in the zoning
classification of the Mortgaged Property, or (d) establish any condominium or
cooperative regime with respect to the Mortgaged Property.

 

            12.       PROTECTION OF LENDER'S SECURITY.

 

            (a)        If Borrower fails to perform any of its obligations under
this Instrument or any other Loan Document, or if any action or proceeding is
commenced which purports to affect the Mortgaged Property, Lender's security or
Lender's rights under this Instrument, including eminent domain, insolvency,
code enforcement, civil or criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or reorganizations or proceedings
involving a bankrupt or decedent, then Lender at Lender's option may make such
appearances, disburse such sums and take such actions as Lender reasonably deems
necessary to perform such obligations of Borrower and to protect Lender's
interest, including (1) payment of fees and out-of-pocket expenses of attorneys,
accountants, inspectors and consultants, (2) entry upon the Mortgaged Property
to make repairs or secure the Mortgaged Property, (3) procurement of the
insurance required by Section 19, and (4) payment of amounts which Borrower has
failed to pay under Sections 15 and 17.

 

            (b)        Any amounts disbursed by Lender under this Section 12, or
under any other provision of this Instrument that treats such disbursement as
being made under this Section 12, shall be added to, and become part of, the
principal component of the Indebtedness, shall be immediately due and payable
and shall bear interest from the date of disbursement until paid at the "Default
Rate", as defined in the Note.

 

            (c)        Nothing in this Section 12 shall require Lender to incur
any expense or take any action.

 

            13.       INSPECTION. 

 

            Lender, its agents, representatives, and designees may make or cause
to be made entries upon and inspections of the Mortgaged Property (including
environmental inspections and tests) during normal business hours, or at any
other reasonable time.

 

            14.          BOOKS AND RECORDS; FINANCIAL REPORTING.

 

            (a)        Borrower shall keep and maintain at all times at the
Mortgaged Property or the management agent's offices, and upon Lender's request
shall make available at the Mortgaged Property, complete and accurate books of
account and records (including copies of supporting bills and invoices) adequate
to reflect correctly the operation of the Mortgaged Property, and copies of all
written contracts, Leases, and other instruments which affect the Mortgaged
Property.  The books, records, contracts, Leases and other instruments shall be
subject to examination and inspection at any reasonable time by Lender.

 

            (b)        Borrower shall furnish to Lender all of the following:

 

                        (1)        within 120 days after the end of each fiscal
year of Borrower, a statement of income and expenses for Borrower's operation of
the Mortgaged Property for that fiscal year, a statement of changes in financial
position of Borrower relating to the Mortgaged Property for that fiscal year
and, when requested by Lender, a balance sheet showing all assets and
liabilities of Borrower relating to the Mortgaged Property as of the end of that
fiscal year;

 

                        (2)        within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request, a rent schedule
for the Mortgaged Property showing the name of each tenant, and for each tenant,
the space occupied, the lease expiration date, the rent payable for the current
month, the date through which rent has been paid, and any related information
requested by Lender;

 

                        (3)        within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request, an accounting of
all security deposits held pursuant to all Leases, including the name of the
institution (if any) and the names and identification numbers of the accounts
(if any) in which such security deposits are held and the name of the person to
contact at such financial institution, along with any authority or release
necessary for Lender to access information regarding such accounts;

 

                        (4)        within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request, a statement that
identifies all owners of any interest in Borrower and the interest held by each,
if Borrower is a corporation, all officers and directors of Borrower, and if
Borrower is a limited liability company, all managers who are not members;

 

                        (5)        upon Lender's request, a monthly property
management report for the Mortgaged Property, showing the number of inquiries
made and rental applications received from tenants or prospective tenants and
deposits received from tenants and any other information requested by Lender;

 

                        (6)        upon Lender's request, a balance sheet, a
statement of income and expenses for Borrower and a statement of changes in
financial position of Borrower for Borrower's most recent fiscal year; and

 

                        (7)        if required by Lender, a statement of income
and expense for the Mortgaged Property for the prior month or quarter.

 

            (c)        Each of the statements, schedules and reports required by
Section 14(b) shall be certified to be complete and accurate by an individual
having authority to bind Borrower, and shall be in such form and contain such
detail as Lender may reasonably require.  Lender also may require that any
statements, schedules or reports be audited at Borrower's expense by independent
certified public accountants acceptable to Lender.

 

            (d)        If Borrower fails to provide in a timely manner the
statements, schedules and reports required by Section 14(b), Lender shall have
the right to have Borrower's books and records audited, at Borrower's expense,
by independent certified public accountants selected by Lender in order to
obtain such statements, schedules and reports, and all related costs and
expenses of Lender shall become immediately due and payable and shall become an
additional part of the Indebtedness as provided in Section 12.

 

            (e)        If an Event of Default has occurred and is continuing,
Borrower shall deliver to Lender upon written demand all books and records
relating to the Mortgaged Property or its operation.

 

            (f)         Borrower authorizes Lender to obtain a credit report on
Borrower at any time.

 

            (g)        If an Event of Default has occurred and Lender has not
previously required Borrower to furnish a quarterly statement of income and
expense for the Mortgaged Property, Lender may require Borrower to furnish such
a statement within 45 days after the end of each fiscal quarter of Borrower
following such Event of Default.

 

            15.       TAXES; OPERATING EXPENSES.

 

            (a)        Subject to the provisions of Section 15(c) and
Section 15(d), Borrower shall pay, or cause to be paid, all Taxes when due and
before the addition of any interest, fine, penalty  or cost for nonpayment. 

 

            (b)        Subject to the provisions of Section 15(c), Borrower
shall pay the expenses of operating, managing, maintaining and repairing the
Mortgaged Property (including insurance premiums, utilities, repairs and
replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added.

 

            (c)        As long as no Event of Default exists and Borrower has
timely delivered to Lender any bills or premium notices that it has received,
Borrower shall not be obligated to pay Taxes, insurance premiums or any other
individual Imposition to the extent that sufficient Imposition Deposits are held
by Lender for the purpose of paying that specific Imposition.  If an Event of
Default exists, Lender may exercise any rights Lender may have with respect to
Imposition Deposits without regard to whether Impositions are then due and
payable.  Lender shall have no liability to Borrower for failing to pay any
Impositions to the extent that any Event of Default has occurred and is
continuing, insufficient Imposition Deposits are held by Lender at the time an
Imposition becomes due and payable or Borrower has failed to provide Lender with
bills and premium notices as provided above.

 

            (d)        Borrower, at its own expense, may contest by appropriate
legal proceedings, conducted diligently and in good faith, the amount or
validity of any Imposition other than insurance premiums, if (1) Borrower
notifies Lender of the commencement or expected commencement of such
proceedings, (2) the Mortgaged Property is not in danger of being sold or
forfeited, (3) Borrower deposits with Lender reserves sufficient to pay the
contested Imposition, if requested by Lender, and (4) Borrower furnishes
whatever additional security is required in the proceedings or is reasonably
requested by Lender, which may include the delivery to Lender of the reserves
established by Borrower to pay the contested Imposition.

 

            (e)        Borrower shall promptly deliver to Lender a copy of all
notices of, and invoices for, Impositions, and if Borrower pays any Imposition
directly, Borrower shall promptly furnish to Lender receipts evidencing such
payments.

 

            16.       LIENS; ENCUMBRANCES. 

 

            Borrower acknowledges that, to the extent provided in Section 21,
the grant, creation or existence of any mortgage, deed of trust, deed to secure
debt, security interest or other lien or encumbrance (a "Lien") on the Mortgaged
Property (other than the lien of this Instrument) or on certain ownership
interests in Borrower, whether voluntary, involuntary or by operation of law,
and whether or not such Lien has priority over the lien of this Instrument, is a
"Transfer" which constitutes an Event of Default.

 

            17.       PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED
PROPERTY.

 

            (a) Borrower (1) shall not commit waste or permit impairment or
deterioration of the Mortgaged Property, (2) shall not abandon the Mortgaged
Property, (3) shall restore or repair promptly, in a good and workmanlike
manner, any damaged part of the Mortgaged Property to the equivalent of its
original condition, or such other condition as Lender may approve in writing,
whether or not insurance proceeds or condemnation awards are available to cover
any costs of such restoration or repair, (4) shall keep the Mortgaged Property
in good repair, including the replacement of Personalty and Fixtures with items
of equal or better function and quality, (5) shall provide for professional
management of the Mortgaged Property by a residential rental property manager
satisfactory to Lender under a contract approved by Lender in writing, and (6)
shall give notice to Lender of and, unless otherwise directed in writing by
Lender, shall appear in and defend any action or proceeding purporting to affect
the Mortgaged Property, Lender's security or Lender's rights under this
Instrument.  Borrower shall not (and shall not permit any tenant or other person
to) remove, demolish or alter the Mortgaged Property or any part of the
Mortgaged Property except in connection with the replacement of tangible
Personalty.

 

            (b)        If, in connection with the making of the loan evidenced
by the Note or at any later date, Lender waives in writing the requirement of
Section 17(a)(5) above that Borrower enter into a written contract for
management of the Mortgaged Property and if, after the date of this Instrument,
Borrower intends to change the management of the Mortgaged Property, Lender
shall have the right to approve such new property manager and the written
contract for the management of the Mortgaged Property and require that Borrower
and such new property manager enter into an Assignment of Management Agreement
on a form approved by Lender.  If required by Lender (whether before or after an
Event of Default), Borrower will cause any Affiliate of Borrower to whom fees
are payable for the management of the Mortgaged Property to enter into an
agreement with Lender, in a form approved by Lender, providing for subordination
of those fees and such other provisions as Lender may require.  "Affiliate of
Borrower" means any corporation, partnership, joint venture, limited liability
company, limited liability partnership, trust or individual controlled by, under
common control with, or which controls Borrower (the term "control" for these
purposes shall mean the ability, whether by the ownership of shares or other
equity interests, by contract or otherwise, to elect a majority of the directors
of a corporation, to make management decisions on behalf of, or independently to
select the managing partner of, a partnership, or otherwise to have the power
independently to remove and then select a majority of those individuals
exercising managerial authority over an entity, and control shall be
conclusively presumed in the case of the ownership of 50% or more of the equity
interests). 

 

            18.       ENVIRONMENTAL HAZARDS.

 

            (a)        Except for matters covered by a written program of
operations and maintenance approved in writing by Lender (an "O&M Program") or
matters described in Section 18(b), Borrower shall not cause or permit any of
the following:

 

                        (1)        the presence, use, generation, release,
treatment, processing, storage (including storage in above ground and
underground storage tanks), handling, or disposal of any Hazardous Materials on
or under the Mortgaged Property or any other  property of Borrower that is
adjacent to the Mortgaged Property;

 

                        (2)        the transportation of any Hazardous Materials
to, from, or across the Mortgaged Property;

 

                        (3)        any occurrence or condition on the Mortgaged
Property or any other property of Borrower that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in violation of Hazardous
Materials Laws; or

 

                        (4)        any violation of or noncompliance with the
terms of any Environmental Permit with respect to the Mortgaged Property or any 
property of Borrower that is adjacent to the Mortgaged Property.

 

The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".

 

            (b)        Prohibited Activities and Conditions shall not include
the safe and lawful use and storage of quantities of (1) pre-packaged supplies,
cleaning materials and petroleum products customarily used in the operation and
maintenance of comparable multifamily properties, (2) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for
consumer use and used by tenants and occupants of residential dwelling units in
the Mortgaged Property; and (3) petroleum products used in the operation and
maintenance of motor vehicles from time to time located on the Mortgaged
Property's parking areas, so long as all of the foregoing are used, stored,
handled, transported and disposed of in compliance with Hazardous Materials
Laws.

 

            (c)        Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any Leases executed after
the date of this Instrument) to prevent its employees, agents, and contractors,
and all tenants and other occupants from causing or permitting any Prohibited
Activities or Conditions.  Borrower shall not lease or allow the sublease or use
of all or any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.

 

            (d)        If an O&M Program has been established with respect to
Hazardous Materials, Borrower shall comply in a timely manner with, and cause
all employees, agents, and contractors of Borrower and any other persons present
on the Mortgaged Property to comply with the O&M Program.  All costs of
performance of Borrower's obligations under any O&M Program shall be paid by
Borrower, and Lender's out-of-pocket costs incurred in connection with the
monitoring and review of the O&M Program and Borrower's performance shall be
paid by Borrower upon demand by Lender.  Any such out-of-pocket costs of Lender
which Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.

 

            (e)        Borrower represents and warrants to Lender that, except
as previously disclosed by Borrower to Lender in writing:

 

                        (1)        Borrower has not at any time engaged in,
caused or permitted any Prohibited Activities or Conditions;

 

                        (2)        to the best of Borrower's knowledge after
reasonable and diligent inquiry, no Prohibited Activities or Conditions exist or
have existed;

 

                        (3)        except to the extent previously disclosed by
Borrower to Lender in writing, the Mortgaged Property does not now contain any
underground storage tanks, and, to the best of Borrower's knowledge after
reasonable and diligent inquiry, the Mortgaged Property has not contained any
underground storage tanks in the past.  If there is an underground storage tank
located on the Property which has been previously disclosed by Borrower to
Lender in writing, that tank complies with all requirements of Hazardous
Materials Laws;

 

                        (4)        Borrower has complied with all Hazardous
Materials Laws, including all requirements for notification regarding releases
of Hazardous Materials.  Without limiting the generality of the foregoing,
Borrower has obtained all Environmental Permits required for the operation of
the Mortgaged Property in accordance with Hazardous Materials Laws now in effect
and all such Environmental Permits are in full force and effect; 

 

                        (5)        no event has occurred with respect to the
Mortgaged Property that constitutes, or with the passing of time or the giving
of notice would constitute, noncompliance with the terms of any Environmental
Permit;

 

                        (6)        there are no actions, suits, claims or
proceedings pending or, to the best of Borrower's knowledge after reasonable and
diligent inquiry, threatened  that involve the Mortgaged Property and allege,
arise out of, or relate to any Prohibited Activity or Condition; and

                       

                        (7)        Borrower has not received any complaint,
order, notice of violation or other communication from any Governmental
Authority with regard to air emissions, water discharges, noise emissions or
Hazardous Materials, or any other environmental, health or safety matters
affecting the Mortgaged Property or any other property of Borrower that is
adjacent to the Mortgaged Property.

 

The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.

 

            (f)         Borrower shall promptly notify Lender in writing upon
the occurrence of any of  the following events:

 

                        (1)        Borrower's discovery of any Prohibited
Activity or Condition;

 

                        (2)        Borrower's receipt of or knowledge of any
complaint, order, notice of violation or other communication from any
Governmental Authority or other person with regard to present or future alleged
Prohibited Activities or Conditions or any other environmental, health or safety
matters affecting the Mortgaged Property or any other property of Borrower that
is adjacent to the Mortgaged Property; and 

 

                        (3)        any representation or warranty in this
Section 18 becomes untrue after the date of this Agreement.

 

Any such notice given by Borrower shall not relieve Borrower of, or result in a
waiver of, any obligation under this Instrument, the Note, or any other Loan
Document.

 

            (g)        Borrower shall pay promptly the costs of any
environmental inspections, tests or audits ("Environmental Inspections")
required by Lender in connection with any foreclosure or deed in lieu of
foreclosure, or as a condition of Lender's consent to any Transfer under
Section 21, or required by Lender following a reasonable determination by Lender
that Prohibited Activities or Conditions may exist.  Any such costs incurred by
Lender (including the fees and out-of-pocket costs of attorneys and technical
consultants whether incurred in connection with any judicial or administrative
process or otherwise) which Borrower fails to pay promptly shall become an
additional part of the Indebtedness as provided in Section 12.  The results of
all Environmental Inspections made by Lender shall at all times remain the
property of Lender and Lender shall have no obligation to disclose or otherwise
make available to Borrower or any other party such results or any other
information obtained by Lender in connection with its Environmental
Inspections.  Lender hereby reserves the right, and Borrower hereby expressly
authorizes Lender, to make available to any party, including any prospective
bidder at a foreclosure sale of the Mortgaged Property, the results of any
Environmental Inspections made by Lender with respect to the Mortgaged
Property.  Borrower consents to Lender notifying any party (either as part of a
notice of sale or otherwise) of the results of any of Lender's Environmental
Inspections.  Borrower acknowledges that Lender cannot control or otherwise
assure the truthfulness or accuracy of the results of any of its Environmental
Inspections and that the release of such results to prospective bidders at a
foreclosure sale of the Mortgaged Property may have a material and adverse
effect upon the amount which a party may bid at such sale.  Borrower agrees that
Lender shall have no liability whatsoever as a result of delivering the results
of any of its Environmental Inspections to any third party, and Borrower hereby
releases and forever discharges Lender from any and all claims, damages, or
causes of action, arising out of, connected with or incidental to the results
of, the delivery of any of Lender's Environmental Inspections.

 

            (h)        If any investigation, site monitoring, containment,
clean-up, restoration or other remedial work ("Remedial Work") is necessary to
comply with any Hazardous Materials Law or order of any Governmental Authority
that has or acquires jurisdiction over the Mortgaged Property  or the use,
operation or improvement of the Mortgaged Property under any Hazardous Materials
Law, Borrower shall, by the earlier of (1) the applicable deadline required by
Hazardous Materials Law or (2) 30 days after notice from Lender demanding such
action, begin performing the Remedial Work, and thereafter diligently prosecute
it to completion, and shall in any event complete the work by the time required
by applicable Hazardous Materials Law.  If Borrower fails to begin on a timely
basis or diligently prosecute any required Remedial Work, Lender may, at its
option, cause the Remedial Work to be completed, in which case Borrower shall
reimburse Lender on demand for the cost of doing so.  Any reimbursement due from
Borrower to Lender shall become part of the Indebtedness as provided in
Section 12.

 

            (i)         Borrower shall cooperate with any inquiry by any
Governmental Authority and shall comply with any governmental or judicial order
which arises from any alleged Prohibited Activity or Condition.

 

            (j)         Borrower shall indemnify, hold harmless and defend (i)
Lender, (ii) any prior owner or holder of the Note, (iii) the Loan Servicer,
(iv) any prior Loan Servicer, (v) the officers, directors, shareholders,
partners, employees and trustees of any of the foregoing, and (vi) the heirs,
legal representatives, successors and assigns of each of the foregoing
(collectively, the "Indemnitees") from and against all proceedings, claims,
damages, penalties and costs (whether initiated or sought by Governmental
Authorities or private parties), including fees and out-of-pocket expenses of
attorneys and expert witnesses, investigatory fees, and remediation costs,
whether incurred in connection with any judicial or administrative process or
otherwise, arising directly or indirectly from any of the following:

 

                        (1)        any breach of any representation or warranty
of Borrower in this Section 18; 

                        (2)        any failure by Borrower to perform any of its
obligations under this Section 18;

 

                        (3)        the existence or alleged existence of any
Prohibited Activity or Condition;

 

                        (4)        the presence or alleged presence of Hazardous
Materials on or under the Mortgaged Property or any property of Borrower that is
adjacent to the Mortgaged Property; and

 

                        (5)        the actual or alleged violation of any
Hazardous Materials Law. 

 

            (k)        Counsel selected by Borrower to defend Indemnitees shall
be subject to the  approval of those Indemnitees.  However, any Indemnitee may
elect to defend any claim or legal or administrative proceeding at the
Borrower's expense. 

 

            (l)         Borrower shall not, without the prior written consent of
those Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim"), settle or compromise the Claim if the settlement (1)
results in the entry of any judgment that does not include as an unconditional
term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender; or (2) may
materially and adversely affect Lender, as determined by Lender in its
discretion.

 

            (m)       Lender agrees that the indemnity under this Section 18
shall be limited to the assets of Borrower and Lender shall not seek to recover
any deficiency from any natural persons who are general partners of Borrower.

 

            (n)        Borrower shall, at its own cost and expense, do all of
the following:

 

                        (1)        pay or satisfy any judgment or decree that
may be entered against any Indemnitee or Indemnitees in any legal or
administrative proceeding incident to any matters against which Indemnitees are
entitled to be indemnified under this Section 18;

                       

                        (2)        reimburse Indemnitees for any expenses paid
or incurred in connection with any matters against which Indemnitees are
entitled to be indemnified under this Section 18; and

                       

                        (3)        reimburse Indemnitees for any and all
expenses, including fees and out-of-pocket expenses of attorneys and expert
witnesses, paid or incurred in connection with the enforcement by Indemnitees of
their rights under this Section 18, or in monitoring and participating in any
legal or administrative proceeding.

 

            (o)        In any circumstances in which the indemnity under this
Section 18 applies, Lender may employ its own legal counsel and consultants to
prosecute, defend or negotiate any claim or legal or administrative proceeding
and Lender, with the prior written consent of Borrower (which shall not be
unreasonably withheld, delayed or conditioned), may settle or compromise any
action or legal or administrative proceeding.  Borrower shall reimburse Lender
upon demand for all costs and expenses incurred by Lender, including all costs
of settlements entered into in good faith, and the fees and out-of-pocket
expenses of such attorneys and consultants.

 

            (p)        The provisions of this Section 18 shall be in addition to
any and all other obligations and liabilities that Borrower may have  under
applicable law or under other Loan Documents, and each Indemnitee shall be
entitled to indemnification under this Section 18 without regard to whether
Lender or that Indemnitee has exercised any rights against the Mortgaged
Property or any other security, pursued any rights against any guarantor, or
pursued any other rights available under the Loan Documents or applicable law.
If Borrower consists of more than one person or entity, the obligation of those
persons or entities to indemnify the Indemnitees under this Section 18 shall be
joint and several. The obligation of Borrower to indemnify the Indemnitees under
this Section 18 shall survive any repayment or discharge of the Indebtedness,
any foreclosure proceeding, any foreclosure sale, any delivery of any deed in
lieu of foreclosure, and any release of record of the lien of this Instrument.

 

            19.       PROPERTY AND LIABILITY INSURANCE.

 

            (a)        Borrower shall keep the Improvements insured at all times
against such hazards as Lender may from time to time require, which insurance
shall include but not be limited to coverage against loss by fire and allied
perils, general boiler and machinery coverage, and business income coverage. 
Lender's insurance requirements may change from time to time throughout the term
of the Indebtedness.  If Lender so requires, such insurance shall also include
sinkhole insurance, mine subsidence insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to applicable zoning or land use laws,
building ordinance or law coverage.  If any of the Improvements is located in an
area identified by the Federal Emergency Management Agency (or any successor to
that agency) as an area having special flood hazards, and if flood insurance is
available in that area, Borrower shall insure such Improvements against loss by
flood.

 

            (b)        All premiums on insurance policies required under
Section 19(a) shall be paid in the manner provided in Section 7, unless Lender
has designated in writing another method of payment.  All such policies shall
also be in a form approved by Lender.  All policies of property damage insurance
shall include a non-contributing, non-reporting mortgage clause in favor of, and
in a form approved by, Lender.  Lender shall have the right to hold the original
policies or duplicate original policies of all insurance required by
Section 19(a).  Borrower shall promptly deliver to Lender a copy of all renewal
and other notices received by Borrower with respect to the policies and all
receipts for paid premiums.  At least 30 days prior to the expiration date of a
policy, Borrower shall deliver to Lender the original  (or a duplicate original)
of a renewal policy in form satisfactory to Lender.

 

            (c)        Borrower shall maintain at all times commercial general
liability insurance, workers' compensation insurance and such other liability,
errors and omissions and fidelity insurance coverages as Lender may from time to
time require.

 

            (d)        All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for such periods as
Lender may from time to time require, and shall be issued by insurance companies
satisfactory to Lender.

 

            (e)        Borrower shall comply with all insurance requirements and
shall not permit any condition to exist on the Mortgaged Property that would
invalidate any part of any insurance coverage that this Instrument requires
Borrower to maintain.

 

            (f)         In the event of loss, Borrower shall give immediate
written notice to the insurance carrier and to Lender.  Borrower hereby
authorizes and appoints Lender as attorney-in-fact for Borrower to make proof of
loss, to adjust and compromise any claims under policies of property damage
insurance, to appear in and prosecute any action arising from such property
damage insurance policies, to collect and receive the proceeds of property
damage insurance, and to deduct from such proceeds Lender's expenses incurred in
the collection of such proceeds.  This power of attorney is coupled with an
interest and therefore is irrevocable.  However, nothing contained in this
Section 19 shall require Lender to incur any expense or take any action.  Lender
may, at Lender's option, (1) hold the balance of such proceeds to be used to
reimburse Borrower for the cost of restoring and repairing the Mortgaged
Property to the equivalent of its original condition or to a condition approved
by Lender (the "Restoration"), or (2) apply the balance of such proceeds to the
payment of the Indebtedness, whether or not then due. To the extent Lender
determines to apply insurance proceeds to Restoration, Lender shall do so in
accordance with Lender's then-current policies relating to the restoration of
casualty damage on similar multifamily properties.

 

            (g)        Lender shall not exercise its option to apply insurance
proceeds to the payment of the Indebtedness if all of the following conditions
are met:  (1) no Event of Default (or any event which, with the giving of notice
or the passage of time, or both, would constitute an Event of Default) has
occurred and is continuing; (2) Lender determines, in its discretion, that there
will be sufficient funds to complete the Restoration; (3) Lender determines, in
its discretion, that the rental income from the Mortgaged Property after
completion of the Restoration will be sufficient to meet all operating costs and
other expenses, Imposition Deposits, deposits to reserves and loan repayment
obligations relating to the Mortgaged Property; (4) Lender determines, in its
discretion, that the Restoration will be completed before the earlier of (A) one
year before the maturity date of the Note or (B) one year after the date of the
loss or casualty; and (5) upon Lender's request, Borrower provides Lender
evidence of the availability during and after the Restoration of the insurance
required to be maintained by Borrower pursuant to this Section 19.

 

            (h)        If the Mortgaged Property is sold at a foreclosure sale
or Lender acquires title to the Mortgaged Property, Lender shall automatically
succeed to all rights of Borrower in and to any insurance policies and unearned
insurance premiums and in and to the proceeds resulting from any damage to the
Mortgaged Property prior to such sale or acquisition.

           

            20.       CONDEMNATION.

 

            (a)        Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, or conveyance in lieu
thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a "Condemnation").  Borrower shall appear in and prosecute or defend
any action or proceeding relating to any Condemnation unless otherwise directed
by Lender in writing.  Borrower authorizes and appoints Lender as
attorney-in-fact for Borrower to commence, appear in and prosecute, in Lender's
or Borrower's name, any action or proceeding relating to any Condemnation and to
settle or compromise any claim in connection with any Condemnation.  This power
of attorney is coupled with an interest and therefore is irrevocable.  However,
nothing contained in this Section 20 shall require Lender to incur any expense
or take any action.  Borrower hereby transfers and assigns to Lender all right,
title and interest of Borrower in and to any award or payment with respect to
(i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any
damage to the Mortgaged Property caused by governmental action that does not
result in a Condemnation.

 

            (b)        Lender may apply such awards or proceeds, after the
deduction of Lender's expenses incurred in the collection of such amounts, at
Lender's option, to the restoration or repair of the Mortgaged Property or to
the payment of the Indebtedness, with the balance, if any, to Borrower.  Unless
Lender otherwise agrees in writing, any application of any awards or proceeds to
the Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments.  Borrower
agrees to execute such further evidence of assignment of any awards or proceeds
as Lender may require.

 

            21.       TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN
BORROWER.

 

            (a)        The occurrence of any of the following events shall
constitute an Event of Default under this Instrument:

 

                        (1)        a Transfer of all or any part of the
Mortgaged Property or any interest in the Mortgaged Property;

 

                        (2)        a Transfer of a Controlling Interest in
Borrower;

 

                        (3)        a Transfer of a Controlling Interest in any
entity which owns, directly or indirectly through one or more intermediate
entities, a Controlling Interest in Borrower;

 

                        (4)        a Transfer of all or any part of Key
Principal's ownership interests (other than limited partnership interests) in
Borrower, or in any other entity which owns, directly or indirectly through one
or more intermediate entities, an ownership interest in Borrower;

 

                        (5)        if Key Principal is an entity, (A) a Transfer
of a Controlling Interest in Key Principal, or (B) a Transfer of a Controlling
Interest in any entity which owns, directly or indirectly through one or more
intermediate entities, a Controlling Interest in Key Principal;

 

                        (6)        if Borrower or Key Principal is a trust, the
termination or revocation of such trust; and

 

                        (7)        a conversion of Borrower from one type of
legal entity into another type of legal entity, whether or not there is a
Transfer.

 

            Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.

 

            (b)        The occurrence of any of the following events shall not
constitute an Event of Default under this Instrument, notwithstanding any
provision of Section 21(a) to the contrary:

 

                        (1)        a Transfer to which Lender has consented;

 

                        (2)        a Transfer that occurs by devise, descent, or
by operation of law upon the death of a natural person;

 

                        (3)        the grant of a leasehold interest in an
individual dwelling unit for a term of two years or less not containing an
option to purchase;

 

                        (4)        a Transfer of obsolete or worn out Personalty
or Fixtures that are contemporaneously replaced by items of equal or better
function and quality, which are free of liens, encumbrances and security
interests other than those created by the Loan Documents or consented to by
Lender;

 

                        (5)        the grant of an easement, if before the grant
Lender determines that the easement will not materially affect the operation or
value of the Mortgaged Property or Lender's interest in the Mortgaged Property,
and Borrower pays to Lender, upon demand, all costs and expenses incurred by
Lender in connection with reviewing Borrower's request; and

 

                        (6)        the creation of a tax lien or a mechanic's,
materialman's or judgment lien against the Mortgaged Property which is bonded
off, released of record or otherwise remedied to Lender's satisfaction within 30
days of the date of creation.

 

            (c)        Lender shall consent, without any adjustment to the rate
at which the Indebtedness secured by this Instrument bears interest or to any
other economic terms of the Indebtedness, to a Transfer that would otherwise
violate this Section 21 if, prior to the Transfer, Borrower has satisfied each
of the following requirements:

 

                        (1)        the submission to Lender of all information
required by Lender to make the determination required by this Section 21(c);

 

                        (2)        the absence of any Event of Default;

 

                        (3)        the transferee meets all of the eligibility,
credit, management and other standards (including any standards with respect to
previous relationships between Lender and the transferee and the organization of
the transferee) customarily applied by Lender at the time of the proposed
Transfer to the approval of borrowers in connection with the origination or
purchase of similar mortgages, deeds of trust or deeds to secure debt on
multifamily properties;

 

                        (4)        the Mortgaged Property, at the time of the
proposed Transfer, meets all standards as to its physical condition that are
customarily applied by Lender at the time of the proposed Transfer to the
approval of properties in connection with the origination or purchase of similar
mortgages on multifamily properties;

 

                        (5)        in the case of a Transfer of all or any part
of the Mortgaged Property, direct or indirect ownership interests in Borrower or
Key Principal (if an entity), if transferor or any other person has obligations
under any Loan Document, the execution by the transferee or one or more
individuals or entities acceptable to Lender of an assumption agreement
(including, if applicable, an Acknowledgement and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability) that is acceptable
to Lender and that, among other things, requires the transferee to perform all
obligations of transferor or such person set forth in such Loan Document, and
may require that the transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been waived by Lender;

 

                        (6)        if a guaranty has been executed and delivered
in connection with the Note, this Instrument or any of the other Loan Documents,
the Borrower causes one or more individuals or entities acceptable to Lender to
execute and deliver to Lender a guaranty in a form acceptable to Lender; and

 

                        (7)        Lender's receipt of all of the following:

 

                                    (A)       a non-refundable review fee in the
amount of $3,000 and a transfer fee equal to 1 percent of the outstanding
Indebtedness immediately prior to the Transfer.

 

                                    (B)       In addition, Borrower shall be
required to reimburse Lender for all of Lender's out-of-pocket costs (including
reasonable attorneys' fees) incurred in reviewing the Transfer request, to the
extent such expenses exceed $3,000.

 

            (d)        For purposes of this Section, the following terms shall
have the meanings set forth below:

 

                        (1)        "Initial Owners" means, with respect to
Borrower or any other entity, the persons or entities who on the date of the
Note own in the aggregate 100% of the ownership interests in Borrower or that
entity.

 

                        (2)        A Transfer of a "Controlling Interest" shall
mean, with respect to any entity, the following:

 

                                    (i)         if such entity is a general
partnership or a joint venture, a Transfer of any general partnership interest
or joint venture interest which would cause the Initial Owners to own less than
51% of all general partnership or joint venture interests in such entity;

 

                                    (ii)        if such entity is a limited
partnership, a Transfer of any general partnership interest;

 

                                    (iii)       if such entity is a limited
liability company or a limited liability partnership, a Transfer of any
membership or other ownership interest which would cause the Initial Owners to
own less than 51% of all membership or other ownership interests in such entity;

 

                                    (iv)       if such entity is a corporation
(other than a Publicly-Held Corporation) with only one class of voting stock, a
Transfer of any voting stock which would cause the Initial Owners to own less
than 51% of voting stock in such corporation;

 

                                    (v)        if such entity is a corporation
(other than a Publicly-Held Corporation) with more than one class of voting
stock, a Transfer of any voting stock which would cause the Initial Owners to
own less than a sufficient number of shares of voting stock having the power to
elect the majority of directors of such corporation; and

 

                                    (vi)       if such entity is a trust, the
removal, appointment or substitution of a trustee of such trust other than (A)
in the case of a land trust, or (B) if the trustee of such trust after such
removal, appointment or substitution is a trustee identified in the trust
agreement approved by Lender.

 

                        (3)        "Publicly-Held Corporation" shall mean a
corporation the outstanding voting stock of which is registered under Section
12(b) or 12(g) of the Securities and Exchange Act of 1934, as amended.

 

            22.       EVENTS OF DEFAULT. 

 

            The occurrence of any one or more of the following shall constitute
an Event of Default under this Instrument:

 

            (a)        any failure by Borrower to pay or deposit when due any
amount required by the Note, this Instrument or any other Loan Document;

 

            (b)        any failure by Borrower to maintain the insurance
coverage required by Section 19;

 

            (c)        any failure by Borrower to comply with the provisions of
Section 33;

 

            (d)        fraud or material misrepresentation or material omission
by Borrower, or any of its officers, directors, trustees, general partners or
managers, Key Principal or any guarantor in connection with (A) the application
for or creation of the Indebtedness, (B) any financial statement, rent roll, or
other report or information provided to Lender during the term of the
Indebtedness, or (C) any request for Lender's consent to any proposed action,
including a request for disbursement of funds under any Collateral Agreement;

 

            (e)        any Event of Default under Section 21;

 

            (f)         the commencement of a forfeiture action or proceeding,
whether civil or criminal, which, in Lender's reasonable judgment, could result
in a forfeiture of the Mortgaged Property or otherwise materially impair the
lien created by this Instrument or Lender's interest in the Mortgaged Property;

 

            (g)        any failure by Borrower to perform any of its obligations
under this Instrument (other than those specified in Sections 22(a) through
(f)), as and when required, which continues for a period of 30 days after notice
of such failure by Lender to Borrower, but no such notice or grace period shall
apply in the case of any such failure which could, in Lender's judgment, absent
immediate exercise by Lender of a right or remedy under this Instrument, result
in harm to Lender, impairment of the Note or this Instrument or any other
security given under any other Loan Document;

 

            (h)        any failure by Borrower to perform any of its obligations
as and when required under any Loan Document other than this Instrument which
continues beyond the applicable cure period, if any, specified in that Loan
Document; and

 

            (i)         any exercise by the holder of any other debt instrument
secured by a mortgage, deed of trust or deed to secure debt on the Mortgaged
Property of a right to declare all amounts due under that debt instrument
immediately due and payable.

 

            23.       REMEDIES CUMULATIVE. 

 

            Each right and remedy provided in this Instrument is distinct from
all other rights or remedies under this Instrument or any other Loan Document or
afforded by applicable law, and each shall be cumulative and may be exercised
concurrently, independently, or successively, in any order.

 

            24.       FORBEARANCE.

 

            (a)        Lender may (but shall not be obligated to) agree with
Borrower, from time to time, and without giving notice to, or obtaining the
consent of, or having any effect upon the obligations of, any guarantor or other
third party obligor, to take any of the following actions:  extend the time for
payment of all or any part of the Indebtedness; reduce the payments due under
this Instrument, the Note, or any other Loan Document; release anyone liable for
the payment of any amounts under this Instrument, the Note, or any other Loan
Document; accept a renewal of the Note; modify the terms and time of payment of
the Indebtedness; join in any extension or subordination agreement; release any
Mortgaged Property; take or release other or additional security; modify the
rate of interest or period of amortization of the Note or change the amount of
the monthly installments payable under the Note; and otherwise modify this
Instrument, the Note, or any other Loan Document.

 

            (b)        Any forbearance by Lender in exercising any right or
remedy under the Note, this Instrument, or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any other right or remedy.  The acceptance by Lender of payment of all or any
part of the Indebtedness 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 on account of the
Indebtedness or to exercise any remedies for any failure to make prompt payment.
Enforcement by Lender of any security for the Indebtedness shall not constitute
an election by Lender of remedies so as to preclude the exercise of any other
right available to Lender.  Lender's receipt of any awards or proceeds under
Sections 19 and 20 shall not operate to cure or waive any Event of Default.

 

            25.       [INTENTIONALLY DELETED]. 

 

            See Section 50.

 

            26.       WAIVER OF STATUTE OF LIMITATIONS. 

 

            Borrower hereby waives the right to assert any statute of
limitations as a bar to the enforcement of the lien of this Instrument or to any
action brought to enforce any Loan Document.

 

            27.       WAIVER OF MARSHALLING.

 

            Notwithstanding the existence of any other security interests in the
Mortgaged Property held by Lender or by any other party, Lender shall have the
right to determine the order in which any or all of the Mortgaged Property shall
be subjected to the remedies provided in this Instrument, the Note, any other
Loan Document or applicable law.  Lender shall have the right to determine the
order in which any or all portions of the Indebtedness are satisfied from the
proceeds realized upon the exercise of such remedies.  Borrower and any party
who now or in the future acquires a security interest in the Mortgaged Property
and who has actual or constructive notice of this Instrument waives any and all
right to require the marshalling of assets or to require that any of the
Mortgaged Property be sold in the inverse order of alienation or that any of the
Mortgaged Property be sold in parcels or as an entirety in connection with the
exercise of any of the remedies permitted by applicable law or provided in this
Instrument.

 

            28.       FURTHER ASSURANCES. 

 

            Borrower shall execute, acknowledge, and deliver, at its sole cost
and expense, all further acts, deeds, conveyances, assignments, estoppel
certificates, financing statements, transfers and assurances as Lender may
require from time to time in order to better assure, grant, and convey to Lender
the rights intended to be granted, now or in the future, to Lender under this
Instrument and the Loan Documents.

 

            29.       ESTOPPEL CERTIFICATE. 

 

            Within 10 days after a request from Lender, Borrower shall deliver
to Lender a written statement, signed and acknowledged by Borrower, certifying
to Lender or any person designated by Lender, as of the date of such statement,
(i) that the Loan Documents are unmodified and in full force and effect  (or, if
there have been modifications, that the Loan Documents are in full force and
effect as modified and setting forth such modifications); (ii) the unpaid
principal balance of the Note; (iii) the date to which interest under the Note
has been paid; (iv) that Borrower is not in default in paying the Indebtedness
or in performing or observing any of the covenants or agreements contained in
this Instrument or any of the other Loan Documents (or, if the Borrower is in
default, describing such default in reasonable detail); (v) whether or not there
are then existing any setoffs or defenses known to Borrower against the
enforcement of any right or remedy of Lender under the Loan Documents; and (vi)
any additional facts requested by Lender.

 

            30.       GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

 

            (a)        This Instrument, and any Loan Document which does not
itself expressly identify the law that is to apply to it, shall be governed by
the laws of the jurisdiction in which the Land is located (the "Property
Jurisdiction").

 

            (b)        Borrower agrees that any controversy arising under or in
relation to the Note, this Instrument, or any other Loan Document shall be
litigated exclusively in the Property Jurisdiction.  The state and federal
courts and authorities with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which shall arise under or in
relation to the Note, any security for the Indebtedness, or any other Loan
Document.  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.

 

            31.       NOTICE.

 

            (a)        All notices, demands and other communications ("notice")
under or concerning this Instrument shall be in writing.  Each notice shall be
addressed to the intended recipient at its address set forth in this Instrument,
and shall be deemed given on the earliest to occur of (1) the date when the
notice is received by the addressee; (2) the first Business Day after the notice
is delivered to a recognized overnight courier service, with arrangements made
for payment of charges for next Business Day delivery; or (3) the third Business
Day after the notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested.  As used in this Section 31,
the term "Business Day" means any day other than a Saturday, a Sunday or any
other day on which Lender is not open for business.

 

            (b)        Any party to this Instrument may change the address to
which notices intended for it are to be directed by means of notice given to the
other party in accordance with this Section 31.  Each party agrees that it will
not refuse or reject delivery of any notice given in accordance with this
Section 31, that it will acknowledge, in writing, the receipt of any notice upon
request by the other party and that any notice rejected or refused by it shall
be deemed for purposes of this Section 31 to have been received by the rejecting
party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.

 

            (c)        Any notice under the Note and any other Loan Document
which does not specify how notices are to be given shall be given in accordance
with this Section 31.

 

            32.       SALE OF NOTE; CHANGE IN SERVICER. 

 

            The Note or a partial interest in the Note (together with this
Instrument and the other Loan Documents) may be sold one or more times without
prior notice to Borrower.  A sale may result in a change of the Loan Servicer. 
There also may be one or more changes of the Loan Servicer unrelated to a sale
of the Note.  If there is a change of the Loan Servicer, Borrower will be given
notice of the change.

 

            33.       SINGLE ASSET BORROWER.  

 

            Until the Indebtedness is paid in full, Borrower (a) shall not
acquire any real or personal property other than the Mortgaged Property and
personal property related to the operation and maintenance of the Mortgaged
Property;  (b) shall not operate any business other than the management and
operation of the Mortgaged Property; and (c) shall not maintain its assets in a
way difficult to segregate and identify.

 

            34.       SUCCESSORS AND ASSIGNS BOUND. 

 

            This Instrument shall bind, and the rights granted by this
Instrument shall inure to, the respective successors and assigns of Lender and
Borrower.  However, a Transfer not permitted by Section 21 shall be an Event of
Default.

 

            35.       JOINT AND SEVERAL LIABILITY. 

 

            If more than one person or entity signs this Instrument as Borrower,
the obligations of such persons and entities shall be joint and several.

 

            36.       RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

 

            (a)        The relationship between Lender and Borrower shall be
solely that of creditor and debtor, respectively, and nothing contained in this
Instrument shall create any other relationship between Lender and Borrower.

 

            (b)        No creditor of any party to this Instrument and no other
person shall be a third party beneficiary of this Instrument or any other Loan
Document.  Without limiting the generality of the preceding sentence, (1) any
arrangement (a "Servicing Arrangement") between the Lender and any Loan Servicer
for loss sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Borrower for the payment of the Indebtedness, (2) Borrower shall not be a third
party beneficiary of any Servicing Arrangement, and (3) no payment by the Loan
Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.

 

            37.       SEVERABILITY; AMENDMENTS. 

 

            The invalidity or unenforceability of any provision of this
Instrument shall not affect the validity or enforceability of any other
provision, and all other provisions shall remain in full force and effect.  This
Instrument contains the entire agreement among the parties as to the rights
granted and the obligations assumed in this Instrument.  This Instrument may not
be amended or modified except by a writing signed by the party against whom
enforcement is sought.

 

            38.       CONSTRUCTION. 

 

            The captions and headings of the sections of this Instrument are for
convenience only and shall be disregarded in construing this Instrument.  Any
reference in this Instrument to an "Exhibit" or a "Section" shall, unless
otherwise explicitly provided, be construed as referring, respectively, to an
Exhibit attached to this Instrument or to a Section of this Instrument.  All
Exhibits attached to or referred to in this Instrument are incorporated by
reference into this Instrument.  Any reference in this Instrument to a statute
or regulation shall be construed as referring to that statute or regulation as
amended from time to time.  Use of the singular in this Agreement includes the
plural and use of the plural includes the singular.  As used in this Instrument,
the term "including" means "including, but not limited to."

 

            39.       LOAN SERVICING. 

 

            All actions regarding the servicing of the loan evidenced by the
Note, including the collection of payments, the giving and receipt of notice,
inspections of the Property, inspections of books and records, and the granting
of consents and approvals, may be taken by the Loan Servicer unless Borrower
receives notice to the contrary.  If Borrower receives conflicting notices
regarding the identity of the Loan Servicer or any other subject, any such
notice from Lender shall govern.

 

            40.       DISCLOSURE OF INFORMATION. 

 

            Lender may furnish information regarding Borrower or the Mortgaged
Property to third parties with an existing or prospective interest in the
servicing, enforcement, evaluation, performance, purchase or securitization of
the Indebtedness, including trustees, master servicers, special servicers,
rating agencies, and organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans.  Borrower irrevocably waives any and
all rights it may have under applicable law to prohibit such disclosure,
including any right of privacy.

 

            41.       NO CHANGE IN FACTS OR CIRCUMSTANCES. 

 

            All information in the application for the loan submitted to Lender
(the "Loan Application") and in all financial statements, rent rolls, reports,
certificates and other documents submitted in connection with the Loan
Application are complete and accurate in all material respects.  There has been
no material adverse change in any fact or circumstance that would make any such
information incomplete or inaccurate.

 

            42.       SUBROGATION. 

 

            If, and to the extent that, the proceeds of the loan evidenced by
the Note are used to pay, satisfy or discharge any obligation of Borrower for
the payment of money that is secured by a pre-existing mortgage, deed of trust
or other lien encumbering the Mortgaged Property (a "Prior Lien"), such loan
proceeds shall be deemed to have been advanced by Lender at Borrower's request,
and Lender shall automatically, and without further action on its part, be
subrogated to the rights, including lien priority, of the owner or holder of the
obligation secured by the Prior Lien, whether or not the Prior Lien is released.

 

            43.       ACCELERATION; REMEDIES. 

 

            At any time during the existence of an Event of Default, Lender, at
Lender's option, may declare the Indebtedness to be immediately due and payable
without further demand, and may invoke the power of sale and any other remedies
permitted by Texas law or provided in this Instrument or in any other Loan
Document.  Borrower acknowledges that the power of sale granted in this
Instrument may be exercised by Lender without prior judicial hearing.  Lender
shall be entitled to collect all costs and expenses incurred in pursuing such
remedies, including attorneys' fees, costs of documentary evidence, abstracts
and title reports.

 

            If Lender invokes the power of sale, Lender may, by and through the
Trustee, or otherwise, sell or offer for sale the Mortgaged Property in such
portions, order and parcels as Lender may determine, with or without having
first taken possession of the Mortgaged Property, to the highest bidder for cash
at public auction.  Such sale shall be made at the courthouse door of the county
in which all or any part of the Land to be sold is situated (whether the parts
or parcel, if any, situated in different counties are contiguous or not, and
without the necessity of having any Personalty present at such sale) on the
first Tuesday of any month between the hours of 10:00 a.m. and 4:00 p.m., after
advertising the time, place and terms of sale and that portion of the Mortgaged
Property to be sold by posting or causing to be posted written or printed notice
of sale at least twenty-one (21) days before the date of the sale at the
courthouse door of the county in which the sale is to be made and at the
courthouse door of any other county in which a portion of the Land may be
situated, and by filing such notice with the County Clerk(s) of the county(s) in
which all or a portion of the Land may be situated, which notice may be posted
and filed by the Trustee acting, or by any person acting for the Trustee, and
Lender has, at least twenty-one (21) days before the date of the sale, served
written or printed notice of the proposed sale by certified mail on each debtor
obligated to pay the Indebtedness according to Lender’s records by the deposit
of such notice, enclosed in a postpaid wrapper, properly addressed to such
debtor at debtor’s most recent address as shown by Lender’s records, in a post
office or official depository under the care and custody of the United States
Postal Service.  The affidavit of any person having knowledge of the facts to
the effect that such service was completed shall be prima facie evidence of the
fact of service.

 

            Trustee shall deliver to the purchaser at the sale, within a
reasonable time after the sale, a deed conveying the Mortgaged Property so sold
in fee simple with covenants of general warranty.  Borrower covenants and agrees
to defend generally the purchaser’s title to the Mortgaged Property against all
claims and demands.  The recitals in Trustee’s deed shall be prima facie
evidence of the truth of the statements contained in those recitals.  Trustee
shall apply the proceeds of the sale in the following order:  (a) to all
reasonable costs and expenses of the sale, including reasonable Trustee’s fees
and attorneys’ fees and costs of title evidence; (b) to the Indebtedness in such
order as Lender, in Lender’s discretion, directs; and (c) the excess, if any, to
the person or persons legally entitled to the excess.

 

            If all or any part of the Mortgaged Property is sold pursuant to
this Section 43, Borrower will be divested of any and all interest and claim to
the Mortgaged Property, including any interest or claim to all insurance
policies, utility deposits, bonds, loan commitments and other intangible
property included as a part of the Mortgaged Property.  Additionally, after a
sale of all or any part of the Land, Improvements, Fixtures and Personalty,
Borrower will be considered a tenant at sufferance of the purchaser of the same,
and the purchaser shall be entitled to immediate possession of such property. 
If Borrower shall fail to vacate the Mortgaged Property immediately, the
purchaser may and shall have the right, without further notice to Borrower, to
go into any justice court in any precinct or county in which the Mortgaged
Property is located and file an action in forcible entry and detainer, which
action shall lie against Borrower or its assigns or legal representatives, as a
tenant at sufferance.  This remedy is cumulative of any and all remedies the
purchaser may have under this Instrument or otherwise.

 

            In any action for a deficiency after a foreclosure under this
Instrument, if any person against whom recovery is sought requests the court in
which the action is pending to determine the fair market value of the Mortgaged
Property, as of the date of the foreclosure sale, the following shall be the
basis of the court’s determination of fair market value:

 

            (a)        the Mortgaged Property shall be valued “as is” and in its
condition as of the date of foreclosure, and no assumption of increased value
because of post-foreclosure repairs, refurbishment, restorations or improvements
shall be made;

 

            (b)        any adverse effect on the marketability of title because
of the foreclosure or because of any other title condition not existing as of
the date of this Instrument shall be considered;

 

            (c)        the valuation of the Mortgaged Property shall be based
upon an assumption that the foreclosure purchaser desires a prompt resale of the
Mortgaged Property for cash within a six month-period after foreclosure;

 

            (d)        although the Mortgaged Property may be disposed of more
quickly by the foreclosure purchaser, the gross valuation of the Mortgaged
Property as of the date of foreclosure shall be discounted for a hypothetical
reasonable holding period (not to exceed 6 months) at a monthly rate equal to
the average monthly interest rate on the Note for the twelve months before the
date of foreclosure;

 

            (e)        the gross valuation of the Mortgaged Property as of the
date of foreclosure shall be further discounted and reduced by reasonable
estimated costs of disposition, including brokerage commissions, title policy
premiums, environmental assessment and clean-up costs, tax and assessment,
prorations, costs to comply with legal requirements and attorneys’ fees;

 

            (f)         expert opinion testimony shall be considered only from a
licensed appraiser certified by the State of Texas and, to the extent permitted
under Texas law, a member of the Appraisal Institute, having at least five
years’ experience in appraising property similar to the Mortgaged Property in
the county where the Mortgaged Property is located, and who has conducted and
prepared a complete written appraisal of the Mortgaged Property taking into
considerations the factors set forth in this Instrument; no expert opinion
testimony shall be considered without such written appraisal;

 

            (g)        evidence of comparable sales shall be considered only if
also included in the expert opinion testimony and written appraisal referred to
in the preceding paragraph; and

 

            (h)        an affidavit executed by Lender to the effect that the
foreclosure bid accepted by Trustee was equal to or greater than the value of
the Mortgaged Property determined by Lender based upon the factors and methods
set forth in subparagraphs (a) through (g) above before the foreclosure shall
constitute prima facie evidence that the foreclosure bid was equal to or greater
than the fair market value of the Mortgaged Property on the foreclosure date.

 

            Lender may, at Lender’s option, comply with these provisions in the
manner permitted or required by Title 5, Section 51.002 of the Texas Property
Code (relating to the sale of real estate) or by Chapter 9 of the Texas Business
and Commerce Code (relating to the sale of collateral after default by a
debtor), as those titles and chapters now exist or may be amended or succeeded
in the future, or by any other present or future articles or enactments relating
to same subject.  Unless expressly excluded, the Mortgaged Property shall
include Rents collected before a foreclosure sale, but attributable to the
period following the foreclosure sale, and Borrower shall pay such Rents to the
purchaser at such sale.  At any such sale:

 

            (a)        whether made under the power contained in this
Instrument, Section 51.002, the Texas Business and Commerce Code, any other
legal requirement or by virtue of any judicial proceedings or any other legal
right, remedy or recourse, it shall not be necessary for Trustee to have
physically present, or to have constructive possession of, the Mortgaged
Property (Borrower shall deliver to Trustee any portion of the Mortgaged
Property not actually or constructively possessed by Trustee immediately upon
demand by Trustee) and the title to and right of possession of any such property
shall pass to the purchaser as completely as if the property had been actually
present and delivered to the purchaser at the sale;

 

            (b)        each instrument of conveyance executed by Trustee shall
contain a general warranty of title, binding upon Borrower;

 

            (c)        the recitals contained in any instrument of conveyance
made by Trustee shall conclusively establish the truth and accuracy of the
matters recited in the Instrument, including nonpayment of the Indebtedness and
the advertisement and conduct of the sale in the manner provided in this
Instrument and otherwise by law and the appointment of any successor Trustee;

 

            (d)        all prerequisites to the validity of the sale shall be
conclusively presumed to have been satisfied;

 

            (e)        the receipt of Trustee or of such other party or officer
making the sale shall be sufficient to discharge to the purchaser or purchasers
for such purchaser(s)’ purchase money, and no such purchaser or purchasers, or
such purchaser(s)’ assigns or personal representatives, shall thereafter be
obligated to see to the application of such purchase money or be in any way
answerable for any loss, misapplication or nonapplication of such purchase
money;

 

            (f)         to the fullest extent permitted by law, Borrower shall
be completely and irrevocably divested of all of Borrower’s right, title,
interest, claim and demand whatsoever, either at law or in equity, in and to the
property sold, and such sale shall be a perpetual bar to any claim to all or any
part of the property sold, both at law and in equity, against Borrower and
against any person claiming by, through or under Borrower; and

 

            (g)        to the extent and under such circumstances as are
permitted by law, Lender may be a purchaser at any such sale.

 

            44.       RELEASE. 

 

            Upon payment of the Indebtedness, Lender shall release this
Instrument.  Borrower shall pay Lender’s reasonable costs incurred in releasing
this Instrument.

 

            45.       TRUSTEE. 

 

            (a)        Trustee may resign by giving of notice of such
resignation in writing to Lender.  If Trustee shall die, resign or become
disqualified from acting under this Instrument or shall fail or refuse to act in
accordance with this Instrument when requested by Lender or if for any reason
and without cause Lender shall prefer to appoint a substitute trustee to act
instead of the original Trustee named in this Instrument or any prior successor
or substitute trustee, Lender shall have full power to appoint a substitute
trustee and, if preferred, several substitute trustees in succession who shall
succeed to all the estate, rights, powers and duties of the original Trustee
named in this Instrument.  Such appointment may be executed by an authorized
officer, agent or attorney-in-fact of Lender (whether acting pursuant to a power
of attorney or otherwise), and such appointment shall be conclusively presumed
to be executed with authority and shall be valid and sufficient without proof of
any action by Lender.

 

            (b)        Any successor Trustee appointed pursuant to this Section
shall, without any further act, deed or conveyance, become vested with all the
estates, properties, rights, powers and trusts of the predecessor Trustee with
like effect as if originally named as Trustee in this Instrument; but,
nevertheless, upon the written request of Lender or such successor Trustee, the
Trustee ceasing to act shall execute and deliver an instrument transferring to
such successor Trustee, all the estates, properties, rights, powers and trusts
of the Trustee so ceasing to act, and shall duly assign, transfer and deliver
any of the property and monies held by the Trustee ceasing to act to the
successor Trustee.

 

            (c)        Trustee may authorize one or more parties to act on
Trustee’s behalf to perform the ministerial functions required of Trustee under
this Instrument, including the transmittal and posting of any notices.

 

            46.       VENDOR’S LIEN; RENEWAL AND EXTENSION.  INTENTIONALLY
DELETED.

 

            47.       NO FIDUCIARY DUTY. 

           

            Lender owes no fiduciary or other special duty to Borrower.

 

            48.       FIXTURE FILING. 

 

            This Instrument is also a fixture filing under the Uniform
Commercial Code of Texas.

 

            49.       ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF RENTS. 

 

            In no event shall the assignment of Rents or Leases in Section 3 and
Section 4 cause the Indebtedness to be reduced by an amount greater than the
Rents actually received by Lender and applied by Lender to the Indebtedness,
whether before, during or after (i) an Event of Default, or (ii) a suspension or
revocation of the license granted to Borrower in Section 3(c) with regard to the
Rents.  Borrower and Lender specifically intend that the assignment of Rents and
Leases in Section 3 and Section 4 is not intended to result in a pro tanto
reduction of the Indebtedness.  The assignment of Rents and Leases in Section 3
and Section 4 is not intended to constitute a payment of, or with respect to,
the Indebtedness and, therefore, Borrower and Lender specifically intend that
the Indebtedness shall not be reduced by the value of the Rents and Leases
assigned.  Such reduction shall occur only if, and to the extent that, Lender
actually receives Rents pursuant to Section 3 and applies such Rents to the
Indebtedness.  Borrower agrees that the value of the license granted with regard
to the Rents equals the value of the absolute assignment of Rents to Lender. 
The assignment of Rents contained in Section 3 shall terminate upon the release
of this Instrument.

 

            50.       LOAN CHARGES. 

 

            Borrower and Lender intend at all times to comply with the laws of
the State of Texas governing the maximum rate or amount of interest payable on
or in connection with the Indebtedness (or applicable United States federal law
to the extent that it permits Lender to contract for, charge, take, reserve or
receive a greater amount of interest than under Texas law).  If the applicable
law is ever judicially interpreted so as to render usurious any amount payable
under the Note, this Instrument or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Indebtedness, or if
acceleration of the maturity of the Indebtedness, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by any applicable law, then Borrower and Lender expressly intend that
all excess amounts collected by Lender shall be applied to reduce the unpaid
principal balance of the Indebtedness (or, if the Indebtedness has been or would
thereby be paid in full, shall be refunded to Borrower), and the provisions of
the Note, this Instrument and the other Loan Documents immediately shall be
deemed reformed and the amounts thereafter collectible under the Loan Documents
reduced, without the necessity of the execution of any new documents, so as to
comply with any applicable law, but so as to permit the recovery of the fullest
amount otherwise payable under the Loan Documents.  The right to accelerate the
maturity of the Indebtedness does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the event of
acceleration.  All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the Indebtedness shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of the Indebtedness until payment in full so that the rate or amount of
interest on account of the Indebtedness does not exceed the applicable usury
ceiling.  Notwithstanding any provision contained in the Note, this Instrument
or any other Loan Document that permits the compounding of interest, including
any provision by which any accrued interest is added to the principal amount of
the Indebtedness, the total amount of interest that Borrower is obligated to pay
and Lender is entitled to receive with respect to the Indebtedness shall not
exceed the amount calculated on a simple (i.e., noncompounded) interest basis at
the maximum rate on principal amounts actually advanced to or for the account of
Borrower, including all current and prior advances and any advances made
pursuant to the Instrument or any other Loan Document (such as for the payment
of Impositions and similar expenses or costs).

 

            51.       PROPERTY AND LIABILITY INSURANCE — DELIVERY OF POLICY TO
LENDER. 

 

            Notwithstanding the provisions of Section 19(b), Borrower shall not
be required to deliver the original (or a duplicate original) of any renewal
policy of insurance to Lender more than 15 days prior to the expiration date of
the policy then held by Lender.

 

            52.       ENTIRE AGREEMENT. 

 

            THIS INSTRUMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS.  THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

 

            53.       WAIVER OF TRIAL BY JURY.

 

            BORROWER AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT OR THE
RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER 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.

 

 

 

            ATTACHED EXHIBITS.  The following Exhibits are attached to this
Instrument:

 

                        |X|        Exhibit A                      Description of
the Land (required).

 

                        |X|        Exhibit B-I                    Modifications
to Instrument (Bankruptcy)

 

                        |X|        Exhibit B-II                  Modifications
to Instrument (Supplemental Lien-Refi Plus)

 

                        |X|        Exhibit B-III                 Modifications
to Instrument (Imposition Deposits Waived)

 

                        |X|        Exhibit B-IV                 Modifications to
Instrument (Borrower-Specific)

 

 

[DOCUMENT EXECUTION AND ACKNOWLEDGMENT OCCUR ON THE FOLLOWING PAGES]

 

 

 

 

 

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[THIS PAGE INTENTIONALLY LEFT BLANK]

            IN WITNESS WHEREOF, Borrower has signed and delivered this
Instrument or has caused this Instrument to be signed and delivered by its duly
authorized representative.

 

 

AIMCO COVINGTON POINTE, L.P.,

a Delaware limited partnership

 

By:       DAVIDSON GP, L.L.C.,

            a South Carolina limited liability company,

            its General Partner

 

By:       Davidson Income Real Estate, L.P.,

                        a Delaware limited partnership,

                        its Sole Member

 

            By:       Davidson Diversified Properties, Inc.,

                                    a Tennessee corporation,

                                    its Managing General Partner

 

 

 

                                    By:       /s/Patti K. Fielding

                                    Patti K. Fielding

                                    Executive Vice President and

                                    Treasurer