Exhibit 10g
LOAN AGREEMENT
THIS LOAN AGREEMENT, made this 16th day of April 2003, by BAYFIELD LOW INCOME
HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office
address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N.D. 58503 (referred to herein as “Borrower”), in favor of DOMINIUM
DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having an
office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).
WITNESSETH
     A. Borrower is the sole limited partner of BLANCHARD SENIORS APARTMENTS,
BUNKIE SENIORS APARTMENTS, COTTONWOOD SENIORS APARTMENTS, LOCKPROT SENIORS
APARTMENTS (AKA DONALDSONVILLE SENIORS) and MANY SENIORS APARTMENTS, each a
Louisiana limited partnership (the “Partnerships”) and each of which own a
twenty-four (24) unit apartment complex, except for Lockport Senior Apartments
(aka Donaldsonville Seniors) and Many Seniors Apartments which each own a
thirty-two (32) unit apartment complex, all for low to moderate income families
located in Blanchard, Bunkie, Cottonport, Donaldsonville and Many, Louisiana,
respectively (the “Apartment Projects”). The Apartment Projects have each been
financed through permanent mortgages from Rural Development Services (formerly
the Farmers Home Administration), U.S. Department of Agriculture (“RD”) which
mortgages had an approximate principal balance as of 12/31/2001 of $700,638,
$675,659, $684,416, $845,704 and $950,434, respectively (the “RD Mortgages”) and
HOME funds and AHP Grants. RD 2000 Development Company, LLC and Community
Support Programs, Inc. are the sole general partners of BLANCHARD SENIORS
APARTMENTS. RD 2000 Development Company, LLC and Caleb Community Development
Corporation are the sole general partners of BUNKIE SENIORS APARTMENTS. RD 2000
Development Company, LLC and Caleb Community Development Corporation are the
sole general partners of COTTONWOOD SENIORS APARTMENTS. RD 2000 Development
Company, LLC and Quad-Area Community Action Agency, Inc. are the sole general
partners of LOCKPROT SENIORS APARTMENTS (AKA DONALDSONVILLE SENIORS). RD 2000
Development Company, LLC and Caleb Community Development Corporation are the
sole general, partners of and MANY SENIORS APARTMENTS.
     B. Lender and Borrower are negotiating for the purchase by Lender of all of
Borrower’s limited partnership interests in similar partnerships and apartment
complexes (the “Principal Transaction”). As part of the Principal Transaction,
Lender has agreed to advance up to $ 162,465 as a down payment on the purchase
price (“Down Payment”). As the Down Payment will be fully refundable to Lender
in the event the Principal Transaction does not close, Lender and Borrower have
agreed to treat said Down Payment as a loan (“Loan”) and secure it’s repayment
partially with a security interest in Borrower’s limited partnership interests
in the Partnerships (“Borrower’s Partnership Interests”).
     C. To evidence the Loan, Borrower has executed and delivered to Lender a
Promissory Note of even date herewith, in the initial principal amount of
$116,130 (the “Note”) which represents the first advance on the Loan, and
Borrower will execute and deliver to Lender a Promissory Note in the amount of
any additional advances under the Loan, if, as and when made.

 

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     D. To secure the Loan, Borrower has executed and delivered to Lender a
Security Agreement of even date herewith, granting to Lender a security interest
in the Borrower’s Partnership Interests in the Partnerships (the “Security
Agreement”), together with a Financing Statement perfecting such security
interests (the “Financing Statement”).
     NOW, THEREFORE, in consideration of the mutual agreements, covenants, and
promises herein contained and for other good and value consideration, receipt of
which is hereby acknowledged each party to the other, Borrower and Lender agree
as follows:
     1. Representations and Warranties of Borrower. Borrower represents and
warrants to Lender as follows:
          (a) There are no actions, suits or proceedings pending involving the
Borrower, or to the best knowledge of Borrower, threatened against or affecting
Borrower, the Apartment Projects, the Partnerships, the Partnership Interests,
or the validity or enforceability of this Agreement, the Note, the Security
Agreement, the Guaranty or the priority thereof, at law or in equity, or before
or by any governmental authority. To Borrower’s knowledge, it is not in default
with respect to any order, writ, injunction, decree, or demand of any court.
          (b) Borrower has no knowledge that the consummation of the transaction
hereby contemplated and the performance of this Agreement, the Note, the
Security Agreement or the Guaranty by the Guarantor will result in any breach
of, or constitute a default under, any deed to secure debt, mortgage, deed of
trust, indenture, security agreement, lease, bank loan or credit agreement,
corporate charter, bylaws, partnership agreement, covenants or use restrictions
applicable to the Apartment Projects, the Partnership Interests, or other
instruments to which the Partnership is a party or by which the Apartment
Projects may be bound or affected, specifically including (but not limited to)
the RD Mortgages, except that Borrower was required to and has obtained the
written approval of the General Partner of the Partnerships to the Security
Agreement pursuant to the Partnership Agreements.
          (c) There arc no liens against the Borrower’s Partnership Interests
and the Lender will have a first priority lien interest in Borrower’s
Partnership Interests.
     2. Covenants and Agreements of Borrower. Borrower covenants and agrees with
Lender as follows:
          (a) Borrower acknowledges and agrees that Lender will disburse the
advances to be made hereunder to the Borrower to be used solely for the
Borrower’s purposes.
          (b) Borrower will not convey or encumber, or cause or permit the
Borrower’s Partnership Interests in the Partnerships to be conveyed or
encumbered further in any way without the prior written consent of Lender, in
its sole discretion.
     3. Disbursement of the Loan. Upon the execution of this Agreement, Lender
will pay the first advance of the Loan funds in the amount of $116,130 to the
Borrower. Borrower will execute a second note for the amount of the second
installment of the Loan ($46,335) on May 30, 2003 if the Principal Transaction
has not closed and if the Lender otherwise has not given written notice of its
decision not to proceed with the Principal Transaction.
     4. Payment. In accordance with the provisions of the Note, the Loan term
shall mature and all advanced principal and accrued interest shall be payable on
the first to occur of (i) the Closing on the

 

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Principal Transaction or (ii) 360 days from the date of the first advance.
     5. Events of Default. At the option of Lender, the occurrence of any one of
the following events shall constitute an Event of Default under this Agreement:
          (a) Borrower fails to make any payment due under the Note within
thirty (30) days after the date such payment becomes due.
          (b) Borrower fails to comply with any covenant, condition, or
agreement, other than the failure to make any payment when due, under this
Agreement, the Note, the Security Agreement or the Guaranty and to cure such
default after receipt of thirty (30) days prior written notice from Lender.
          (c) Either the Borrower, Guarantor, the General Partner, or the
Partnership makes an assignment for the benefit of creditors, files a petition
in bankruptcy, is adjudicated, insolvent or bankrupt, petitions or applies to
any tribunal for any receiver of or trustee for it or any substantial part of
its property, commences any proceeding relating to Borrower, Guarantor, the
General Partner, the Partnership, or the Apartment Project under any
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, or there
is commenced against Borrower, Guarantor, the General Partner, or the
Partnership any such, act or proceeding which remains undismissed for a period
of sixty (60) days, or either Borrower, Guarantor, the General Partner, or the
Partnership by any act indicates its consent to, approval of, or acquiescence in
any such proceeding or the appointment of any receiver of or trustee for it or
any substantial part of its property, or suffers any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days.

    6. Remedies. I. Upon the occurrence of an Event of Default in connection
with subsections 2(b), 5(a) or 5(c) with respect to Borrower or Guarantor,
above, Lender may, at its option, do all or any of the following:

          (a)  Declare all sums evidenced by the Note to be immediately due and
payable.
          (b) Pursue all remedies granted under the Note, the Guaranty or the
Security Agreement or any combination thereof for default, and the remedies
granted under all laws and statutes. All such remedies are deemed cumulative and
may be exercised concurrently. The failure to exercise any remedy shall not
constitute a waiver thereof, nor shall use of any remedy prevent the subsequent
or concurrent resort to the same or any other remedy.
          (c) In lieu of the remedies provided in subsection “(b)’’ hereof,
elect to take in full payment for the Loan (i) three of the limited partner
interest, in its sole discretion, that are Collateral, if Lender has loaned only
the first installment or (ii) all of the Collateral, if Lender has loaned both
the first installment and the second installment.
               II. Upon the occurrence of an Event of Default, except in
connection with subsections 2(b), 5(a) or 5(c) with respect to Borrower or
Guarantor, above, Lender shall substitute one or more Apartment Complexes in
Borrower’s portfolio, other than one of those few indicated as “SOLD” on the
spreadsheets previously provided to Lender, of approximate equal size and value
for any of the Apartment Complexes with respect to which an Event of Default has
occurred.

 

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     7. Provided the first and second installments of the loan are funded in
accordance herewith, Borrower will not sell any further interests in its
Operating Partnerships (other than completing those few indicated as “SOLD” on
the spreadsheets previously provided to Lender) prior to July 31, 2003 unless a
closing on the Principal Transaction has taken place by then, in which event the
terms and conditions of the Principal Transaction as closed shall govern the
sales of any further interests in Borrower’s Operating Partnerships.
     8. Termination. This Agreement shall terminate upon satisfaction in full of
the indebtedness evidenced by the Note.
     9. Miscellaneous.
          (a) All notices, requests or other communications required hereunder
must be in writing and must be mailed by registered or certified mail, return
receipt requested, or delivered to the parties in person, at the addresses first
above written. Each party may change its address by notifying the other party in
the manner set forth above. All such notices, requests or other communications
shall be effective when deposited in the mails or delivered in person as
aforesaid.
          (b) This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, personal representatives,
successors, and permitted assigns.
          (c) This Agreement contains the entire understanding and agreement of
the parties with respect to the subject matter hereof. This Agreement has been
entered into after full investigation, and neither party has relied upon any
statements made by any person that are not set forth herein; accordingly, this
Agreement shall not be construed more strictly against either party. This
Agreement may not be modified, amended, or cancelled, nor shall any provision
thereof be waived, except in a writing signed by Borrower and Lender.
          (d) The section headings of this Agreement are for reference and are
not part of or a guide to the interpretation of this Agreement. Any singular
word or term herein shall be read as in the plural whenever the sense of this
Agreement may require it.
          (e) This Agreement may be executed in one or more counterparts, each
of which shall constitute a complete agreement and all of which taken together
shall constitute a single agreement.
          (f) THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE
INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS LOAN AGREEMENT MAY BE
ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR
THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS NOT
CONVENIENT. IN THE EVENT AN ACTION IS AN ACTION IS COMMENCED IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS LOAN AGREEMENT, LENDER AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

 

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AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER
AND BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION WITH SAID LOAN, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

     
 
“BORROWER:”
 
BAYFIELD LOW INCOME
 
HOUSING LIMITED PARTNERSHIP,
 
a Delaware limited partnership,
 
By: Megan Asset Management, Inc.,
 
General Partner
 
/s/ Paul J.Maddock
 
 
 
Paul J.Maddock,President
 
 
 
“LENDER:”
 
DOMINIUM DEVELOPMENT &
 
ACQUISITION, LLC, a Minnesota
 
limited liability company
 
 
 
By:  /s/ [ILLEGIBLE]
 
   
 
Print Name:

 

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STATE OF NORTH DAKOTA
  )          
 
          ss:    
COUNTY OF BURLEIGH
)          

     On this the 10th day of June, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J.
Maddock, to me known, who being by me duly sworn, did depose and say that he has
an address of 1424 West Century Avenue, #102, Bismarck, North Dakota 58503; that
he is the President of Megan Asset Management, Inc., the corporation described
in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his
name thereto on behalf of said corporation for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
(SEAL)
  /s/ Sandra Levorsen    
 
       
SANDRA LEVORSEN
Notary Public
  NOTARY PUBLIC
My commission    
State of North Dakota
My Commission Expires Mar, 23, 2009
  expires:    

                 
STATE OF MINNESOTA
)          
 
          ss:    
COUNTY OF HENNEPIN
)          

     On this the 11th day of June, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Jon
Segner, who is personally known to me to be or who produced [ILLEGIBLE] Driver’s
[ILLEGIBLE] as identification evidencing he is the individual who executed and
delivered the foregoing instrument, and he duly acknowledged to me that he
executed and delivered the same in his capacity as the Chief Financial Officer
of Dominium Development & Acquisition, LLC on behalf of said company and for the
purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.
(SEAL)

         
 
  /s/ Michelle M. Miller  
 
       
MICHELLE M. MILLER
NOTARY PUBLIC — MINNESOTA
  NOTARY PUBLIC
My commission    
My Commission Expires Jan. 31, 2005
  expires: 1/31/05    

 

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(DOMINIUM LOGO) [w14889w1488901.gif]
April 2, 2003
Bayfield Low Income Housing Limited Partnership
c/o Megan Asset Management, Inc.
1424 W. Century Avenue, Suite 102
Bismarck, ND 58503
Re: Bridge Loan Commitment
Gentlemen:
We are pleased to provide this commitment for a loan (the “Loan”) in the
principal amount up to $162,465, to Bayfield Low Income Housing Limited
Partnership (the “Partnership”). This letter shall be deemed the commitment
(“Commitment”) to make the Loan by Dominium Development & Acquisition (“DDA”),
subject to the terms and conditions set forth below. This loan commitment shall
expire on April 11, 2005, if net accepted by then, and is subject to the terms
and conditions set forth below. This loan commitment is made in consideration of
a sale proposal presented by the Partnership to DDA (the “Proposal”) and to
allow DDA additional time in which to consider the proposal.
This loan is to be secured by a first priority lien position in the limited
partner interests that the Partnership owns in each of the partnerships that
own, respectively, the following projects that are located in Louisiana (the
“Collateral”):

  1.   Blanchard Apartments;     2.   Bunkie Apartments;     3.   Cottonwood
Seniors Apartments;     4.   Donaldsonville Seniors; and     5.   Many Seniors
Apartments.

The Terms and Conditions are as follows:

  (a)   The principal loan amount shall not exceed $162,465.     (b)   The loan
shall be funded in two installments;

i. $116,130 upon completion of DDA’s due diligence on the Collateral, but in no
event later than April 15, 2003, except as the due diligence review period may
be extended pursuant to Paragraph (e); and
[ILLEGIBLE]
2355 Polaris Lane North Suite 100 Minneapolis, MN 55407-4853 Phone 763/354-3500
Fax 763/354-5519
[ILLEGIBLE]

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  ii.   $46,335 on May 30, 2003 if a closing on the underlying transaction
contained in the Proposal (the “Closing”) has not taken place by then.

(c)   The Loan shall mature and all funded principal and accrued interest shall
be payable on the first to occur of (i) the Closing or (ii) 360 days from the
date of the first installment.   (d)   The Interest Rate shall be five percent
(5%). Interest shall accrue and shall be paid with the principal maturity.   (e)
  Collateral for the Loan shall be the Collateral, as described above. DDA shall
be entitled to request materials relative to the Collateral to allow it to
determine the sufficiency of the collateral (the “Due Diligence Materials”).
Upon receipt of the initially requested Due Diligence Materials, which request
DDA will submit in writing within five (5) days following DDA’s receipt of your
executed Commitment, DDA will have ten (10) days within which to review to its
sole satisfaction the Due Diligence Materials to determine (i) the sufficiency
of the Collateral or (ii) to select one or more projects of comparable size that
it deems are sufficient to equal a total of five projects within the Collateral.
If, based on the initial Due Diligence Materials, there are additional Due
Diligence Materials that DDA wants to request, it may submit a written request
for the additional Due Diligence Materials, and this sentence will apply to any
additional Due Diligence Materials received as a result of the request. The ten-
(10-) day review period will be suspended for the period during which there is
an outstanding request for additional Due Diligence Materials. If DDA determines
(i) during the ten- (10-) day review period, as it may be extended, that it does
not want either to make the Loan or to proceed with the Proposal, it will give
written notice to the Partnership, and neither party will have any further
obligations pursuant to this Commitment, or (ii) after loaning the first
installment but prior to loaning the second installment, that it does not want
to proceed with the Proposal, it will give written notice to the Partnership,
and DDA will not be obligated to loan the second installment. If DDA neither
gives during the due diligence review period its written notice of the
acceptance of the Collateral or of its decision not to make the Loan or not to
proceed with the Proposal, the Collateral will be deemed sufficient.   (f)   The
Guarantor of the Loan shall be Megan Asset Management Inc.   (g)   The Loan and
the pledge of the Collateral will be documented by documents that are actually
acceptable to the Partnership and DDA, and drafts will be provided by DDA within
five (5) business days following DDA’s receipt of the Partnership’s executed
Commitment.   (h)   From the date of the funding of the first installment, and
provided the second loan installment is funded in accordance herewith, the
partnership will not sell any further interest in its Operating Partnership
(other than completing those few indicated as “SOLD” on the spreadsheet
previously

2355 Polaris Lane North Suite 100 Minneapolis, MN [ILLEGIBLE] Phone 612/354-550
Fax 612/354-5650

[ILLEGIBLE]

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provided to DDA) prior to June 30 PGM 2005 unless the Closing has taken place by
then

  (i)   At DDA’s sole option, if it does not proceed with the Closing it may
elect to take in full payment for the Loan (i) three of the limited partner
interest, in DDA’s disorction, that are Collateral if DDA has loaned only the
first installment or (ii) all of the Collateral if DDA has loaned both the first
installment and the second installment.

This Commitment may not be modified, transferred or assigned without the prior
written consent of DDA and the partnership.
If this Commitment is acceptable, please execute two (2) copies of this
Commitment and return one (1) copy within two (2) days of the date of this
Commitment to:
Jon Segner
Dominium Acquisition, LLC
2355 Polaris Lane North, Suite 100
Minnepolis, MN 55447-4853
We appreciate the opportunity to be of service to you. If you have any questions
regarding this Commitment, please contact the undersigned.

     
 
Sincerely, 
 
Dominium Acquisition, LLC
 
   
 
By: /s/[ILLEGIBLE]
 
   
 
Title: Member

The undersigned accepts the foregoing Commitment as of this 4th day of
April, 2003.

     
 
Bayfield Low Income Housing Limited Partnership 
 
   
 
By: Megan Asset Management, Inc.
 
       Its General Partner
 
   
 
By: /s/ Paul J. Maddock
 
   
 
  Paul J. Maddock
 
  Title: President
 
   

2355 Polaris Lane North Suite 100 Minneapolis, MN 55447 Phone 612/354-5500 Fax
612/354-5650
[ILLEGIBLE]

4

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(WINTHROP & WEINSTINE LOGO) [w14889w1488902.gif]
A Professional Association
3000 Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 347-0700
Fax: (612) 347-0600
FACSIMILE COVER LETTER

                 
CC TO:
  Mr. Paul J. Maddock   FACSIMILE NO.:   [701] 223-5672    
PHONE:
  [701] 223-2923            
 
               
SENT TO:
  Mr. Gary Maddock       [913] 685-9025    
PHONE:
  [913] 685-9000            
 
               
CC TO:
  Mr. Jon Segner   FACSIMILE NO.:   [763] 354-5650    
PHONE:
  [763] 354-5620            
 
               
SENT BY:
  Paul W. Markwardt   FILE NO.:   3997-157      
DATE:
  June 4, 2003            
 
                MESSAGE:   Gary, as a follow-up to your e-mail from yesterday,
please find attached a copy of the Loan Commitment. I have circled on the
signature page paragraph (i), which is the paragraph to which I was referring in
my comments. If you have any questions, please call me. Regards.

(-s- Paul) [w14889w1488907.gif]
ORIGINAL WILL: Not Be Sent

NOTICE-CONFIDENTIAL INFORMATION
The information to this fax communication is privileged and strictly
confidential. It is intended solely for the use of the individual or entity
named above. If the reader of this message is not the intended recipient or the
employee or agent responsible to deliver it to the intended recipient, any
dissemination, distribution, copying or other use of the information contained
in this communication is strictly prohibited. If you have received this
communication in error, please first notify the sender immediately at the above
telephone number of your erroneous receipt and then return this fax
communication at once to the sender at the above address either via United
States Postal Service or by the method of delivery specified by the sender.
This communication consists of 4 pages, including this cover letter. If all
pages are not received, please contact Linda R. Quimby (612) 347-0663.

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CORPORATE GUARANTY
     THIS CORPORATE GUARANTY, dated as of April 16, 2003 (the “Guaranty”), is
made and given by MEGAN ASSET MANAGEMENT, INC., a Delaware corporation, whose
mailing address is 1424 W. Century Avenue, #102, Bismarck, North Dakota 58503
(the “Guarantor”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a
Minnesota limited liability company, whose mailing address is 2355 Polaris Lane
North, Suite 100, Minneapolis, Minnesota 55447 (“Lender”).
RECITALS
     A. Lender has agreed to lend to Bayfield Low Income Housing Limited
Partnership, a Delaware limited partnership (“Borrower”), the sum of up to
$162,465.00 (the “Loan”), which Loan is evidenced by one or more Promissory
Note(s) in an aggregate amount equal to the amount(s) that Lender loans
(individually or collectively, the “Note”), and is secured by a Security
Agreement of even date herewith (the “Security Agreement”), and is the subject
of a Loan Agreement of even date herewith between Borrower and Lender (the “Loan
Agreement”); the Note, the Security Agreement, and the Loan Agreement are
sometimes hereinafter collectively referred to as the “Loan Documents,” Any
capitalized term used herein and not otherwise defined herein shall have the
meaning ascribed to such term in the Loan Agreement.
     B. It is a condition precedent to the obligation of Lender to make the Loan
to Borrower that this Guaranty be executed and delivered by Guarantor.
     NOW, THEREFORE, in consideration of the recitals, the truth and correctness
of which are hereby confirmed by Guarantor, of the making of the Loan, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor hereby covenants and agrees with Lender as
follows:
     Section 1. The Guaranty. Guarantor hereby absolutely, irrevocably and
unconditionally guarantees to Lender the following (collectively referred to
herein as the “Obligations”): (i) the collection of payment (whether at a stated
maturity date or earlier by reason of acceleration) of all indebtedness
(principal, interest and other), liabilities and monetary obligations of
Borrower to Lender of every kind, nature and description under the Loan
Documents; and (ii) all representations and warranties made by Borrower in the
Loan Documents being true, correct and complete.
     Section 2. Continuing Guaranty. This Guaranty is an absolute, irrevocable,
unconditional, complete and continuing guaranty of collection of payment. The
obligations of Guarantor hereunder shall not be released by any action which
might, but for this provision of this Guaranty, be deemed a legal or equitable
discharge of a surety or guarantor, other than irrevocable payment and
performance in full of the Obligations. No notice of any renewal or extension of
the Obligations need be given to Guarantor. Guarantor hereby waives
(a) diligence, demand for payment, presentment, protest, notice of demand, of
protest, of dishonor or of nonpayment; (b) notices of advances of Loan proceeds;
(c) all other notices and demands of any kind and description relating to the
Obligations; and (d)all defenses of Borrower pertaining to the Obligations,
except for the defense of discharge by irrevocable payment and performance.

 

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The Obligations of Guarantor hereunder are irrevocable. The acceptance of this
Guaranty by Lender is not intended to and does not release any liability
previously existing of any guarantor or surety of any indebtedness of Borrower
to Lender.
     Section 3. Other Transactions. Lender is authorized (a) to exchange any
collateral or security which may be placed with it by Borrower, or to deliver
any such collateral or security directly to Borrower For collection and
remittance or for credit, or to collect the same in any manner without notice to
Guarantor; and (b) to amend, extend or supplement the Loan Documents, to waive
compliance by Borrower with the terms thereof without affecting the liabilities
of Guarantor hereunder and to settle or compromise any of the Obligations
without notice to or consent of Guarantor. No invalidity, irregularity or
unenforceability of all or any part of the Obligations or of any security
therefor or other recourse with respect thereto shall affect, impair or be a
defense to this Guaranty. The liabilities of Guarantor shall not be affected by
any delay on the part of Lender to realize upon any of the obligations of
Borrower to Lender, or upon any collateral or security for any of the
Obligations, nor by the taking by Lender of (or its failure to take) any other
guaranty or guaranties to secure the Obligations, nor by the taking by Lender of
(or its failure to take or its failure to perfect its security interest in or
other lien on) collateral or security of any kind. No act or omission of Lender,
whether or not such action or failure to act varies or increases the risk, or
affects the rights or remedies, of Guarantor, shall affect or impair the
obligations of Guarantor hereunder. This Guaranty is in effect and binding
without reference to whether this Guaranty is signed by any other person.
Possession of this Guaranty by Lender shall be conclusive evidence of due
delivery hereof by Guarantor and acceptance hereof by Lender. This Guaranty
shall continue in full force and effect, notwithstanding (a) any extension of
time to Borrower and/or (b) the making of any other loans by Lender to Borrower.
     Section 4. Actions Not Required. Guarantor hereby waives any and all right
to cause a marshalling of the assets of Borrower or any other action by any
court or other governmental body with respect thereto. Time is of the essence
with respect to Guarantor’s obligations under this Guaranty. If any remedy or
right hereby granted shall be found to be unenforceable, such unenforceability
shall not limit or prevent enforcement of any other remedy or right hereby
granted.
     Section 5. No Subrogation. Unless and until the Obligations have
irrevocably been paid in full, and notwithstanding any payment or payments made
by Guarantor hereunder, Guarantor irrevocably waives all rights of subrogation
to any of the rights of Lender against Borrower or any other person liable for
payment of any of the Obligations or any collateral security or guaranty or
right of offset held by Lender for the payment or performance of the
Obligations, and Guarantor irrevocably waives all legal and equitable rights to
seek any recourse to or contribution, recovery or reimbursement from, or
subrogation against, Borrower or any other person liable for payment or
performance of any of the Obligations in respect of payments or performance made
by Guarantor hereunder.
     Section 6. Application of Payments. Any and all payments made by Guarantor
or by any other person, and/or the proceeds of any or all collateral or security
for any of the Obligations, may be applied by Lender on such items of the
Obligations as Lender may elect.

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     Section 7. Recovery of Payment. If any payment received by Lender and
applied to the Obligations is subsequently set aside, recovered, rescinded or
required to be returned or repaid for any reason (including, without limitation,
the bankruptcy, insolvency or reorganization of Borrower or any other obliger),
the Obligations to which such payment was applied shall for the purposes of this
Guaranty be deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such Obligations as
fully as if such application had never been made. No payment shall be deemed to
be irrevocable for the purpose of this Guaranty if it remains subject to any
possible such set aside, recovery, recission, return or repayment for any
reason.
     Section 8. Security Interest and Set-offs. Guarantor hereby grants Lender a
security interest in all sums due from Lender to Guarantor in the possession of
or in transit to Lender, now existing or hereafter arising or coming due
(including without limitation repurchase agreements and securities in transit),
and such amounts and all proceeds thereof may at all times be held and treated
as collateral security hereunder (the “Additional Collateral”). To the extent
the Obligations are due and payable and unpaid, and at any time thereafter,
Lender shall have all the rights and remedies of a secured party as against the
Additional Collateral, and Lender may apply or set-off all or any of such
Additional Collateral against the Obligations as Lender deems appropriate,
and/or refuse to honor orders to pay or withdraw the Additional Collateral or
sums represented thereby, all at Lender’s sole and absolute discretion.
     Section 9. Representations and Warranties of Guarantor. Guarantor hereby
represents and warrants to, and covenants with, Lender that:
     A. Borrower’s Financial Condition. Guarantor is familiar with the financial
condition of Borrower and with all other facts and circumstances which a
diligent inquiry would reveal and which would bear upon the risk of nonpayment
or nonperformance of the Obligations, and Guarantor has executed and delivered
this Guaranty based on Guarantor’s own judgment and not in reliance upon any
statement or representation of Lender. Lender shall have no obligation to
provide Guarantor with any advice or information whatsoever or to inform
Guarantor at any time of Lender’s actions, evaluations or conclusions on the
financial condition of or any other matter concerning Borrower.
     B. Organization, Standing, Etc. Guarantor is a Delaware corporation duly
incorporated and validly organized, existing and in good standing under the laws
of the jurisdiction of its organization, and, if different and if required, the
jurisdiction(s) in which Borrower conducts business, and has all requisite power
and authority to carry on its business as now conducted, to enter into this
Guaranty and to perform its obligations hereunder. This Guaranty has been duly
authorized by all necessary action and when executed and delivered will be the
legal and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms. The execution, delivery and performance of this
Guaranty will not violate Guarantor’s organizational documents or any law,
statute, ordinance, code, or governmental rule or regulation applicable to
Guarantor, and will not violate or cause a default under, or permit acceleration
of, any agreement to which Guarantor is a party or by which it or any of its
properties or assets is bound.

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     C. Litigation. There are no actions, suits or proceedings pending or, to
the knowledge of Guarantor, threatened against or affecting Guarantor which, if
determined adversely to Guarantor, would have a material adverse effect on the
condition of Guarantor or on the ability of Guarantor to perform its obligations
under this Guaranty. Guarantor is not in violation of any law, statute,
ordinance, code or governmental rule or regulation applicable to Guarantor where
such violation could reasonably be expected to impose a material liability on
Guarantor; no unsatisfied judgments have been entered against Guarantor; and no
unsatisfied liens have been filed against Guarantor.
     D. Taxes. Guarantor has filed all federal, state and local tax returns
required to be filed and, has paid or made provision for the payment of all
taxes due and payable pursuant to such returns and pursuant to any assessments
made against it or its property (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been provided on
the books of Guarantor).
     Section 10. Remedies. All remedies afforded to Lender by this Guaranty are
separate and cumulative remedies, and no one of such remedies, whether or not
exercised by Lender, shall limit any of the other remedies available to Lender
hereunder, under the Loan Documents, at law in equity by statute or otherwise,
and shall in no way limit or prejudice any other remedy which Lender may have.
Mere delay or failure to act shall not preclude the exercise or enforcement of
any such rights and remedies available to Lender.
     Section 11. Bankruptcy of Borrower. The liabilities and obligations of
Guarantor under this Guaranty shall not be impaired or affected by the
institution by or against Borrower or any other person of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or any other
similar proceedings for relief under any bankruptcy law or similar law for the
relief of debtors. Any discharge of any of the Obligations pursuant to any such
bankruptcy or similar law or other law shall not dimmish, discharge or otherwise
affect in any way the obligations of Guarantor under this Guaranty, and upon the
institution of any of the above actions, such obligations shall be enforceable
against Guarantor.
     Section 12. Costs and Expenses. Guarantor shall pay or reimburse Lender on
demand for all out-of-pocket expenses (including in each case all fees and
expenses of counsel) incurred by Lender arising out of or in connection with,
the enforcement of this Guaranty against Guarantor or arising out of or in
connection with any failure of Guarantor to perform fully and timely the
obligations of Guarantor hereunder.
     Section 13. Waivers and Amendments. This Guaranty can be waived, modified,
amended, terminated or discharged only explicitly in a writing signed by Lender.
A waiver so signed shall be effective only in the specific instance and for the
specific purpose given.
     Section 14. Transfer of Assets. Guarantor agrees not to transfer any
material portion of its assets without, fair and adequate consideration or as
otherwise agreed to in writing by Lender.

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     Section 15. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder will be sufficiently
given if in writing and delivered in person, sent by United States certified
mail, return receipt requested, postage prepaid, sent by overnight mail by a
nationally recognized courier service or sent by fax (provided that a copy of
such fax is also sent to such party on the same business day) by certified mail
or by an overnight courier service to the party being given such notice at the
appropriate address or fax number set forth on page 1 hereof, or to such other
address or fax number as any party may give to the others in writing at least
ten (10) days prior to the effective date of said change of address or fax
number. Notices delivered in person shall be effective upon receipt; notices
delivered by mail shall be effective three (3) business days after being
deposited in the United States mail; notices delivered by overnight mail shall
be effective on the business day following delivery to the courier, and notices
sent by fax shall be effective on the business day of the transmission provided
the transmitting party receives a fax machine confirmation of receipt and has
mailed or sent a copy of the fax to the other party as provided above.
     Section 16. Guarantor Acknowledgements. Guarantor acknowledges that
(a) Guarantor will benefit by and from the making of the Loan by Lender to
Borrower; (b) Guarantor has received legal and adequate consideration for the
execution of this Guaranty and has executed and delivered this Guaranty to
Lender in good faith in exchange for reasonably equivalent value; (c) Guarantor
is not presently insolvent and will not be rendered insolvent by virtue of the
execution and delivery of this Guaranty; (d) Guarantor has not executed or
delivered this Guaranty with actual intent to hinder, delay or defraud
Guarantor’s creditors; (e) Lender has agreed to make the Loan in reliance upon
this Guaranty; (f) Guarantor’s independent counsel has advised Guarantor in the
negotiation, execution and delivery of this Guaranty; (g) Lender has no
fiduciary relationship to Guarantor, their relationship being solely that of
debtor and creditor; (h) no joint venture exists between Guarantor and Lender;
and (i) Guarantor has received a true and correct copy of each Loan Document.
     Section 17. Successors and Assigns. This Guaranty shall (a) remain in full
force and effect until irrevocable payment and performance in full of the
Obligations, and the expiration of the obligation, if any, of Lender to make
advances to Borrower under the Loan Agreement, (b) be binding upon Guarantor and
the heirs, representatives, successors and assigns of Guarantor, and (c) inure
to the benefit of, and be enforceable by, Lender and its successors, transferees
and assigns.
     Section 18. GOVERNING LAW; JURISDICTION; VENUE. THIS GUARANTY, THE RIGHTS
OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF
LENDER, THIS GUARANTY MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA;
GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES
ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR

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INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY, LENDER AT ITS OPTION
SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
     Section 19. Severability. Whenever possible, each provision of this
Guaranty and any other statement, instrument or transaction contemplated hereby
or relating hereto, shall be interpreted in such manner as to be effective and
valid under applicable law, but, if any provision of this Guaranty or any other
statement, instrument or transaction contemplated hereby or relating hereto
shall be held to be prohibited or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Guaranty or any other statement, instrument or transaction contemplated
hereby or relating hereto.
     Section 20. WAIVER OF JURY TRIAL. GUARANTOR AND LENDER HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO THIS GUARANTY, THE OBLIGATIONS HEREUNDER OR ANY COLLATERAL SECURING
THE OBLIGATIONS, GUARANTOR AND LENDER EACH REPRESENTS TO THE OTHER THAT THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
     Section 21 General. All representations and warranties contained in this
Guaranty, or in any other agreement between Guarantor and Lender, shall survive
the execution, delivery and performance of this Guaranty and the creation,
payment and performance of the Obligations. Captions in this Guaranty are for
reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Guaranty.
     IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.

            GUARANTOR;
MEGAN ASSET MANAGEMENT, INC.
      By:   /s/ Paul J. Maddock         Paul J. Maddock, President             

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SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 16th day of April 2003, by BAYFIELD LOW INCOME
HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office
address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N.D. 58503 (referred to herein as “Debtor”), in favor of DOMINIUM
DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having an
office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).
     Debtor hereby agrees as follows:
     1. Security Interest. Debtor constitutes the sole limited partner of
BLANCHARD SENIORS APARTMENTS, BUNKIE SENIORS APARTMENTS, COTTONWOOD SENIORS
APARTMENTS, LOCKPORT SENIORS APARTMENTS (AKA DONALDSONVILLE SENIORS) and MANY
SENIORS APARTMENTS, each a Louisiana limited partnership (the “Partnerships”).
Lender is a Minnesota limited liability company. In consideration of and as an
inducement for an extension of credit by Lender to Debtor for the purpose of
funding certain requirements of the Debtor, Debtor hereby gives Lender a
continuing and unconditional security interest (the “Security Interest”) in
Debtor’s interest as a limited partner in the Partnerships and in all additions,
replacements, substitutions, increases and profits, and in all proceeds and
products thereof in any form to which Debtor is entitled (collectively referred
to herein as the “Collateral”). The Collateral shall include, without
limitation, Debtor’s entitlement to, if any, all distributions of Cash Flow,
distributions of proceeds resulting from a Refinancing, distributions of
proceeds resulting from a Major Capital Event, liquidating distributions,
distributions in kind, upon a default all profits and losses from the
Partnership to Debtor, and all returns of capital, all as defined or described
in, and in accordance with the provisions of (i) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of BLANCHARD SENIORS
APARTMENTS, executed as of the 1st day of November, 1987 and filed in the Office
of the Secretary of State of Louisiana on the 4th day of January, 1988 and that
Amendment to the Amended and Restated Agreement and Certificate of Limited
Partnership of BLANCHARD SENIORS APARTMENTS, executed as of the 1st day of July,
1990, (ii) that certain Amended and Restated Agreement and Certificate of
Limited Partnership of BUNKIE SENIORS APARTMENTS, executed as of the 1st day of
November, 1987 and filed in the Office of the Secretary of State of Louisiana on
the 4th day of January, 1988 and that Amendment to the Amended and Restated
Agreement and Certificate of Limited Partnership of BUNKIE SENIORS APARTMENTS,
executed as of the 1st day of July, 1990, (iii) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of COTTONWOOD SENIORS
APARTMENTS, executed as of the 1st day of August, 1988 and filed in the Office
of the Secretary of State of Louisiana on the 13th day of December, 1988 and
that Amendment to the Amended and Restated Agreement and Certificate of Limited
Partnership of COTTONWOOD SENIORS APARTMENTS, executed as of the 1st day of
July, 1990, (iv) that certain Amended and Restated Agreement and Certificate of
Limited Partnership of LOCKPORT SENIORS APARTMENTS, executed as of the 1st day
of June, 1988 and filed in the Office of the Secretary of State of Louisiana on
the 16th day of November, 1989 and that Amendment to the Amended, and Restated
Agreement and Certificate of Limited Partnership of LOCKPORT SENIORS APARTMENTS,
executed as of the lst day of July, 1990, and (v) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of MANY SENIORS
APARTMENTS, executed as of the 1st day of August, 1988 and filed in the Office
of the Secretary of State of Louisiana on the 24th day of February, 1989 and
that Amendment to the Amended and Restated Agreement and Certificate of Limited
Partnership of MANY SENIORS APARTMENTS, executed as of the 1st day of July, 1990
(each as

 

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hereinbefore and hereinafter amended or restated).
     2. Indebtedness Secured. This Agreement and the Security Interests created
hereby secure the payment of that certain Promissory Note of even date herewith
executed and delivered by Debtor in favor of Lender, in the original principal
amount of One Hundred Sixteen Thousand One Hundred Thirty and No/100 Dollars
($116,130 — the “Note” or sometimes herein the “Indebtedness”) and any further
Promissory Notes executed and delivered by Debtor in favor of Lender in the
amount of any additional advances under the Loan, if, as and when made.
     3. Warranties of Debtor. Debtor represents and warrants, and for so long as
this Agreement continues in force, it shall be deemed continuously to represent
and warrant, that: (i) each item constituting the Collateral is genuine and in
all respects what it purports to be; (ii) Debtor is the owner of the Collateral
free of all security interests or other encumbrances, except the Security
Interests; and (iii) Debtor is authorized to enter into this Security Agreement
under the Partnership Agreements, subject to the approval of the General
Partner, which approval Debtor has obtained in writing.
     4. Covenants of Debtor. So long as this Agreement has not been terminated
as provided hereinafter, Debtor covenants and agrees as follows:
          (a) Debtor will defend the Collateral against the claims of all other
persons, including without limitation, setoffs, claims, counter-claims, and
defenses against either Debtor or Lender; will keep the Collateral free from all
security interests or other encumbrances, except this Security Interest; and
will not assign, deliver, sell, transfer, lease, or otherwise dispose of any of
the Collateral or any interest therein without the prior written consent of
Lender, in its sole discretion.
          (b) Debtor will notify Lender promptly in writing of any change in
Debtor’s address.
          (c) Debtor will not, without Lender’s written consent, in its sole
discretion, make or agree to make any alteration, modification, or cancellation
of, substitution for, or credit, adjustment or allowance on, any of the
Collateral.
          (d) Debtor will execute and deliver to Lender such financing
statements and other documents and take such other actions and provide such
further reasonable assurances as Lender may deem advisable to perfect the
Security Interests created by this Agreement.
          (e) Debtor will pay all taxes, assessments, and other charges of every
nature which may be levied or assessed against the Collateral and will deliver
to Lender, on demand, such reasonable certificates or other evidence
satisfactory to Lender attesting thereto.
     5. Verification of Collateral. Lender shall have the right to verify the
Collateral in any manner and through any medium which Lender may reasonably
consider appropriate, and Debtor shall furnish such assistance and information
and perform such acts as Lender may reasonably require in connection therewith.
     6. Default. At the option of Lender, the occurrence of any of the following
events shall constitute an Event of Default under this Agreement following the
failure to cure within thirty (30) days after written notice by Lender to
Borrower:
          (a) Nonpayment when due, whether by acceleration or otherwise, after
any

 

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applicable grace period, of the principal of or interest on any Indebtedness,
time being of the essence.
          (b) Failure by Debtor to perform any obligations under this Agreement.
          (c) Acceptance by Debtor of any payment or distribution of income or
assets from the Partnership in violation of Paragraph 7 (e) hereof.
          (d) The filing by or against Debtor, Guarantor, General Partner, or
the Partnership of a petition in bankruptcy or for reorganization under any
bankruptcy, reorganisation, compromise, arrangement, insolvency, readjustment of
debt, dissolution, liquidation, or similar law of any jurisdiction.
          (e) The making of a general assignment by Debtor, Guarantor, General
Partner, or the Partnership for the benefit of creditors; the appointment of or
taking possession by a receiver, trustee, custodian or similar official for
Debtor, Guarantor, General Partner, or the Partnership or for any of their
assets; or the institution, by or against Debtor, Guarantor, General Partner, or
the Partnership of any kind of insolvency proceedings, or any proceeding for the
dissolution or liquidation of the Partnership.
          (f) Any material falsity in any certificate, statement,
representation, warranty, or audit at any time furnished by or on behalf of the
Partnership, Debtor, or any endorser or guarantor or any other party liable for
payment of all or part of the Indebtedness, pursuant to or in connection with
this Agreement or otherwise, to Lender, including warranties in this Agreement,
and any failure to disclose any substantial contingent or liquidated liabilities
or any material adverse change in facts disclosed by any certificate, statement,
representation, warranty or audit furnished to Lender.
          (g) Any attachment or levy against the Collateral, or any other
occurrence which inhibits Lender’s free access to the Collateral.
     7. Rights of Lender.
          (a) Lender may, at its option, declare all or any part of the
Indebtedness to be immediately due upon giving thirty (30) days written notice
to Debtor upon the occurrence of any Event of Default.
          (b) Upon the occurrence of any Event of Default, Lender’s rights with
respect to the Collateral shall be those of a secured party under the Uniform
Commercial Code and any other applicable law in effect from time to time.
          (c) Debtor agrees that any notice by Lender of the sale or disposition
of the Collateral or any other intended action hereunder, whether required by
the Uniform Commercial Code or otherwise, shall constitute reasonable notice to
Debtor if the notice is mailed by regular or certified mail, postage prepaid, at
least fourteen (14) days before the action, to the Debtor’s address as above
first written, or to any other address which Debtor has specified in writing to
Lender as the address at which notices shall be given to Debtor.
          (d) Upon Debtor’s failure to perform any of its duties hereunder,
Lender may, but shall not be obligated to, perform any such duties, and Debtor
shall forthwith upon demand reimburse Lender for any expenses incurred by Lender
in so doing. Debtor shall pay all costs and expenses incurred by Lender in
enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness whether or not suit is brought and whether incurred In connection
with collection, trial, appeal, bankruptcy, post-judgment collection, or
otherwise; and shall be liable for any deficiencies in the event

 

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the proceeds of disposition of the Collateral do not satisfy the Indebtedness in
full.
          (e) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive all income from the instruments constituting the Collateral to
which Debtor may be entitled until this Agreement has been terminated, in
accordance with the terms of the Note. Debtor will not demand or receive any
income from the instruments constituting Collateral until the Indebtedness has
been paid in full, and if Debtor receives any such income, Debtor will pay it to
Lender within five (5) days of its receipt thereof without demand. Lender may
apply the net cash receipts of such income to payment of any of the
Indebtedness, but Lender shall account for and pay over to Debtor any income
remaining after full payment of the Indebtedness.
          (f) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive any increase in any instruments constituting Collateral and
any distribution upon the dissolution and liquidation of the Partnership, and to
surrender such partnership interests or any part thereof in exchange therefor,
and to hold the receipt from any such distribution or increase as part of the
Collateral; provided, however, that Lender need not collect interest on or
principal of any Collateral or give any notice of nonpayment with respect to
such principal or interest. If Debtor receives any such increase, profits or
distribution, Debtor will deliver such receipts promptly to Lender, to be held
by Lender as provided in this paragraph.
          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with RD
regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account or
investment and not with a view to the distribution or resale of such Collateral,
or in order to obtain any required approval of the sale or of the purchase by
any governmental regulatory authority or official); and Debtor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall Lender be
liable or accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction. Debtor further agrees that any sales by Lender shall not be
considered to be other than “public sales” within the meaning of Section 9-504
of the Uniform Commercial Code because such sales or solicitations are
structured to comply with such limitations or restrictions, the intent of the
parties being that any public sale be subject to such limitations and
restrictions.
          (h) Upon the occurrence of any Event of Default, Lender may exercise
any rights that Debtor has as a limited partner with respect to the Collateral.
          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND
THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS SECURITY
AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT JURISDICTION IN SUCH FORUMS IS NOT

 

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PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS
COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS SECURITY
AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED
TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER
CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

     
 
  “DEBTOR”
 
  BAYFIELD LOW INCOME
 
  HOUSING LIMITED PARTNERSHIP,
 
  a Delaware limited partnership,
 
  By: Megan Asset Management, Inc.,
 
  General Partner
 
   
 
   
 
   
 
  Paul J. Maddock, President
 
   
 
  “LENDER:”
 
  DOMINIUM DEVELOPMENT &
 
  ACQUISITION, LLC, a Minnesota
 
  limited liability company
 
   
 
  By:
 
 
 
 
   
 
  Print Name:

 

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STATE OF NORTH DAKOTA
    )          
 
          ss    
COUNTY OF BURLEIGH
    )          

     On this the                      day of June, 2003 before me, the
undersigned, a notary public of said state, duly commissioned and sworn,
personally appeared Paul J. Maddock, to me known, who being by me duly sworn,
did depose and say that he has an address of 1424 West Century Avenue, #102,
Bismarck, North Dakota 58503; that he is the President of Megan Asset
Management, Inc., the corporation described in and which executed and delivered
the foregoing instrument as the General Partner of Bayfield Low Income Housing
Limited Partnership; and he signed his name thereto on behalf of said
corporation for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

                   
(SEAL)
 
 
NOTARY PUBLIC    
 
  My commission expires:    

                 
STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the _____ day of June, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared
                                         who is personally known to me to be or
who produced                                          as identification
evidencing he is the individual who executed and delivered the foregoing
instrument, and he duly acknowledged to me that he executed and delivered the
same in his capacity as the                                          of Dominium
Development & Acquisition, LLC on behalf of said company and for the purposes
therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
(SEAL)
       
 
       
 
  NOTARY PUBLIC    
 
  My commission expires:    

 

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SUBSEQUENT LOAN AGREEMENT
THIS LOAN AGREEMENT, made this 19 day of September 2003, by BAYFIELD LOW INCOME
HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office
address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N.D. 58503 (referred to herein as “Borrower”), in favor of DOMINIUM
DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having an
office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).
WITNESSETH
     A. Borrower is the sole limited partner of COUSHATTA SENIORS APARTMENTS, A
LOUISIANA PARTNERSHIP IN COMMENDAM, which owns a twenty-four (24) unit apartment
complex, SOUTHERN APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, which owns a
twenty-six (26) unit apartment complex, OAKDALE SENIOR APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM, which owns a twenty-six (26) unit apartment complex,
each a Louisiana limited partnership and JOAQUIN APARTMENTS, LTD. and PECANWOOD
APARTMENTS III, LTD., each of which own a thirty-two (32) unit apartment complex
and each of which are Texas limited partnership (the “Partnerships”) located in
Coushatta, Iota and Oakdale, Louisiana and Joaquin and Whitehouse, Texas,
respectively (the “Apartment Projects”) all for low to moderate income families.
The Apartment Projects have each been financed through permanent mortgages from
Rural Development Services (formerly the Farmers Home Administration), U.S.
Department of Agriculture (“RD”) which mortgages had an approximate principal
balance as of 12/31/2001 of $713,450, $585,471, $757,651, $740,941 and $701,164,
respectively (the “RD Mortgages”) and HOME funds and AHP Grants. RD 2000
Development Company, LLC and Pine Belt Multi Purpose Community Action Agency
Inc. are the sole general partners of COUSHATTA SENIORS APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM. RD 2000 Development Company, LLC and “Assist Agency”
(a Self Sufficiency Improvement Support Team), Inc. are the sole general
partners of SOUTHERN APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM. RD 2000
Development Company, LLC and Caleb Community Development Corporation are the
sole general partners of OAKDALE SENIOR APARTMENTS, A LOUISIANA PARTNERSHIP IN
COMMENDAM. Calhoun Builders and RD 2000 Development Company, LLC are the sole
general partners of JOAQUIN APARTMENTS, LTD. Calhoun Builders and RD 2000
Development Company, LLC are the sole general partners of PECANWOOD APARTMENTS
III, LTD.
     B. The Lender and an affiliate of Borrower have entered into that certain
Purchase Agreement dated September 19, 2003 (the “Purchase Agreement”) pursuant
to which an affiliate of Lender has agreed to purchase a certain percentage of
Borrower’s limited partnership interests in similar partnerships (the “Principal
Transaction”). Capitalized terms used and not defined herein have the respective
meanings as provided for in the Purchase Agreement. As part of the Principal
Transaction, Lender has advanced up to $162,465 as a down payment on the
purchase price (“Down Payment”). As the Down Payment will be fully refundable to
Lender in the event the Principal Transaction does not close, Lender and
Borrower have agreed to treat said Down Payment as a loan (“Loan”) and secure
it’s repayment partially with a security interest in

 

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Borrower’s limited partnership interests in certain Partnerships (“Borrower’s
Partnership Interests”).
     C. Accordingly, pursuant to a loan commitment dated April 2, 2003 and Loan
Agreement dated April 16, 2003, amended by that First Amendment to Loan
Agreement dated as of July 1, 2003 (as amended the “Loan Agreement”), Dominium
Guarantor loaned Seller $162,465 evidenced by two promissory notes, one dated
April 16 and another dated July 18, 2003 (the “Promissory Notes”) and secured
with a security interest in five of Borrower’s Operating Partnership Interests
pursuant to a security agreement dated April 16, 2003 (the “Security Agreement”)
to cover its operating cash flow needs in consideration of Borrower’s agreement
not to sell further interests in its Operating Partnerships prior to July 31,
2003.
     D. In further consideration of Borrower’s agreement not to sell additional
interests in its 123 Operating Partnerships prior to the Closing contemplate by
the execution of the Purchase Agreement, Lender hereby agrees to make further
loans to Borrower in the following amounts: $120,000 on the execution of this
Subsequent Loan Agreement and $60,000 on the tenth (10th) day of each of October
and November, 2003, with time being of the essence (each a Subsequent Loan and
collectively “Subsequent Loans”). Each Subsequent Loan shall be evidenced by a
promissory note in the form of the Promissory Note and secured by an interest in
one or more of Borrower’s Operating Partnership interests, pursuant to a
security agreement in the form of the Security Agreement. The security for the
First Subsequent Loan in the amount of $120,000 shall be secured by a pledge of
the Borrower’s interest in the Partnerships. The Borrowers shall secure each
additional installment of a Subsequent Loan with an interest in one or more
Borrower’s Operating Partnership Interests with a value equal to the principal
amount of such installment as determined by the purchase price attributable to
such Operating Partnerships’ purchase price as set forth on Exhibit A to the
Purchase Agreement.
     E. To evidence, and upon the funding of, each Subsequent Loan, Borrower
will execute and deliver to Lender a Promissory Note, in the principal amount of
$120,000, $60,000 and $60,000, respectively (each a “Subsequent Loan Note”) to
represent each such Subsequent Loan.
     F. To secure each Subsequent Loan, Borrower will execute and deliver to
Lender a Security Agreement, granting to Lender a security interest in the
Borrower’s Partnership Interests in the Partnerships of a value equal to the
amount of each Subsequent Loan as determined by the purchase price attributed to
such Operating Partnership Interests on Exhibit A to the Proposed Purchase
Agreement (the “Subsequent Loan Security Agreement”).
     NOW, THEREFORE, in consideration of the mutual agreements, covenants, and
promises herein contained and for other good and value consideration, receipt of
which is hereby acknowledged each party to the other, Borrower and Lender agree
as follows:
     1. Representations and Warranties of Borrower. Borrower represents and
warrants to Lender as follows:
          (a) There are no actions, suits or proceedings pending involving the
Borrower, or to the best knowledge of Borrower, threatened against or affecting
Borrower, the Apartment Projects, the Partnerships, the Partnership Interests,
or the validity or enforceability of

 

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this Agreement, the Subsequent Loan Note, the Subsequent Loan Security
Agreement, the Subsequent Loan Guaranty or the priority thereof, at law or in
equity, or before or by any governmental authority. To Borrower’s knowledge, it
is not in default with respect to any order, writ, injunction, decree, or demand
of any court.
          (b) Borrower has no knowledge that the consummation of the transaction
hereby contemplated and the performance of this Agreement, the Subsequent Loan
Note, the Subsequent Loan Security Agreement or the Subsequent Loan Guaranty by
the Guarantor will result in any breach of, or constitute a default under, any
deed to secure debt, mortgage, deed of trust, indenture, security agreement,
lease, bank loan or credit agreement, corporate charter, bylaws, partnership
agreement, covenants or use restrictions applicable to the Apartment Projects,
the Partnership Interests, or other instruments to which the Partnership is a
party or by which the Apartment Projects may be bound or affected, specifically
including (but not limited to) the RD Mortgages, except that Borrower was
required to and will obtain the written approval of the General Partner of the
Partnerships to the Subsequent Loan Security Agreement pursuant to the
Partnership Agreements.
          (c) There are no liens against the Borrower’s Partnership Interests
and the Lender will have a first priority lien interest in Borrower’s
Partnership Interests.
     2. Covenants and Agreements of Borrower. Borrower covenants and agrees with
Lender as follows:
          (a) Borrower acknowledges and agrees that Lender will disburse the
advances to be made hereunder to the Borrower to be used solely for the
Borrower’s purposes.
          (b) Borrower will not convey or encumber, or cause or permit the
Borrower’s Partnership Interests in the Partnerships to be conveyed or
encumbered further in any way without the prior written consent of Lender, in
its sole discretion.
     3. Disbursement of the Loan. Upon the execution of this Agreement, Lender
will make the first Subsequent Loan in the amount of $120,000 to the Borrower.
Borrower will execute a promissory note for the amount of each such Subsequent
Loan.
     4. Payment. In accordance with the provisions of each Subsequent Loan Note,
each Subsequent Loan term shall mature and principal and accrued interest shall
be payable as follows: (i) if the Closing on the Principal Transaction occurs,
the Down Payment and the Subsequent Loans, including interest thereon, shall be
credited against the Purchase Price for the Partnership Interests subject to the
Closing in the manner provided for in Section 1.2 and Article 5 of the Purchase
Agreement. If the Buyer fails to give Seller Buyer’s Approval Notice or if Buyer
terminates the Purchase Agreement as provided in Article 7.5 thereof, principal
plus accrued interest on the Subsequent Loans subject to the provisions below of
this paragraph 4 shall be payable in full on December 31, 2004.
     At Lender’s sole option which it must elect on or before April 12, 2004, if
it does not proceed with the Principal Transaction, it may elect to take in full
payment for the balance of principal and interest of any Subsequent Loan then
outstanding (the “Outstanding Balance”) the

 

--------------------------------------------------------------------------------

 

Borrower’s Partnership Interests provided as security for the Subsequent Loan
equal in value to the then Outstanding Balance.
     5. Events of Default. At the option of Lender, the occurrence of any one of
the following events shall constitute an Event of Default under this Agreement:
          (a) Borrower fails to make any payment due under the Subsequent Loan
Notes within thirty (30) days after the date such payment becomes due.
          (b) Borrower fails to comply with any covenant, condition, or
agreement, other than the failure to make any payment when due, under this
Agreement, the Subsequent Loan Notes, the Subsequent Loan Security Agreement or
the Subsequent Loan Guaranty and to cure such default after receipt of thirty
(30) days prior written notice from Lender.
          (c) Either the Borrower, Guarantor, the General Partner, or the
Partnership makes an assignment for the benefit of creditors, files a petition
in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any
tribunal for any receiver of or trustee for it or any substantial part of its
property, commences any proceeding relating to Borrower, Guarantor, the General
Partner, the Partnership, or the Apartment Project under any reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or there is commenced
against Borrower, Guarantor, the General Partner, or the Partnership any such
act or proceeding which remains undismissed for a period of sixty (60) days, or
either Borrower, Guarantor, the General Partner, or the Partnership by any act
indicates its consent to, approval of, or acquiescence in any such proceeding or
the appointment of any receiver of or trustee for it or any substantial part of
its property, or suffers any such receivership or trusteeship to continue
undischarged for a period of sixty (60) days.
     6. Remedies. I. Upon the occurrence of an Event of Default in connection
with subsections 2(b), 5 (a) or 5(c) with respect to Borrower or Guarantor,
above, Lender may, at its option, do all or any of the following;
          (a) Declare all sums evidenced by the Subsequent Loan Notes to be
immediately due and payable.
          (b) Pursue all remedies granted under the Subsequent Loan Notes, the
Subsequent Loan Guaranty or the Subsequent Loan Security Agreement or any
combination thereof for default, and the remedies granted under all laws and
statutes. All such remedies are deemed cumulative and may be exercised
concurrently. The failure to exercise any remedy shall not constitute a waiver
thereof, nor shall use of any remedy prevent the subsequent or concurrent resort
to the same or any other remedy.
          (c) In lieu of the remedies provided in subsection “(b)” hereof, elect
to take in full payment for each Subsequent Loan the limited partner interest,
in its sole discretion, that are Collateral for such Subsequent Loan.
               II. Upon the occurrence of an Event of Default, except in
connection with subsections 2(b), 5(a) or 5(c) with respect to Borrower or
Guarantor, above, Lender shall

 

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substitute one or more Apartment Complexes in Borrower’s portfolio, other than
one of those few indicated as “SOLD” on the spreadsheets previously provided to
Lender, of equal size and value for any of the Apartment Complexes with respect
to which an event of Default has occurred.
     7. Borrower will not sell any further interests in its Operating
Partnerships (other than completing those few indicated as “SOLD” on Exhibit A
(i) as long as the Subsequent Loans are being funded as provided herein or,
(ii) prior to Buyer’s failure to give Seller Buyer’s Approval Notice or prior to
Buyer’s terminating the Purchase Agreement as provided in Article 7.5 thereof,
unless a closing on the Principal Transaction has taken place by then, in which
event the terms and conditions of the Principal Transaction as closed shall
govern the sales of any further interests in Borrower’s Operating Partnerships.
     8. Termination. This Agreement shall terminate upon satisfaction in full of
the indebtedness evidenced by each Subsequent Loan Note.
     9. Miscellaneous.
          (a) All notices, requests or other communications required hereunder
must be in writing and must be mailed by registered or certified mail, return
receipt requested, or delivered to the parties in person, at the addresses first
above written. Each party may change its address by notifying the other party in
the manner set forth above. All such notices, requests or other communications
shall be effective when deposited in the mails or delivered in person as
aforesaid.
          (b) This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, personal representatives,
successors, and permitted assigns.
          (c) This Agreement contains the entire understanding and agreement of
the parties with respect to the subject matter hereof. This Agreement has been
entered into after full investigation, and neither party has relied upon any
statements made by any person that are not set forth herein; accordingly, this
Agreement shall not be construed more strictly against either party. This
Agreement may not be modified, amended, or cancelled, nor shall any provision
thereof be waived, except in a writing signed by Borrower and Lender.
          (d) The section headings of this Agreement are for reference and are
not part of or a guide to the interpretation of this Agreement. Any singular
word or term herein shall be read as in the plural whenever the sense of this
Agreement may require it.
          (e) This Agreement may be executed in one or more counterparts, each
of which shall constitute a complete agreement and all of which taken together
shall constitute a single agreement.
THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION
HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. AT THE OPTION OF LENDER, THIS LOAN AGREEMENT MAY BE ENFORCED IN ANY
UNITED

 

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STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING
IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF
ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT
PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS
AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR
CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY
THIS LOAN AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER
AND BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE PRINCIPAL
TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY.
[“THE REMAINDER OF THIS PAGE INTENTIONALLY HAS BEEN LEFT BLANK”.]

 

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

              “BORROWER;”     BAYFIELD LOW INCOME
HOUSING LIMITED
PARTNERSHIP, a Delaware limited
partnership,     By: Megan Asset Management, Inc., General Partner
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
      Paul J. Maddock, President
 
            “LENDER:”     DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota
limited liability company
 
       
 
  By:   /s/ Paul R. Sween
 
       
 
      Paul R. Sween, Vice President

 

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STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the 19th day of September, 2003 before me, the undersigned, a
notary public of said state, duly commissioned and sworn, personally appeared
Paul J. Maddock, to me known, who being by me duly sworn, did depose and say
that he has an address of 1424 West Century Avenue, #102, Bismarck, North,
Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing
instrument as the General Partner of Bayfield Low Income Housing Limited
Partnership; and he signed his name thereto on behalf of said corporation for
the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

     
LISA RENAE GUETTER
  /s/ Lisa Renae Guetter
 
   
NOTARY PUBLIC-MINNES0TA
  NOTARY PUBLIC
My commission expires Jan. 31, 2005
  My commission expires: 1/31/2005

                 
STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the 19th day of September, 2003 before me, the undersigned, a
notary public of said state, duly commissioned and sworn, personally appeared
Paul R. Sween, who is personally known to me to be the individual who executed
and delivered the foregoing instrument, and he duly acknowledged to me that he
executed and delivered the same in his capacity as the Vice President of
Dominium Development & Acquisition, LLC on behalf of said company and for the
purposes therein contained.
      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the
day and year first above written.

     
LISA RENAE GUETTER
  /s/ Lisa Renae Guetter
 
   
NOTARY PUBLIC-MINNES0TA
  NOTARY PUBLIC
My commission expires Jan. 31, 2005
  My commission expires: 1/31/2005

 

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PROMISSORY NOTE

     
$116,130
  April 16, 2003
 
  Bismarck,
 
  North Dakota

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP (referred to herein as “Maker”), promises to pay to the order of
DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company
(referred to herein as “Payee”), at 2355 Polaris Lane N., Suite 100,
Minneapolis, MN 55447, or at such other place as Payee may designate in writing,
from time to time, in legal tender of the United States of America, the sum of
ONE HUNDRED SIXTEEN THOUSAND ONE HUNDRED THIRTY AND No/100 DOLLARS ($116,130),
together with interest thereon at the rate of Five Percent (5%) per annum.
     Payments of principal and accrued interest shall be payable on the first to
occur of (i) the Closing on the Principal Transaction as defined in the Loan
Agreement of even date herewith made by Maker in favor of Payee (the “Loan
Agreement”) or (ii) 360 days from the date hereof (the “Maturity Date”).
     This Note is made pursuant to the Loan Agreement. This Note is secured by
the Security Agreement of even date herewith made by Maker in favor of Payee,
and encumbering the limited partnership interests of Maker in the Partnerships
as defined in the Loan Agreement (the “Security Agreement”). This Note is
entitled to the protection of the Loan Agreement, the Security Agreement and the
Guaranty, the terms of which are by this reference incorporated herein. At the
option of Payee, any default under the terms of the Loan Agreement or the
Security Agreement shall constitute a default hereunder.
     The indebtedness evidenced by this Note may be prepaid in whole or in part
at any time without penalty, provided that any prepayments shall, be applied
first against accrued and unpaid interest, if any, and second to principal.
Prepayment in part shall not affect or postpone Maker’s duty to pay all
obligations when due.
     Payee shall have the right to declare the total unpaid principal balance,
together with all accrued interest, to be due and payable forthwith upon the
failure of Maker to pay any payment due hereunder within thirty (30) days after
the date when such payment shall become due; or upon the sale or other
conveyance or encumbrance by Maker of the Apartment Projects as defined in the
Loan Agreement or any part hereof, or after thirty (30) days prior written
notice of any default under the terms of the Loan Agreement, the Security
Agreement, the Guaranty or any other document or instrument executed in
connection with or securing this Note, Failure by Payee to exercise this right
with respect to any failure or breach of Maker shall not constitute a waiver of
the right as to any subsequent failure or breach and maker expressly waives
notice of Payee’s exercise of this right.
     Time is of the essence of this Note. Maker covenants and agrees to pay all
the costs and fees (whether incurred in post-judgment collection, or in any
successful dispute resolution proceeding expended by Payee in the collection
hereof, or in the event of any default on the part of Maker or Guarantor in the
making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Note, the Loan Agreement, the Guaranty, or the
Security Agreement, or in securing this Note or sustaining or defending the
priority of any collateral against all persons., including but not limited to
the exercise of the power of eminent domain or other governmental power of any
kind. Nothing contained in this paragraph shall be construed as requiring Payee
to advance or spend money for any of

 

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the purposes mentioned in this paragraph,
     The interest on this Note shall never be greater than an amount which, if
added to the amount of any discount, additional fees, or charges paid by Maker
which constitute interest under the laws of the State of Minnesota, would cause
the total interest to exceed the maximum rate of interest chargeable to the
Maker under such law. If Payee shall receive any payment which is in excess of
the maximum rate permitted to be charged under such law, such payment shall
automatically be applied to reduce the principal sum outstanding on this Note,
This provision shall control every other provision of all agreements between
Maker and Payee.
THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT
PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS
COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND
MAKER KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS NOTE, THE LOAN EVIDENCED HEREBY, ALL DOCUMENTS AND
AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH SAID LOAN,
AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF EITHER PARTY.

     
 
  “MAKER”
 
  BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP,
a Delaware limited partnership.,
By: Megan Asset Management, Inc.,
General Partner
 
   
 
  /s/ Paul J. Maddock
 
   
 
  Paul J. Maddock, President
 
   
 
  Whose address is:
 
  1424 W. Century Avenue, #102
 
  Bismarck, ND 58503

2

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PROMISSORY NOTE

     
$46,335
  July 18, 2003
 
  Bismarck,
 
  North Dakota

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW .INCOME HOUSING LIMITED
PARTNERSHIP (referred to herein as “Maker”), promises to pay to the order of
DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company
(referred, to herein as “Payee”), at 2355 Polaris Lane N., Suite 100,
Minneapolis, MN 55447, or at such other place as Payee may designate in writing,
from time to time, in legal tender of the United States of America, the sum of
FORTY-SIX THOUSAND THREE HUNDRED THIRTY-FIVE AND No/100 DOLLARS ($46,335),
together with interest thereon at the rate of Five Percent (5%) per annum.
     Payments of principal and accrued interest shall be payable on the first to
occur of (i) the Closing on the Principal Transaction as defined in the Loan
Agreement of even date herewith made by Maker in favor of Payee (the “Loan
Agreement”) or (ii) April 12, 2004 (the “Maturity Date’’).
     This Note is made pursuant to the Loan Agreement. This Note is secured by
the Security Agreement dated April 16, 2003 made by Maker in favor of Payee, and
encumbering the limited partnership interests of Maker in the Partnerships as
defined in the Loan Agreement (the “Security Agreement”). This Note is entitled
to the protection of the Loan Agreement, the Security Agreement and the
Guaranty, the terms of which are by this reference incorporated herein. At the
option of Payee, any default under the terms of the Loan Agreement or the
Security Agreement shall constitute a default hereunder.
     The indebtedness evidenced by this Note may be prepaid in whole or in part
at any time without penalty, provided that any prepayments shall be applied
first against accrued and unpaid interest, if any, and second to principal.
Prepayment in part shall not affect or postpone Maker’s duty to pay all
obligations when due.
     Payee shall have the right to declare the total, unpaid principal balance,
together with all accrued interest, to be due and payable forthwith upon the
failure of Maker to pay any payment due hereunder within, thirty (30) days after
the date when such payment shall become due; or upon the sale or other
conveyance or encumbrance by Maker of the Apartment Projects as defined in the
Loan Agreement or any part hereof; or after thirty (30) days prior written
notice of any default under the terms of the Loan Agreement, the Security
Agreement, the Guaranty or any other document or instrument executed in
connection with or securing this Note. Failure by Payee to exercise this right
with respect to any failure or breach of Maker shall not constitute a waiver of
the right as to any subsequent failure or breach and maker expressly waives
notice of Payee’s exercise of this right.
     Time is of the essence of this Note. Maker covenants and agrees to pay all
the costs and fees (whether incurred in post-judgment collection, or in any
successful dispute resolution proceeding expended by Payee in the collection
hereof, or in the event of any default on the part of Maker or Guarantor in the
making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Mote, the Loan Agreement, the Guaranty, or the
Security Agreement, or in, securing this Note or sustaining or defending the
priority of any collateral against all persons, including but not limited to the
exercise of the power of eminent domain or other governmental power of any kind.
Nothing contained in this paragraph shall be construed, as requiring Payee to
advance or spend money for any of

 

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the purposes mentioned in this paragraph.
     The interest on this Note shall never be greater than an amount which, if
added to the amount of any discount, additional fees, or charges paid by Maker
which constitute interest under the laws of the State of Minnesota, would cause
the total interest to exceed the maximum rate of interest chargeable to the
Maker under such law. If Payee shall receive any payment which is in excess of
the maximum rate permitted to be charged under such law, such payment shall
automatically be applied to reduce the principal sum outstanding on this Note.
This provision shall control every other provision of all agreements between
Maker and Payee.
THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT
PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS
COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND
MAKER KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS NOTE, THE LOAN EVIDENCED HEREBY, ALL DOCUMENTS AND
AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH SAID LOAN,
AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF EITHER PARTY.

     
 
  “MAKER”
 
  BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP,
a Delaware limited partnership,
By: Megan Asset Management, Inc.,
General Partner
 
   
 
  /s/ Paul J. Maddock
 
   
 
  Paul J. Maddock, President
 
   
 
  Whose address is:
 
  1424 W. Century Avenue, #102
 
  Bismarck, ND 58503

2

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SUBSEQUENT LOAN SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 18th day of September, 2003, by BAYFIELD LOW
INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an
office address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N.D. 58503 (referred to herein as “Debtor”), in favor of DOMINIUM
DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having
an. office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).
     Debtor hereby agrees as follows:
     1. Security Interest. Debtor constitutes the sole limited partner of
COUSHATTA SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, SOUTHERN
APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, OAKDALE SENIOR APARTMENTS, A
LOUISIANA PARTNERSHIP IN COMMENDAM, each a Louisiana limited partnership, and
JOAQUIN APARTMENTS, LTD. and PECANWOOD APARTMENTS III, LTD., each a Texas
limited partnership (the “Partnerships”). Lender is a Minnesota limited
liability company, In consideration of and as an inducement for an extension of
credit by Lender to Debtor for the purpose of funding certain requirements of
the Debtor, Debtor hereby gives Lender a continuing and unconditional security
interest (the “Security Interest”) in Debtor’s interest as a limited partner in
the Partnerships and in all additions, replacements, substitutions, increases
and profits, and in all proceeds and products thereof in any form to which
Debtor is entitled (collectively referred to herein as the “Collateral”). The
Collateral shall include, without limitation, Debtor’s entitlement to, if any,
all distributions of Cash Flow, distributions of proceeds resulting from a
Refinancing, distributions of proceeds resulting from a Major Capital Event,
liquidating distributions, distributions in kind, upon a default all profits and
losses from the Partnership to Debtor, and all returns of capital, all as
defined or described in, and in accordance with the provisions of (i) that
certain Amended and Restated Agreement and Certificate of Limited Partnership of
COUSHATTA SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, executed as
of the 1st day of August, 1988 and filed said amended agreement in the Office of
the Secretary of State of Louisiana on the 13th day of December, 1988 and that
Amendment to the Amended and Restated Agreement and Certificate of Limited
Partnership of COUSHATTA SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN
COMMENDAM, executed as of the 1st day of July, 1990, (ii) that certain Amended
and Restated Agreement and Certificate of Limited Partnership of SOUTHERN
APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM executed as of the, 1st day of
November, 1987 and filed said amended agreement in the Office of the Secretary
of State of Louisiana on the 4th day of January, 1988 and that Amendment to the
Amended and Restated Agreement and Certificate of Limited Partnership of
SOUTHERN APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, executed as of the
1st day of July, 1990, (iii) that certain Amended and Restated Agreement and
Certificate of Limited Partnership of OAKDALE SENIOR APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM, executed as of the 1st day of November, 1987 and filed
in the Office of the Secretary of State of Louisiana on the 4th day of January,
1988 and that Amendment to the Amended and Restated Agreement and Certificate of
Limited Partnership of OAKDALE SENIOR APARTMENTS, A LOUISIANA PARTNERSHIP IN
COMMENDAM, executed as of the 1st day of July, 1990, (iv) that certain Amended
and Restated Agreement and Certificate of Limited Partnership of JOAQUIN
APARTMENTS, LTD., executed as of the 1st day of June, 1988 and filed said
amended agreement in, the Office of the Secretary of State of Texas on the 11th
day of November, 1988 and that Amendment to the Amended and Restated

 

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Agreement and Certificate of Limited Partnership of JOAQUIN APARTMENTS, LTD.,
executed as of the 1st day of July, 1990, and (v) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of PECANWOOD
APARTMENTS III, LTD., executed as of the 1st day of June, 1988 and filed in the
Office of the Secretary of State of Louisiana on the 16th day of December, 1988
and that Amendment to the Amended and Restated Agreement and Certificate of
Limited Partnership of PECANWOOD APARTMENTS III, LTD., executed as of the 1st
day of July, 1990 (each as hereinbefore and hereinafter amended or restated),
     2. Indebtedness Secured. This Agreement and the Security Interests created
hereby secure the payment of that certain First Subsequent Loan Note of even
date herewith executed and delivered by Debtor in favor of Lender, in the
original principal amount of One Hundred Twenty Thousand and No/100 Dollars
($120,000 — the “Note” or sometimes herein the “Indebtedness”).
     3. Warranties of Debtor. Debtor represents and warrants, and for so long as
this Agreement continues in force, it shall, be deemed continuously to represent
and warrant, that: (i) each, item constituting the Collateral is genuine and in
all respects what it purports to be; (ii) Debtor is the owner of the Collateral
free of all security interests or other encumbrances, except the Security
Interests; and (iii) Debtor is authorized to enter into this Security Agreement
under the Partnership Agreements, subject to the approval of the General
Partner, which approval Debtor has obtained in writing.
     4. Covenants of Debtor. So long as this Agreement has not been terminated
as provided hereinafter, Debtor covenants and agrees as follows:
          (a) Debtor will defend the Collateral against the claims of all other
persons, including without limitation, setoffs, claims, counter-claims, and
defenses against either Debtor or Lender; will keep the Collateral free from all
security interests or other encumbrances, except this Security Interest; and
will not assign, deliver, sell, transfer, lease, or otherwise dispose of any of
the Collateral or any interest therein without the prior written, consent of
Lender, in its sole discretion.
          (b) Debtor will notify Lender promptly in writing of any change in
Debtor’s address.
          (c) Debtor will not, without Lender’s written consent, in its sole
discretion, make or agree to make any alteration, modification, or cancellation
of, substitution for, or credit, adjustment or allowance on, any of the
Collateral.
          (d) Debtor will execute and deliver to Lender such financing
statements and other documents and take such other actions and provide such
further reasonable assurances as Lender may deem advisable to perfect the
Security Interests created by this Agreement.
          (e) Debtor will pay all taxes, assessments, and other charges of every
nature which may be levied or assessed against the Collateral and will deliver
to Lender, on demand, such reasonable certificates or other evidence
satisfactory to Lender attesting thereto.
     5. Verification of Collateral. Lender shall have the right to verify the
Collateral in any manner and through any medium which Lender may reasonably
consider appropriate, and Debtor shall furnish such assistance and information,
and perform such acts as Lender may reasonably require in connection therewith.
     6. Default. At the option of Lender, the occurrence of any of the following
events shall

 

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constitute an, Event of Default under this Agreement following the failure to
cure within thirty (30) days after written notice by Lender to Borrower:
          (a) Nonpayment when due, whether by acceleration or otherwise, after
any applicable grace period, of the principal of or interest on any
Indebtedness, time being of the essence, and other Subsequent Loan Note, or
either of the Promissory Notes,
          (b) Failure by Debtor to perform any obligations under this Agreement.
          (c) Acceptance by Debtor of any payment or distribution of income or
assets from the Partnership in violation of Paragraph 7 (e) hereof.
          (d) The filing by or against Debtor, Guarantor, General Partner, or
the Partnership of a petition in bankruptcy or for reorganization under any
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution, liquidation, or similar law of any jurisdiction.
          (e) The making of a general assignment by Debtor, Guarantor, General
Partner, or the Partnership for the benefit of creditors; the appointment of or
taking possession by a receiver, trustee, custodian or similar official for
Debtor, Guarantor, General Partner, or the Partnership or for any of their
assets; or the institution by or against Debtor, Guarantor, General Partner, or
the Partnership of any kind of insolvency proceedings, or any proceeding for the
dissolution or liquidation of the Partnership,
          (f) Any material falsity in any certificate, statement,
representation, warranty, or audit at any time furnished by or on behalf of the
Partnership, Debtor, or any endorser or guarantor or any other party liable for
payment of all or part of the Indebtedness, pursuant to or in connection with
this Agreement or otherwise, to Lender, including warranties in this Agreement,
and any failure to disclose any substantial contingent or liquidated liabilities
or any material adverse change in facts disclosed by any certificate, statement,
representation, warranty or audit furnished to Lender.
          (g) Any attachment or levy against the Collateral, or any other
occurrence which inhibits Lender’s free access to the Collateral.
          (h) Any default by Debtor under the Subsequent Loan. Agreement, any of
the Subsequent Loan Notes, any other Subsequent Loan Security Agreement, the
Loan Agreement, or either of the Promissory Notes, any default by the Guarantor
under the Subsequent Loan Guaranty or the Guaranty,
     7. Rights of Lender.
          (a) Lender may, at its option, declare all or any part of the
Indebtedness, any other Subsequent Loan Note, or the Promissory Notes to be
immediately due upon giving thirty (30) days written notice to Debtor upon the
occurrence of any Event of Default.
          (b) Upon the occurrence of any Event of Default, Lender’s rights with
respect to the Collateral shall be those of a secured party under the Uniform
Commercial Code and any other applicable law in effect from time to time.
          (c) Debtor agrees that any notice by Lender of the sale or disposition
of the Collateral or any other intended action hereunder, whether required by
the Uniform Commercial Code or otherwise, shall constitute reasonable notice to
Debtor if the notice is mailed by regular or certified mail,

 

--------------------------------------------------------------------------------

 

postage prepaid, at least fourteen (14) days before the action, to the Debtor’s
address as above first written, or to any other address which Debtor has
specified in writing to Lender as the address at which notices shall be given to
Debtor.
          (d) Upon Debtor’s failure to perform any of its duties hereunder,
Lender may, but shall not be obligated to, perform any such duties, and Debtor
shall forthwith upon demand reimburse Lender for any expenses incurred by Lender
in so doing. Debtor shall pay all costs and expenses incurred by Lender in
enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness whether or not suit is brought and whether incurred in connection
with collection, trial, appeal, bankruptcy, post-judgment collection, or
otherwise; and shall be liable for any deficiencies in the event the proceeds of
disposition of the Collateral do not satisfy the Indebtedness in full.
          (e) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive all income from the instruments constituting the Collateral to
which Debtor may be entitled until this Agreement has been terminated, in
accordance with the terms of each Subsequent Loan Note. Debtor will not demand
or receive any income from the instruments constituting Collateral until the
Indebtedness has been paid in full, and if Debtor receives any such income,
Debtor will pay it to Lender within five (5) days of its receipt thereof without
demand. Lender may apply the net cash receipts of such income to payment of any
of the Indebtedness, but Lender shall account for and pay over to Debtor any
income remaining after full payment of the Indebtedness,
          (f) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive any increase in any instruments constituting Collateral and
any distribution upon the dissolution and liquidation of the Partnership, and to
surrender such partnership interests or any part thereof in exchange therefor,
and to hold the receipt from any such distribution or increase as part of the
Collateral; provided, however, that Lender need not collect interest on or
principal of any Collateral or give any notice of nonpayment with respect to
such principal or interest. If Debtor receives any such increase, profits or
distribution, Debtor will deliver such receipts promptly to Lender, to be held
by Lender as provided in this paragraph.
          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with RD
regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account or
investment and not with a view to the distribution or resale of such Collateral,
or in order to obtain any required approval of the sale or of the purchase by
any governmental regulatory authority or official); and Debtor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall Lender be
liable or accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction. Debtor further agrees that any sales by Lender shall not be
considered to be other than “public sales” within the meaning of Section 9-504
of the Uniform Commercial Code because such sales or solicitations arc
structured to comply with such limitations or restrictions, the intent of the
parties being that any public sale be subject to such limitations and
restrictions,
          (h) Upon the occurrence of any Event of Default, Lender may exercise
any rights that Debtor has as a limited partner with respect to the Collateral.

 

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          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND
THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF- AT THE OPTION OF LENDER, THIS SECURITY
AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

     
 
  “DEBTOR”
 
  BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP,
a Delaware limited partnership,
By: Megan Asset Management, Inc.,
General Partner
 
   
 
  /s/ Paul J. Maddock
 
   
 
  Paul J. Maddock, President

              “LENDER:”     DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota
limited liability company
 
       
 
  By:   /s/ Paul R. Sween
 
            Paul R. Sween., Vice President

 

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STATE OF MINNESOTA
    )          
 
          ss    
COUNTY OF HENNEPIN
    )          

     On this the 19th day of September, 2003 before me, the undersigned, a
notary public of said state, duly commissioned and sworn, personally appeared
Paul J. Maddock, to me known, who being by me duly sworn, did depose and say
that he has an address of 1424 West Century Avenue, #102, Bismarck, North Dakota
58503; that he is the President of Megan Asset Management, Inc., the corporation
described in and which executed, and delivered the foregoing instrument as the
General Partner of Bayfield Low Income Housing Limited Partnership; and he
signed his name thereto on behalf of said corporation for the purposes therein
contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal, the
day and year first above written.

     
(SEAL)
   
LISA RENAE GUETTER
  /s/ Lisa Renae Guetter
 
   
NOTARY PUBLIC-MINNESOTA
  NOTARY PUBLIC
My Commission Expires Jan 31, 2005
  My commission expires: 1/31/2005

                 
STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the 19th day of September, 2003 before me, the undersigned, a
notary public of said state, duly commissioned and sworn, personally appeared
Paul R. Sween, who is personally known to me to be the individual who executed
and delivered the foregoing instrument, and he duly acknowledged to me that he
executed and delivered the same in his capacity as the Vice President of
Dominium Development & Acquisition, LLC on behalf of said company and for the
purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed ray seal the
day and year first above written.

     
(SEAL)
   
LISA RENAE GUETTER
  /s/ Lisa Renae Guetter
 
   
NOTARY PUBLIC-MINNESOTA
  NOTARY PUBLIC
Commission Expires Jan 31, 2005
  My commission expires: 1/31/2005

 

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FIRST AMENDMENT
TO
LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”), made as of July 1,
2003 between BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited
partnership, having an office address c/o Megan Asset Management, Inc., 1424 W.
Century Avenue, #102, Bismarck, N.D., 58503 (referred to herein as “Borrower”)
and DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability
company, having an office address of 2355 Polaris Lane N., Suite 100,
Minneapolis, MN 55447 (referred to herein as “Lender”).
WITNESSETH
     A. Lender provided to Borrower, and Borrower accepted, a loan commitment
dated April 2, 2003 regarding the Lender’s willingness to loan funds to Borrower
(the “Loan”) upon the general terms and conditions set forth in the loan,
commitment (the “Commitment”).
     B. Borrower and Lender entered into the Loan Agreement dated April 16, 2003
regarding the Loan (the “Loan Agreement”).
     C. The Loan Agreement did not contain one of the terms that the Commitment
contained regarding the Lender’s having the option to accept all or part of the
collateral provided as security for the Loan in full payment of the Loan, which
Borrower and Lender intended to include in the Loan Agreement.
     D. Borrower and Lender desire to amend the Loan Agreement to include the
omitted term.
     E. In conjunction with the parties’ entering into this Amendment, Lender
also will be advancing to Borrower the second installment of the Loan.
     NOW, THEREFORE, in consideration of the mutual agreements, covenants, and
promises herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged by each party to the other, Borrower and
Lender agree as follows:
     1. Section 6.II. of the Loan Agreement is amended by deleting the word
“approximate.”
     2. Section 9 of the Loan Agreement is amended by adding to the end thereof
the following new subsection 9(g):
     (g) At Lender’s sole option, if it does not proceed with the Principal
Transaction, it may elect to take in full payment for the balance of principal
and interest of the Loan then outstanding (the “Outstanding Balance”) such of
the Borrower’s Partnership

 

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Interests provided as security for the Loan equal in value to the then
Outstanding Balance.
     3. The remaining provisions of the Loan Agreement are unchanged by this
Amendment and remain in full force and effect.
     IN WITNESS WHEREOF, the parties have signed this Amendment effective as of
the above-stated date.

              “BORROWER”
 
            BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP, a
Delaware limited partnership,
 
            By: Megan Asset Management, Inc., its General Partner
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
      Paul J. Maddock, President

              “LENDER”
 
            DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited
liability company
 
       
 
  By:    
 
       
 
       
 
  Name:    
 
       
 
       
 
  Title:    
 
       

 

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FIRST AMENDMENT TO SUBSEQUENT LOAN AGREEMENT
THE SUBSEQUENT LOAN AGREEMENT made the 19th day of September 2003, by BAYFIELD
LOW INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having
an office address c/o Megan Asset Management, Inc., 1424 W. Century Avenue,
#102, Bismarck, N.D. 58503 (referred to herein as “Borrower”), in favor of
DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company,
having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN
55447 (referred to herein as “Lender”) is hereby amended to add the following
additional collateral.
WITNESSETH
     A. Borrower is the sole limited partner of OAKWOOD APARTMENTS, LTD., which
owns a twenty-four (24) unit apartment complex and PERRY APARTMENTS, L.P,, which
owns an eight (8) unit apartment complex, each a Missouri limited partnership
(the “Missouri Partnerships”) located in Hannibal and Perry, Missouri,
respectively (the “Missouri Apartment Projects”) all for low to moderate income
families. The Missouri Apartment Projects have each been financed through
permanent mortgages from Rural Development Services (formerly the Farmers Home
Administration), U.S. Department of Agriculture (“RD”) which mortgages had an
approximate principal balance as of 12/31/2001 of $576,203 and $182,500,
respectively (the “RD Mortgages”). J.V. Norton, Murray L. Childers, The J.
William Holliday Revocable Trust and Stephen G. Owsley are the sole general
partners of the Missouri Partnerships.
     B. In further consideration of Borrower’s agreement not to sell additional
interests in its 123 Operating Partnerships prior to the Closing contemplate by
the Purchase Agreement, Lender on September 25, 2003 made a further loan to
Borrower in the amount of $120,000 and pursuant to the Subsequent Loan
Agreement, Lender agreed to make further $60,000 loans to Borrower on the tenth
(10th) day of each of October and November, 2003. The Missouri Partnerships are
being provided as additional Collateral to further secure the $60,000 loan to be
made in October, 2003 (the “October Subsequent Loan”). The October Subsequent
Loan is evidenced by a promissory note in the form of the Promissory Note and,
in addition to the Missouri Partnerships, is secured by an interest in one or
more of Borrower’s Operating Partnership interests pursuant to a security
agreement in the form of the Security Agreement.
     C. To evidence, and upon the funding of, the October Subsequent Loan,
Borrower will execute and deliver to Lender a Promissory Note, in the principal
amount of $60,000 (the “October Subsequent Loan Note”) to represent the October
Subsequent Loan.
     D. To secure the October Subsequent Loan, Borrower will execute and deliver
to Lender a further Security Agreement, granting to Lender a security interest
in the Borrower’s Partnership Interests in the Missorui Partnerships (the
“Second Subsequent Loan Security Agreement”).

 

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     E. Except as modified hereby, the remaining provisions of the Subsequent
Loan Agreement are unchanged by this Amendment and remain in full force and
effect.
     F. This Agreement may be executed in one or more counterparts, each of
which shall constitute a complete agreement and all of which taken together
shall constitute a single agreement.
THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION
HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. AT THE OPTION OF LENDER, THIS LOAN AGREEMENT MAY BE ENFORCED IN ANY
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT
SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS
IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN
ACTION IS AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT
OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED
BY THIS LOAN AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER
AND BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE PRINCIPAL
TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY.
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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

              “BORROWER:”     BATFIELD LOW INCOME
HOUSING LIMITED
PARTNERSHIP, a Delaware limited
partnership,     By: Megan Asset Management, Inc.,
General Partner
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
      Paul J. Maddock, President
 
            “LENDER:”     DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota
limited liability company
 
       
 
  By:    
 
       
 
      Paul R. Sween, Vice President

 

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STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the 17th day of October, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J.
Maddock, to me known, who being by me duly sworn, did depose and say that he has
an address of 1424 West Century Avenue, #102, Bismarck, North Dakota 58503; that
he is the President of Megan Asset Management, Inc., the corporation described
in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his
name thereto on behalf of said corporation for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

     
(SEAL)
   
SANDRA LEVORSEN
  /s/ Sandra Levorsen
SANDRA LEVERSON
  /s/ Sandra Levorsen
 
   
Notary public
  NOTARY PUBLIC
State of North Dakota
  My commission expires:
My Commission Expires Mar 23, 2009
   

                 
STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

On this the                      day of October, 2003 before me, the
undersigned, a notary public of said state, duly commissioned and sworn,
personally appeared Paul R. Sween, who is personally known to me to be the
individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as
the Vice President of Dominium Development & Acquisition, LLC on behalf of said
company and for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

     
 
   
(SEAL)
  NOTARY PUBLIC
 
  My commission expires:

 

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SECOND AMENDMENT TO SUBSEQUENT LOAN AGREEMENT
THE SUBSEQUENT LOAN AGREEMENT, made the 19th day of September 2003, by BAYFIELD
LOW INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having
an office address c/o Megan Asset Management, Inc., 1424 W. Century Avenue,
#102, Bismarck, N.D. 58503 (referred to herein as “Borrower”), in favor of
DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company,
having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN
55447 (referred to herein as “Lender”) as amended by that First Amendment to
Subsequent Loan Agreement dated the 17th day of October, 2003 is hereby further
amended to add the following additional collateral.
WITNESSETH
     A. Borrower is the sole limited partner of AFM RRH, LTD, a Florida limited
partnership, which owns a thirty-six (36) unit apartment complex located in
Anthony, Florida and ANDERSON COUNTRY ESTATES, L.P., a Missouri limited
partnership, which owns a twenty-four (24) unit apartment complex, located in
Palmyra, Missouri (the “Second Amendment Partnerships”) all for low to moderate
income families (the “Second Amendment Apartment Projects”). The Second
Amendment Apartment Projects have each been financed through permanent mortgages
from Rural Development Services (formerly the Farmers Home Administration), U.S.
Department of Agriculture (“RD”) which mortgages had an approximate principal
balance as of 12/31/2001 of $1,078,799 and $579,390, respectively (the “RD
Mortgages”). AFM ONE, INC. and J.V. Norton, Murray L. Childers, The J. William
Holliday Revocable Trust and Stephen G. Owsley are the sole general partners of
the Second Amendment Partnerships, respectively.
     B. In further consideration of Borrower’s agreement not to sell additional
interests in its 123 Operating Partnerships prior to the Closing contemplate by
the Purchase Agreement, Lender made further loans to Borrower in the amounts of
$120,000 and $60,000 to Borrower on or about September 25, 2003 and October 23,
2003 and, pursuant to the Subsequent Loan Agreement, Lender agreed to make a
further $60,000 loan to Borrower on the tenth (10th) day of November, 2003. The
Second Amendment Partnerships are being provided as additional Collateral to
further secure the $60,000 loan to be made in November, 2003 (the “Third
Subsequent Loan”). The Third Subsequent Loan is evidenced by a promissory note
in the form of the Promissory Note and, in addition to the Second Amendment
Partnerships, is secured by an interest in one or more of Borrower’s Operating
Partnership interests pursuant to a security agreement in the form of the
Security Agreement and the First Subsequent Loan Security Agreement.
     C. To evidence, and upon the funding of, the Third Subsequent Loan,
Borrower will execute and deliver to Lender a Promissory Note, in the principal
amount of $60,000 (the “Third Subsequent Loan Note”) to represent the Third
Subsequent Loan.
     D. To secure the Third Subsequent Loan, Borrower will execute and deliver
to

 

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Lender a further Security Agreement, granting to Lender a security interest in
the Borrower’s Partnership Interests in the Second Amendment Partnerships (the
“Third Subsequent Loan Security Agreement”).
     E. Except as modified hereby, the remaining provisions of the Subsequent
Loan Agreement, as amended, are unchanged by this Amendment and remain in full
force and effect.
     F. This Agreement may be executed in one or more counterparts, each of
which shall constitute a complete agreement and all of which taken together
shall constitute a single agreement.
THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION
HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. AT THE OPTION OF LENDER, THIS LOAN AGREEMENT MAY BE ENFORCED IN ANY
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT
SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS
IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN
ACTION IS AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT
OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED
BY THIS LOAN AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER
AND BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE PRINCIPAL
TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY.
[THE REMAINDER OF THIS PAGE INTENTIONALLY HAS BEEN LEFT BLANK.]

 

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

              “BORROWER:”     BAYFIELD LOW INCOME
HOUSING LIMITED
PARTNERSHIP, a Delaware limited
partnership,     By: Megan Asset Management, Inc., General Partner
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
      Paul J. Maddock, President
 
            “LENDER:”     DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota
limited liability company
 
       
 
  By:    
 
       
 
      Paul R. Sween, Vice President

 

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STATE OF NORTH DAKOTA
    )          
 
          ss:    
COUNTY OF BURLEIGH
    )          

     On this the 10 day of November, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J.
Maddock, to me known who being by me duly sworn, did depose and say that he has
an address of 1424 West Century Avenue, #102, Bismarck, North Dakota 58503; that
he is the President of Megan Asset Management, Inc., the corporation described
in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his
name thereto on behalf of said corporation for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
 
  /s/ Jessica L. Bashus    
 
       
(SEAL)
  NOTARY PUBLIC     JESSICA L. BASHUS
Notary Public, State of North Dakota
My commission Expires February 18, 2009
STATE OF NORTH DAKOTA
NOTARY PUBLIC SEAL   My commission expires: Feb. 18, 2009    

                 
STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the                      day of November, 2003 before me, the
undersigned, a notary public of said state, duly commissioned and sworn,
personally appeared Paul R. Sween, who is personally known to me to be the
individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as
the Vice President of Dominium Development & Acquisition, LLC on behalf of said
company and for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
(SEAL)
 
 
NOTARY PUBLIC    
 
  My commission expires;    

 

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SECOND SUBSEQUENT LOAN PROMISSORY NOTE

$60,000   October 17, 2003
Bismarck,           
North Dakota    

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP (referred to herein as “Maker”), promises to pay to the order of
DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company
(referred to herein as “Payee”), at 2355 Polaris Lane N., Suite 100,
Minneapolis, MN 55447, or at such other place as Payee may designate in writing,
from time to time, in legal tender of the United States of America, the sum of
SIXTY THOUSAND AND No/100 DOLLARS ($60,000), together with interest thereon at
the rate of Five Percent (5%) per annum.
     Payments of principal and accrued interest shall be payable on the first to
occur of (i) the Closing on the Principal Transaction as defined in the
Subsequent Loan Agreement dated the 19th day of September, 2003, as amended,
made by Maker in favor of Payee (the “Subsequent Loan Agreement”) and then to be
paid in installments in accordance with the agreement with respect to the
Principal Transaction, (ii) April 12, 2004 if Payee elects on or before such
date to take the collateral that secures this Note in full satisfaction of the
then-outstanding amount of this Note, or (iii) December 31, 2004 (the “Maturity
Date”). In addition, if the Closing on the Principal Transaction occurs and,
thus, clause (i) of the preceding sentence applies, no further interest will
accrue on, this Note from and after the date of the Closing.
     This Note is made pursuant to the Subsequent Loan Agreement, as amended.
This Note is secured by the Subsequent Loan Security Agreement dated
September 19, 2003 and Second Subsequent Loan Security Agreement of even date
herewith made by Maker in favor of Payee, and encumbering the limited
partnership interests of Maker in OAKWOOD APARTMENTS, LTD. and PERRY APARTMENTS,
L.P., each a Missouri limited partnership (the “Missouri Partnerships”) as
defined in the First Amendment to Subsequent Loan Agreement (the “Second
Subsequent Loan Security Agreement”). This Note is entitled to the protection of
the Subsequent Loan Agreement, as amended, the Subsequent Loan Security
Agreement dated September 19, 2003 and Second Subsequent Loan Security Agreement
and the Subsequent Loan Guaranty, the terms of which are by this reference
incorporated herein. At the option of Payee, any default under the terms of the
Loan Agreement, the Promissory Notes, the Security Agreement, the Guaranty, the
Subsequent Loan Agreement, as amended, any other Subsequent Loan Note, the
Subsequent Loan Security Agreement or the Second Subsequent Loan Security
Agreement, or the Subsequent Loan Guaranty shall constitute a default hereunder.
     The indebtedness evidenced by this Note may be prepaid in whole or in part
at any time without penalty, provided that any prepayments shall be applied
first against accrued and unpaid interest, if any, and second to principal.
Prepayment in part shall not affect or postpone Maker’s duty to pay all
obligations when due.
     Payee shall have the right to declare the total unpaid principal balance,
together with all accrued interest, to be due and payable forthwith upon the
failure of Maker to pay any payment due hereunder, under any other Subsequent
Loan Note, or under either of the Promissory Notes, within thirty (30) days

 

--------------------------------------------------------------------------------

 

after the date when such payment shall become due; or upon the sale or other
conveyance or encumbrance by Maker of the Apartment Projects as defined in the
Subsequent Loan Agreement or any part hereof; or after thirty (30) days prior
written notice of any default under the terms of the Loan Agreement, the
Security Agreement, the Guaranty, the Subsequent Loan Agreement, as amended, the
Subsequent Loan Security Agreement or the Second Subsequent Loan Security
Agreement, the Subsequent Loan Guaranty or any other document or instrument
executed in connection with or securing this Note, any other Subsequent Loan
Note, or either of the Promissory Notes. Failure by Payee to exercise this right
with respect to any failure or breach of Maker shall not constitute a waiver of
the right as to any subsequent failure or breach and maker expressly waives
notice of Payee’s exercise of this right.
     Time is of the essence of this Note. Maker covenants and agrees to pay all
the costs and fees (whether incurred in post-judgment collection, or in any
successful dispute resolution proceeding expended by Payee in the collection
hereof, or in the event of any default on the part of Maker or Guarantor in the
making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Note, any other Subsequent Loan Note, the
Subsequent Loan Agreement, as amended, the Subsequent Loan Guaranty, the
Subsequent Loan Security Agreement or the Second Subsequent Loan Security
Agreement, the Loan Agreement, either of the Promissory Notes, the Guaranty, or
the Security Agreement, or in securing this Note, any other Subsequent Loan
Note, or either of the Promissory Notes, or sustaining or defending the priority
of any collateral against all persons, including but not limited to the exercise
of the power of eminent domain or other governmental power of any kind. Nothing
contained in this paragraph shall be construed as requiring Payee to advance or
spend money for any of the purposes mentioned in this paragraph.
     The interest on this Note shall never be greater than an amount which, if
added to the amount of any discount, additional fees, or charges paid by Maker
which constitute interest under the laws of the State of Minnesota, would cause
the total interest to exceed the maximum rate of interest chargeable to the
Maker under such law. If Payee shall receive any payment which is in excess of
the maximum rate permitted to be charged under such law, such payment shall
automatically be applied to reduce the principal sum outstanding on this Note.
This provision shall control every other provision of all agreements between
Maker and Payee.
THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT
PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS
COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND
MAKER KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION

2

--------------------------------------------------------------------------------

 

ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE LOAN EVIDENCED
HEREBY, ALL DOCUMENTS AND AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE PRINCIPAL TRANSACTION,
AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF EITHER PARTY.

         
 
  “MAKER”
BAYFIELD LOW INCOME HOUSING
LIMITED PARTNERSHIP, a Delaware limited partnership,
By: Megan Asset Management, Inc.,
General Partner    
 
       
 
  /s/ Paul J. Maddock    
 
       
 
  Paul J. Maddock, President    
 
       
 
  Whose address is;    
 
  1424 W. Century Avenue, #102    
 
  Bismarck, ND 58503    

3

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SECOND SUBSEQUENT LOAN SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 17th day of October, 2003, by BAYFIELD LOW
INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an
office address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N,D. 58503 (referred to herein as “Debtor”), in favor of DOMINIUM
DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having an
office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).
     Debtor hereby agrees as follows:
     1. Security Interest. Debtor constitutes the sole limited partner of
OAKWOOD APARTMENTS, LTD. and PERRY APARTMENTS, L.P., each a Missouri limited
partnership (the “Missouri Partnerships”) Lender is a Minnesota limited
liability company. In consideration of and as an inducement for an extension of
credit by Lender to Debtor for the purpose of funding certain requirements of
the Debtor, Debtor hereby gives Lender a continuing and unconditional security
interest (the “Security Interest”) in Debtor’s interest as a limited partner in
the Missouri Partnerships and in all additions, replacements, substitutions,
increases and profits, and in all proceeds and products thereof in any form to
which Debtor is entitled (collectively referred to herein as the “Collateral”).
The Collateral shall include, without limitation, Debtor’s entitlement to, if
any, all distributions of Cash Flow, distributions of proceeds resulting from a
Refinancing, distributions of proceeds resulting from a Major Capital Event,
liquidating distributions, distributions in kind, upon a default all profits and
losses from the Partnership to Debtor, and all returns of capital, all as
defined or described in, and in accordance with the provisions of (i) that
certain Amended and Restated Agreement and Certificate of Limited Partnership of
OAKWOOD APARTMENTS, LTD., executed as of the 1st day of March, 1988 and filed
said amended agreement in the Office of the Secretary of State of Missouri on
the 25th day of July, 1990 and that Amendment to the Amended and Restated
Agreement and Certificate of Limited Partnership of OAKWOOD APARTMENTS, LTD.,
executed as of the 13th day of July, 1990, and (ii) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of PERRY APARTMENTS,
L.P. executed as of the 1st day of October, 1987 and filed said amended
agreement in the Office of the Secretary of State of Missouri on the 25th day of
July, 1990 and that Amendment to the Amended and Restated Agreement and
Certificate of Limited Partnership of PERRY APARTMENTS, L.P., executed as of the
1st day of July, 1990 (each as hereinbefore and hereinafter amended or
restated).
     2. Indebtedness Secured. This Agreement and the Security Interests created
hereby and the Subsequent Loan Security Agreement secure the payment of that
certain Second Subsequent Loan Note of even date herewith executed and delivered
by Debtor in favor of Lender, in the original principal amount of Sixty Thousand
and No/100 Dollars ($60,000 — the “Note” or sometimes herein the
“Indebtedness”).
     3. Warranties of Debtor. Debtor represents and warrants, and for so long as
this Agreement continues in force, it shall be deemed continuously to represent
and warrant, that: (i) each item constituting the Collateral is genuine and in
all respects what it purports to be; (ii) Debtor is the owner of the Collateral
free of all security interests or other encumbrances, except the Security
Interests; and (iii) Debtor is authorized to enter into this Security Agreement
under the Partnership Agreements, subject to the approval of the General
Partner, which approval Debtor has obtained in writing.
     4. Covenants of Debtor. So long as this Agreement has not been terminated
as provided

 

--------------------------------------------------------------------------------

 

hereinafter, Debtor covenants and agrees as follows:
          (a) Debtor will defend the Collateral against the claims of all other
persons, including without limitation, setoffs, claims, counter-claims, and
defenses against either Debtor or Lender; will keep the Collateral free from all
security interests or other encumbrances, except this Security Interest; and
will not assign, deliver, sell, transfer, lease, or otherwise dispose of any of
the Collateral or any interest therein without the prior written consent of
Lender, in its sole discretion.
          (b)  Debtor will notify Lender promptly in writing of any change in
Debtor’s address.
          (c) Debtor will not, without Lender’s written consent, in its sole
discretion, make or agree to make any alteration, modification, or cancellation
on substitution for, or credit, adjustment or allowance on, any of the
Collateral.
          (d) Debtor will execute and deliver to Lender such financing
statements and other documents and take such other actions and provide such
further reasonable assurances as Lender may deem advisable to perfect the
Security Interests created by this Agreement.
          (c) Debtor will pay all taxes, assessments, and other charges of every
nature which may be levied or assessed against the Collateral and will deliver
to Lender, on demand, such reasonable certificates or other evidence
satisfactory to Lender attesting thereto.
     5. Verification of Collateral. Lender shall have the right to verify the
Collateral in any manner and through any medium which Lender may reasonably
consider appropriate, and Debtor shall furnish such assistance and information
and perform such acts as Lender may reasonably require in connection therewith.
     6. Default. At the option of Lender, the occurrence of any of the following
events shall constitute an Event of Default under this Agreement following the
failure to cure within thirty (30) days after written, notice by Lender to
Borrower:
          (a) Nonpayment when due, whether by acceleration or otherwise, after
any applicable grace period, of the principal of or interest on any
Indebtedness, time being of the essence, and other Subsequent Loan Note, or
either of the Promissory Notes.
          (b) Failure by Debtor to perform any obligations under this Agreement.
          (c) Acceptance by Debtor of any payment or distribution of income or
assets from the Partnership in violation of Paragraph 7 (e) hereof.
          (d) The filing by or against Debtor, Guarantor, General Partner, or
the Partnership of a petition in bankruptcy or for reorganization under any
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution, liquidation, or similar law of any jurisdiction.
          (e) The making of a general assignment by Debtor, Guarantor, General
Partner, or the Partnership for the benefit of creditors; the appointment of or
taking possession, by a receiver, trustee, custodian or similar official for
Debtor, Guarantor, General Partner, or the Partnership or for any of their
assets; or the institution by or against Debtor, Guarantor, General Partner, or
the Partnership of any kind of insolvency proceedings, or any proceeding for the
dissolution or liquidation of the Partnership.

 

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          (f) Any material falsity in any certificate, statement,
representation, warranty, or audit at any time furnished by or on behalf of the
Partnership, Debtor, or any endorser or guarantor or any other party liable for
payment of all or part of the Indebtedness, pursuant to or in connection with
this Agreement or otherwise, to Lender, including warranties in this Agreement,
and any failure to disclose any substantial contingent or liquidated liabilities
or any material adverse change in facts disclosed by any certificate, statement,
representation, warranty or audit furnished to Lender.
          (g) Any attachment or levy against the Collateral, or any other
occurrence which inhibits Lender’s free access to the Collateral.
          (h) Any default by Debtor under the Subsequent Loan Agreement, as
amended, any of the Subsequent Loan Notes, any other Subsequent Loan Security
Agreement, the Loan Agreement, or either of the Promissory Notes, any default by
the Guarantor under the Subsequent Loan Guaranty or the Guaranty.
     7. Rights of Lender.
          (a) Lender may, at its option, declare all or any part of the
Indebtedness, any other Subsequent Loan Note, or the Promissory Notes to be
immediately due upon giving thirty (30) days written notice to Debtor upon the
occurrence of any Event of Default.
          (b) Upon the occurrence of any Event of Default, Lender’s rights with
respect to the Collateral shall be those of a secured party under the Uniform
Commercial Code and any other applicable law in effect from time to time.
          (c) Debtor agrees that any notice by Lender of the sale or disposition
of the Collateral or any other intended action hereunder, whether required by
the Uniform Commercial Code or otherwise, shall constitute reasonable notice to
Debtor if the notice is mailed by regular or certified mail, postage prepaid, at
least fourteen (14) days before the action, to the Debtor’s address as above
first written, or to any other address which Debtor has specified in writing to
Lender as the address at which notices shall be given to Debtor.
          (d) Upon Debtor’s failure to perform any of its duties hereunder,
Lender may, but shall not be obligated to, perform any such duties, and Debtor
shall forthwith upon demand reimburse Lender for any expenses incurred by Lender
in so doing. Debtor shall pay all costs and expenses incurred by Lender in
enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness whether or not suit is brought and whether incurred in connection
with collection, trial, appeal, bankruptcy, post-judgment collection, or
otherwise; and shall be liable for any deficiencies in the event the proceeds of
disposition of the Collateral do not satisfy the Indebtedness in full.
          (e) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive all income from the instruments constituting the Collateral to
which Debtor may be entitled until this Agreement has been terminated, in
accordance with the terms of each Subsequent Loan Note. Debtor will not demand
or receive any income from the instruments constituting Collateral until the
Indebtedness has been paid in full, and if Debtor receives any such income,
Debtor will pay it to Lender within Five (5) days of its receipt thereof without
demand. Lender may apply the net cash receipts of such income to payment of any
of the Indebtedness, but Lender shall account for and pay over to Debtor any
income remaining after full payment of the Indebtedness.
          (f) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to

 

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receive any increase in any instruments constituting Collateral and any
distribution upon the dissolution and liquidation of the Partnership, and to
surrender such partnership interests or any part thereof in exchange therefor,
and to hold the receipt from any such distribution or increase as part of the
Collateral; provided, however, that Lender need not collect interest on or
principal of any Collateral or give any notice of nonpayment with respect to
such principal or interest. If Debtor receives any such increase, profits or
distribution, Debtor will deliver such receipts promptly to Lender, to be held
by Lender as provided in this paragraph.
          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with RD
regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they arr purchasing for their own account or
investment and not with a view to the distribution or resale of such Collateral,
or in order to obtain any required approval of the sale or of the purchase by
any governmental regulatory authority or official); and Debtor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall Lender be
liable or accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction. Debtor further agrees that any sales by Lender shall not be
considered to be other than “public sales” within the meaning of Section 9-504
of the Uniform Commercial Code because such sales or solicitations are
structured to comply with such limitations or restrictions, the intent of the
parties being that any public sale be subject to such limitations and
restrictions.
          (h) Upon the occurrence of any Event of Default, Lender may exercise
any rights that Debtor has as a limited partner with respect to the Collateral.
          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND
THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS SECURITY
AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

 

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“DEBTOR”
 
BAYFIELD LOW INCOME
 
HOUSING LIMITED PARTNERSHIP,
 
a Delaware limited partnership,
 
By: Megan Asset Management, Inc.,
 
General Partner
 
 
 
/s/ Paul J. Maddock
 
 
 
Paul J. Maddock, President
 
 
 
“LENDER:”
 
DOMINIUM DEVELOPMENT &
 
ACQUISITION, LLC, a Minnesota
 
limited liability company
 
 
 
By:
 
   
 
Paul R. Sween, Vice President

 

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STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the 17th day of October, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J.
Maddock, to me known, who being by me duly sworn, did depose and say that he has
an address of 1424 West Century Avenue, #102, Bismarck, North Dakota 58503; that
he is the President of Megan Asset Management, Inc., the corporation described
in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his
name thereto on behalf of said corporation for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
 
  /s/ Sandra Levorsen    
 
       
(SEAL)
  NOTARY PUBLIC     SANDRA LEVORSEN
Notary Public
State of North Dakota
My Commission Expires Mar. 23, 2009   My commission expires:    

         
STATE OF MINNESOTA                             )
          ss:      
COUNTY OF HENNEPIN                             )
       

     On this the      day of October, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul R.
Sween, who is personally known to me to be the individual who executed and
delivered the foregoing instrument, and he duly acknowledged to me that he
executed and delivered the same in his capacity as the Vice President of
Dominium Development & Acquisition, LLC on behalf of said company and for the
purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
(SEAL)
 
 
NOTARY PUBLIC    
 
  My commission expires:    

 

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THIRD SUBSEQUENT LOAN PROMISSORY NOTE

  $60,000   November 10, 2003     Bismarck,                    North
Dakota          

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP (referred to herein as “Maker”), promises to pay to the order of
DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company
(referred to herein as “Payee”), at 2355 Polaris Lane N., Suite 100,
Minneapolis, MN 55447, or at such other place as Payee may designate in writing,
from time to time, in legal tender of the United States of America, the sum of
SIXTY THOUSAND AND No/100 DOLLARS ($60,000), together with interest thereon at
the rate of Five Percent (5%) per annum.
     Payments of principal and accrued interest shall be payable on the first to
occur of (i) the Closing on the Principal Transaction as defined in the
Subsequent Loan Agreement dated the 19th day of September, 2003, as amended,
made by Maker in favor of Payee (the “Subsequent Loan Agreement”) and then to be
paid in installments in accordance with the agreement with respect to the
Principal Transaction, (ii) April 12, 2004 if Payee elects on or before such
date to take the collateral that secures this Note in full satisfaction of the
then-outstanding amount of this Note, or (iii) December 31, 2004 (the “Maturity
Date”). In addition, if the Closing on the Principal Transaction occurs and,
thus, clause (i) of the preceding sentence applies, no further interest will
accrue on this Note from and after the date of the Closing.
     This Note is made pursuant to the Subsequent Loan Agreement, as amended.
This Note is secured by the Third, Subsequent Loan Security Agreement of even
date herewith made by Maker in favor of Payee, and encumbering the limited
partnership interests of Maker in APM RRH, LTD., a Florida limited partnership
and ANDERSON COUNTRY ESTATES, L.P., a Missouri limited partnership, (the “Second
Amendment Partnerships”) as defined in the Second Amendment to Subsequent Loan
Agreement (the “Second Amendment to Subsequent Loan Agreement”). This Note is
entitled to the protection of the Subsequent Loan Agreement, as amended, the
Second Subsequent Loan Security Agreement, the Third Subsequent Loan Security
Agreement and the Subsequent Loan Guaranty, the terms of which are by this
reference incorporated herein. At the option of Payee, any default under the
terms of the Loan Agreement, the Promissory Notes, the Security Agreement, the
Guaranty, the Subsequent Loan Agreement, as amended, any other Subsequent Loan
Note, the Subsequent Loan Security Agreement, the Second Subsequent Loan
Security Agreement, or the Third Subsequent Loan Security Agreement, or the
Subsequent Loan Guaranty shall constitute a default hereunder.
     The indebtedness evidenced by this Note may be prepaid in whole or in part
at any time without penalty, provided that any prepayments shall be applied
first against accrued and unpaid interest, if any, and second to principal.
Prepayment in part shall not affect or postpone Maker’s duty to pay all
obligations when due.
     Payee shall have the right to declare the total unpaid principal balance,
together with all accrued interest, to be due and payable forthwith upon the
failure of Maker to pay any payment due hereunder, under any other Subsequent
Loan Note, or under either of the Promissory Notes, within thirty (30) days

 

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after the date when such payment shall become due; or upon the sale or other
conveyance or encumbrance by Maker of the Apartment Projects as defined in the
Subsequent Loan Agreement or any part hereof; or after thirty (30) days prior
written notice of any default under the terms of the Loan Agreement, the
Security Agreement, the Guaranty, the Subsequent Loan Agreement, as amended, the
Subsequent Loan Security Agreement, the Second Subsequent Loan Security
Agreement, or the Third Subsequent Loan Security Agreement, the Subsequent Loan
Guaranty or any other document or instrument executed in connection with or
securing this Note, any other Subsequent Loan Note, or either of the Promissory
Notes. Failure by Payee to exercise this right with respect to any failure or
breach of Maker shall not constitute a waiver of the right as to any subsequent
failure or breach and maker expressly waives notice of Payee’s exercise of this
right.
     Time is of the essence of this Note. Maker covenants and agrees to pay all
the costs and fees (whether incurred in post-judgment collection, or in any
successful dispute resolution proceeding expended by Payee in the collection
hereof, or in the event of any default on the part of Maker or Guarantor in the
making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Note, any other Subsequent Loan Note, the
Subsequent Loan Agreement, as amended, the Subsequent Loan Guaranty, the
Subsequent Loan Security Agreement, the Second Subsequent Loan Security
Agreement, or the Third Subsequent Loan Security Agreement, the Loan Agreement,
either of the Promissory Notes, the Guaranty, or the Security Agreement, or in
securing this Note, any other Subsequent Loan Note, or either of the Promissory
Notes, or sustaining or defending the priority of any collateral against all
persons, including but not limited to the exercise of the power of eminent
domain or other governmental power of any kind. Nothing contained in this
paragraph shall be construed as requiring Payee to advance or spend money for
any of the purposes mentioned in this paragraph.
     The interest on this Note shall never be greater than an amount which, if
added to the amount of any discount, additional fees, or charges paid by Maker
which constitute interest under the laws of the State of Minnesota, would cause
the total interest to exceed the maximum rate of interest chargeable to the
Maker under such law. If Payee shall receive any payment which is in excess of
the maximum rate permitted to be charged under such law, such payment shall
automatically be applied to reduce the principal sum outstanding on this Note.
This provision shall control every other provision of all agreements between
Maker and Payee.
THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT
PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS
COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND
MAKER KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE

2

--------------------------------------------------------------------------------

 

RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE LOAN EVIDENCED HEREBY, ALL
DOCUMENTS AND AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION
WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE PRINCIPAL TRANSACTION, AND ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF EITHER PARTY.

         
 
  “MAKER”    
 
  BAYFIELD LOW INCOME
HOUSING LIMITED PARTNERSHIP,    
 
  a Delaware limited partnership,    
 
  By: Megan Asset Management, Inc.,    
 
  General Partner    
 
       
 
  /s/ Paul J. Maddock    
 
       
 
  Paul J. Maddock, President    
 
       
 
  Whose address is:    
 
  1424 W. Century Avenue, #102    
 
  Bismarck, ND 58503    

3

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THIRD SUBSEQUENT LOAN SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 10th day of November, 2003, by BAYFIELD LOW
INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an
office address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N.D. 58503 (referred to herein as “Debtor”), in favor of DOMINIUM
DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having an
office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).
     Debtor hereby agrees as follows:
     1. Security Interest. Debtor constitutes the sole limited partner of AFM
RRH, LTD., a Florida limited partnership and ANDERSON COUNTRY ESTATES, L.P., a
Missouri limited partnership, (the “Second Amendment Partnerships”). Lender is a
Minnesota limited liability company. In consideration of and as an inducement
for an extension of credit by Lender to Debtor for the purpose of funding
certain requirements of the Debtor, Debtor hereby gives Lender a continuing and
unconditional security interest (the “Security Interest”) in Debtor’s interest
as a limited partner in the Second Amendment Partnerships and in all additions,
replacements, substitutions, increases and profits, and in all proceeds and
products thereof in any form to which Debtor is entitled (collectively referred
to herein as the “Collateral”). The Collateral shall include, without
limitation, Debtor’s entitlement to, if any, all distributions of Cash Flow,
distributions of proceeds resulting from a Refinancing, distributions of
proceeds resulting from a Major Capital Event, liquidating distributions,
distributions in kind, upon a default all profits and losses from the
Partnership to Debtor, and all returns of capital, all as defined or described
in, and in accordance with the provisions of (i) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of AFM RRH, LTD., a
Florida limited partnership executed as of the 13th day of September, 1988 and
filed said amended agreement in the Office of the Secretary of State of Florida
on the 15th day of October, 1998 and that Amendment to the Amended and Restated
Agreement and Certificate of Limited Partnership of AFM RRH, LTD., executed as
of the 1st day of July, 1990 and filed said amended agreement in the Office of
the Secretary of State of Florida on the 15th day of October, 1998, and that
Second Amendment to the Amended and Restated Agreement and Certificate of
Limited Partnership of AFM RRH, LTD., executed as of the 1st day of March, 1998
and filed said amended agreement in the Office of the Secretary of State of
Florida on the 15th day of October, 1998, and that Third Amendment to the
Amended and Restated Agreement and Certificate of Limited Partnership of AFM
RRH, LTD., executed as of the 1st day of April, 1998 and filed said amended
agreement in the Office of the Secretary of State of Florida on the 15th day of
October, 1998, and (ii) that certain Amended and Restated Agreement and
Certificate of Limited Partnership of ANDERSON COUNTRY ESTATES, L.P., a Missouri
limited partnership, executed as of the 1st day of December, 1988 and filed in
the Office of the Secretary of State of Missouri on the 25th day of July, 1990
and that Amendment to the Amended and Restated Agreement and Certificate of
Limited Partnership of ANDERSON COUNTRY ESTATES, L.P., executed as of the Ist
day of July, 1990 and filed in the Office of the Secretary of State of Missouri
on the 25th day of July, 1990, and that Second Amended and Restated Agreement
and Certificate of Limited Partnership of ANDERSON COUNTRY ESTATES, L.P., filed
in the Office of the Secretary of State of Missouri on the 5th day of November,
1991 and that Amendment to the Amendment Certificate of Limited Partnership of
ANDERSON COUNTRY ESTATES, L,P., filed in the Office of the Secretary of State of
Missouri on the 9th day of January, 1992 (each as hereinbefore and hereinafter
amended or restated).
     2. Indebtedness Secured. This Agreement and the Security Interests created
hereby secure the payment of that certain Third Subsequent Loan Note of even
date herewith executed and delivered by

 

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Debtor in favor of Lender, in the original principal amount of Sixty Thousand
and No/100 Dollars ($60,000 — the “Note” or sometimes herein the
“Indebtedness”).
     3. Warranties of Debtor. Debtor represents and warrants, and for so long as
this Agreement continues in force, it shall be deemed continuously to represent
and warrant, that: (i) each item constituting the Collateral is genuine and in
all respects what it purports to be; (ii) Debtor is the owner of the Collateral
free of all security interests or other encumbrances, except the Security
Interests; and (iii) Debtor is authorized to enter into this Security Agreement
under the Partnership Agreements, subject to the approval of the General
Partner, which approval Debtor has obtained in writing.
     4. Covenants of Debtor. So long as this Agreement has not been terminated
as provided hereinafter, Debtor covenants and agrees as follows:
          (a) Debtor will defend the Collateral against the claims of all other
persons, including without limitation, setoffs, claims, counter-claims, and
defenses against either Debtor or Lender; will keep the Collateral free from all
security interests or other encumbrances, except this Security Interest; and
will not assign, deliver, sell, transfer, lease, or otherwise dispose of any of
the Collateral or any interest therein without the prior written consent of
Lender, in its sole discretion.
          (b) Debtor will notify Lender promptly in writing of any change in
Debtor’s address.
          (c) Debtor will not, without Lender’s written consent, in, its sole
discretion, make or agree to make any alteration, modification, or cancellation
of, substitution for, or credit, adjustment or allowance on, any of the
Collateral.
          (d) Debtor will execute and deliver to Lender such financing
statements and other documents and take such other actions and provide such
further reasonable assurances as Lender may deem advisable to perfect the
Security Interests created by this Agreement.
          (e) Debtor will pay all taxes, assessments, and other charges of every
nature which may be levied or assessed against the Collateral and will deliver
to Lender, on demand, such reasonable certificates or other evidence
satisfactory to Lender attesting thereto,
     5. Verification of Collateral. Lender shall have the right to verify the
Collateral in any manner and through any medium which Lender may reasonably
consider appropriate, and Debtor shall furnish such assistance and information
and perform such acts as Lender may reasonably require in connection therewith.
     6. Default. At the option of Lender, the occurrence of any of the following
events shall, constitute an Event of Default under this Agreement following the
failure to cure within thirty (30) days after written notice by Lender to
Borrower:
          (a) Nonpayment when due, whether by acceleration or otherwise, after
any applicable grace period, of the principal of or interest on any
Indebtedness, time being of the essence, and other Subsequent Loan Note, or
either of the Promissory Notes.
          (b) Failure by Debtor to perform any obligations under this Agreement.
          (c) Acceptance by Debtor of any payment or distribution of income or
assets from

 

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the Partnership in violation of Paragraph 7 (e) hereof.
          (d) The Filing by or against Debtor, Guarantor, General Partner, or
the Partnership of a petition in bankruptcy or for reorganization under any
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution, liquidation, or similar law of any jurisdiction.
          (e) The making of a general assignment by Debtor, Guarantor, General
Partner, or the Partnership for the benefit of creditors; the appointment of or
taking possession by a receiver, trustee, custodian or similar official for
Debtor, Guarantor, General Partner, or the Partnership or for any of their
assets; or the institution by or against Debtor, Guarantor, General Partner, or
the Partnership of any kind of insolvency proceedings, or any proceeding for the
dissolution or liquidation of the Partnership.
          (f) Any material falsity in any certificate, statement,
representation, warranty, or audit at any time furnished by or on behalf of the
Partnership, Debtor, or any endorser or guarantor or any other party liable for
payment of all or part of the Indebtedness, pursuant to or in connection with
this Agreement or otherwise, to Lender, including warranties in this Agreement,
and any failure to disclose any substantial contingent or liquidated liabilities
or any material adverse change in facts disclosed by any certificate, statement,
representation, warranty or audit furnished to Lender.
          (g) Any attachment or levy against the Collateral, or any other
occurrence which inhibits Lender’s free access to the Collateral.
          (h) Any default by Debtor under the Subsequent Loan Agreement, as
amended, any of the Subsequent Loan Notes, any other Subsequent Loan Security
Agreement, the Loan Agreement, or either of the Promissory Notes, any default by
the Guarantor under the Subsequent Loan Guaranty or the Guaranty,
     7. Rights of Lender.
          (a) Lender may, at its option, declare all or any part of the
Indebtedness, any other Subsequent Loan Note, or the Promissory Notes to be
immediately due upon giving thirty (30) days written notice to Debtor upon, the
occurrence of any Event of Default.
          (b) Upon the occurrence of any Event of Default, Lender’s rights with
respect to the Collateral shall be those of a secured party under the Uniform
Commercial Code and any other applicable law in effect from time to time.
          (c) Debtor agrees that any notice by Lender of the sale or disposition
of the Collateral or any other intended action hereunder, whether required by
the Uniform Commercial Code or otherwise, shall, constitute reasonable notice to
Debtor if the notice is mailed by regular or certified mail, postage prepaid, at
least fourteen (14) days before the action, to the Debtor’s address as above
first written, or to any other address which Debtor has specified in writing to
Lender as the address at which notices shall be given to Debtor.
          (d) Upon Debtor’s failure to perform any of its duties hereunder,
Lender may, but shall not be obligated to, perform any such duties, and Debtor
shall forthwith upon demand reimburse Lender for any expenses incurred by Lender
in so doing. Debtor shall pay all costs and expenses incurred by Lender in
enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness whether or not suit is brought and whether incurred in connection
with collection, trial, appeal, bankruptcy, post-judgment collection, or
otherwise; and shall be liable for any deficiencies in the event

 

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the proceeds of disposition of the Collateral do not satisfy the Indebtedness in
full.
          (e) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive all income from the instruments constituting the Collateral to
which Debtor may be entitled until this Agreement has been terminated, in
accordance with the terms of each Subsequent Loan Note. Debtor will not demand
or receive any income from the instruments constituting Collateral until the
Indebtedness has been paid in full, and if Debtor receives any such income,
Debtor will pay it to Lender within five (5) days of its receipt thereof without
demand. Lender may apply the net cash receipts of such income to payment of any
of the Indebtedness, but Lender shall account for and pay over to Debtor any
income remaining after full payment of the Indebtedness.
          (f) Whether or not an Event of Default has occurred, Debtor authorizes
Lender to receive any increase in any instruments constituting Collateral and
any distribution upon the dissolution and liquidation of the Partnership, and to
surrender such partnership interests or any part thereof in exchange therefor,
and to hold the receipt from any such distribution or increase as part of the
Collateral; provided, however, that Lender need not collect interest on or
principal of any Collateral or give any notice of nonpayment with respect to
such principal or interest. If Debtor receives any such increase, profits or
distribution, Debtor will deliver such receipts promptly to Lender, to be held
by Lender as provided in this paragraph.
          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with RD
regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account or
investment and not with a view to the distribution or resale of such Collateral,
or in order to obtain any required approval of the sale or of the purchase by
any governmental regulatory authority or official); and Debtor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall Lender be
liable or accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction. Debtor further agrees that any sales by Lender shall not be
considered to be other than “public sales” within the meaning of Section 9-504
of the Uniform Commercial Code because such sales or solicitations are
structured to comply with such limitations or restrictions, the intent of the
parties being that any public sale be subject to such limitations and
restrictions.
          (h) Upon the occurrence of any Event of Default, Lender may exercise
any rights that Debtor has as a limited partner with respect to the Collateral.
          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND
THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS SECURITY
AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS

 

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NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names, the date and year first above written.

     
 
“DEBTOR”
 
BAYFIELD LOW INCOME
 
HOUSING LIMITED PARTNERSHIP,
 
a Delaware limited partnership,
 
By: Megan Asset Management, Inc.,
 
General Partner
 
 
 
/s/ Paul J. Maddock
 
   
 
Paul J. Maddock, President
 
 
 
“LENDER:”
 
DOMINIUM DEVELOPMENT &
 
ACQUISITION, LLC, a Minnesota
 
limited liability company
 
 
 
By:
 
   
 
Paul R. Sween, Vice President

 

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STATE OF NORTH DAKOTA
    )          
 
          ss    
COUNTY OF BURLEIGH
    )          

     On this the 10 day of November, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J.
Maddock, to me known, who being by me duly sworn, did depose and say that he has
an address of 1424 West Century Avenue, #102, Bismarck, North Dakota 58503; that
he is the President of Megan Asset Management, Inc., the corporation described
in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his
name thereto on behalf of said corporation for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

      (SEAL)   JESSICA L. BASHUS
Notary Public, State of North Dakota
My Commission Expires Feb 18, 2009   /s/ Jessica L. Bashus STATE OF NORTH DAKOTA
NOTARY PUBLIC SEAL   NOTARY PUBLIC
     My Commission expires: Feb 18, 2009

                 
STATE OF MINNESOTA
    )          
 
          ss:    
COUNTY OF HENNEPIN
    )          

     On this the                      day of November, 2003 before me, the
undersigned, a notary public of said state, duly commissioned and sworn,
personally appeared Paul R. Sween, who is personally known to me to be the
individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as
the Vice President of Dominium Development & Acquisition, LLC on behalf of said
company and for the purposes therein contained.
     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day
and year first above written.

         
    (SEAL)
 
 
NOTARY PUBLIC    
 
 
   
 
       My commission expires:    

 

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of $10,835 in hand paid from Assignee and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bayfield Low Income Housing Limited Partnership (“Assignor”)
hereby:

  1)   assigns and transfers to Dominium Acquisition Limited Partnership
(“Assignee”) the following:         Forty-nine and one-half percentage (49.5%
points) of all of Assignor’s rights, interests, powers and obligations as the
Limited or Investor Partner under the Partnership Agreement, as amended (the
“Partnership Agreement”), of ANDERSON COUNTRY ESTATES, L. P. , a Missouri
limited partnership (the “Partnership”) in which Assignor owns an interest,
including forty-nine and one-half percentage points (49.5% points) of Assignor’s
Accounts Receivable due from the Partnership, excluding any Annual Distributions
due Assignor from the Partnership;

and

  2)   as grantee of all of Continental Construction Management Corporation’s
(“Continental”) rights, title and interests in and to any and all amounts
payable to Continental under the Plan (“Continental Interests”) pursuant to that
Bill of Sale, Assignment and Power of Attorney, granted it in December, 1991,
Assignor does hereby release Assignee from and assume and indemnify and hold
Assignee harmless from the payment of One Hundred percentage (100% points) of
any Continental Interests with respect to the Partnership, including, but not
limited to those Continental Interests to which Megan Asset Management, Inc.
(“Megan”) is or may become entitled with respect to the Partnership and agrees
to timely pay the same to Megan.

Assignee hereby assumes and agrees to timely and faithfully perform forty-nine
and one-half percentage (49.5% points) of all obligations of Assignor:

  1)   as the Limited or Investor Partner under the Partnership Agreement
arising from and after the effective date hereof, except the Continental
Interests.     2)   with respect to the eight percent (8%) interest in the
amount of approximately Ten Thousand Eight Hundred Four and No/100 ($10,804)
Dollars still due by Assignor to the Partnership payable pursuant to Article 15
(1)(a)(ii) of the Plan as a first priority from the proceeds of any

 

--------------------------------------------------------------------------------

 

     Capital Events.
     IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of April 10, 2004.

              ASSIGNOR   BAYFIELD LOW INCOME HOUSING
LIMITED PARTNERSHIP,             a Delaware limited partnership     By: Megan
Asset Management, Inc.,     a Delaware corporation     Its: General Partner    
 
 
  By:        
 
           
 
  Its:        
 
           
 
                BAYFIELD ACQUISITION LIMITED ASSIGNEE   PARTNERSHIP, a Minnesota
limited partnership     By: Bayfield Acquisition, LLC     a Minnesota limited
liability company     Its: General Partner  
 
  By:        
 
                Its: Manager    

2

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of the payment by Bayfield Low Income Housing Limited
Partnership (“Assignee”) of Twenty-Two Thousand One Hundred Sixty-one and No/100
($22,161) Dollars, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bayfield Acquisition Limited
Partnership (“Assignor”) hereby assigns and transfers to Assignee the following:
All of Assignor’s limited partnership interest under each and every Operating
Partnership Agreement, as amended (as identified on the Exhibit A that is
attached to this Assignment and Assumption — the “Transferred Interests”),
consisting of all of Assignor’s rights, interests, powers, and obligations as
the Additional Limited Partner with respect to such Transferred Interests, and
Assignor’s Accounts Receivable due from such Operating Partnerships with respect
to, and to the extent of, the Transferred Interests, it being intended to be the
same interests assigned by Assignee to Assignor by that Assignment and
Assumption agreement effective as of January 1, 2004.
          Assignee hereby assumes and agrees to timely and faithfully perform
(i) all obligations of Assignor as the Additional Limited Partner under the
respective Operating Partnership agreement, as amended (as identified on the
Exhibit A that is attached to this Assignment and Assumption), with respect to,
and to the extent of, the Transferred Interests arising from and after
January 1, 2004, and (ii) the eight percent (8%) interest obligation still due
by Assignee to ANDERSON COUNTRY ESTATES, L.P. in the amount of, as of January 1,
2004, approximately $10,804 in the aggregate, which amount is fixed, does not
accrue additional interest, and is payable pursuant to Article 15 (1)(a)(ii) of
the Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In re
Bayfield Estates Limited Partnership and Related Cases (Bankruptcy EDNY
Chapter 11 Case Nos, 189-92514 through 189-92516, 189-92683, 189-92817 through
189-92823, 189-92838 through 189-92842, & 189-92955 through 189-92992) (the
“Plan”) as a first priority from the proceeds of any Capital Events (the “8%
Interest Obligation”), it being intended to be the same obligations assumed by
Assignor by that Assignment and Assumption agreement effective as of January 1,
2004.
          Assignor and Assignee agree that the remaining outstanding balance of
the November Subsequent Loan Promissory Note as of January 1, 2004 was $41,159,
which has continued to accrue interest at the rate of Five Percent (5.0%) per
annum in accordance with the November Subsequent Loan Promissory Note since
January 1, 2004.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of January 1, 2005.

              ASSIGNEE   BAYFIELD ACQUISITION LIMITED
PARTNERSHIP, a Minnesota limited partnership
By; Bayfield Acquisition LLC
a Minnesota limited liability company
Its: General Partner    
 
           
 
  By: /s/ [ILLEGIBLE]      
 
              Its: Manager    
 
            ASSIGNOR   BAYFIELD LOW INCOME HOUSING         LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Megan Asset Management, Inc.,
a Delaware corporation         Its: General Partner    
 
           
 
  By:  /s/ Paul J. Maddock    
 
                Its: President    

2

--------------------------------------------------------------------------------

 

Exhibit A
1. ANDERSON COUNTRY ESTATES, L.P., a Missouri partnership

  •   Amended and Restated Agreement and Certificate of Limited Partnership
dated as of December 1,1988     •   Amendment to Amended and Restated Agreement
and Certificate of Limited Partnership dated as of July 1, 1990     •  
Amendment Certificate of Limited Partnership filed January 9, 1992

 

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of the payment by Bayfield Low Income Housing Limited
Partnership (“Assignee”) of Twenty-Two Thousand One Hundred Sixty-one and No/100
($22,161) Dollars, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bayfield Acquisition Limited
Partnership (“Assignor”) hereby assigns and transfers to Assignee the following:
All of Assignor’s limited partnership interest under each and every Operating
Partnership Agreement, as amended (as identified on the Exhibit A that is
attached to this Assignment and Assumption — the “Transferred Interests”),
consisting of all of Assignor’s rights, interests, powers, and obligations as
the Additional Limited Partner with respect to such Transferred Interests, and
Assignor’s Accounts Receivable due from such Operating Partnerships with respect
to, and to the extent of, the Transferred Interests, it being intended to be the
same interests assigned by Assignee to Assignor by that Assignment and
Assumption agreement effective as of January 1, 2004.
          Assignee hereby assumes and agrees to timely and faithfully perform
(i) all obligations of Assignor as the Additional Limited Partner under the
respective Operating Partnership agreement, as amended (as identified on the
Exhibit A that is attached to this Assignment and Assumption), with respect to,
and to the extent of, the Transferred Interests arising from and after
January 1, 2004, and (ii) the eight percent (8%) interest obligation still due
by Assignee to ANDERSON COUNTRY ESTATES, L.P. in the amount of, as of January 1,
2004, approximately $10,804 in the aggregate, which amount is fixed, does not
accrue additional interest, and is payable pursuant to Article 15 (l)(a)(ii) of
the Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In re
Bayfield Estates Limited Partnership and Related Cases (Bankruptcy EDNY
Chapter 11 Case Nos. 189-92514 through 189-92516, 189-92683, 189-92817 through
189-92823, 189-92838 through 189-92842, & 189-92955 through 189-92992) (the
“Plan”) as a first priority from the proceeds of any Capital Events (the “8%
Interest Obligation”), it being intended to be the same obligations assumed by
Assignor by that Assignment and Assumption agreement effective as of
January 1,2004.
          Assignor and Assignee agree that the remaining outstanding balance of
the November Subsequent Loan Promissory Note as of January 1, 2004 was $41,159,
which has continued to accrue interest at the rate of Five Percent (5.0%) per
annum in accordance with the November Subsequent Loan Promissory Note since
January 1, 2004.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of January 1, 2005.

     
ASSIGNEE
  BAYFIELD ACQUISITION LIMITED
 
  PARTNERSHIP, a Minnesota limited partnership
 
  By: Bayfield Acquisition, LLC
 
  a Minnesota limited liability company
 
  Its: General Partner

                  By:   /s/ [ILLEGIBLE]      Its: Manager             

     
ASSIGNOR
  BAYFIELD LOW INCOME HOUSING
 
  LIMITED PARTNERSHIP,
 
  a Delaware limited partnership
 
  By: Megan Asset Management, Inc.,
 
  a Delaware corporation
 
  Its: General Partner

                  By:   /s/ Paul J. Maddock       Its: Pres.          

2

--------------------------------------------------------------------------------

 

         

Exhibit A
1. ANDERSON COUNTRY ESTATES, L.P., a Missouri partnership

  •   Amended and Restated Agreement and Certificate of Limited Partnership
dated as of December 1,1988     •   Amendment to Amended and Restated Agreement
and Certificate of Limited Partnership dated as of July 1, 1990     •  
Amendment Certificate of Limited Partnership filed January 9, 1992

 

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of the payment by Bayfield Low Income Housing Limited
Partnership (“Assignee”) of Twenty-Two Thousand One Hundred Sixty-one and No/100
($22,161) Dollars, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bayfield Acquisition Limited
Partnership (“Assignor”) hereby assigns and transfers to Assignee the following:
All of Assignor’s limited partnership interest under each and every Operating
Partnership Agreement, as amended (as identified on the Exhibit A that is
attached to this Assignment and Assumption, — the “Transferred Interests”),
consisting of all of Assignor’s rights, interests, powers, and obligations as
the Additional Limited Partner with respect to such Transferred Interests, and
Assignor’s Accounts Receivable due from such Operating Partnerships with respect
to, and to the extent of, the Transferred Interests, it being intended to be the
same interests assigned by Assignee to Assignor by that Assignment and
Assumption agreement effective as of January 1, 2004.
          Assignee hereby assumes and agrees to timely and faithfully perform
(i) all obligations of Assignor as the Additional Limited Partner under the
respective Operating Partnership agreement, as amended (as identified on the
Exhibit A that is attached to this Assignment and Assumption), with respect to,
and to the extent of, the Transferred Interests arising from and after
January 1,2004, and (ii) the eight percent (8%) interest obligation still due by
Assignee to ANDERSON COUNTRY ESTATES, L.P. in the amount of, as of January 1,
2004, approximately $10,804 in the aggregate, which amount is fixed, does not
accrue additional interest, and is payable pursuant to Article 15 (l)(a)(ii) of
the Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In re
Bayfield Estates Limited Partnership and Related Cases (Bankruptcy EDNY
Chapter 11 Case Nos. 189-92514 through 189-92516, 189-92683, 189-92817 through
189-92823, 189-92838 through 189-92842, & 189-92955 through 189-92992) (the
“Plan”) as a first priority from the proceeds of any Capital Events (the “8%
Interest Obligation”), it being intended to be the same obligations assumed by
Assignor by that Assignment and Assumption agreement effective as of January 1,
2004.
          Assignor and Assignee agree that the remaining outstanding balance of
the November Subsequent Loan Promissory Note as of January 1, 2004 was $41,159,
which has continued to accrue interest at the rate of Five Percent (5.0%) per
annum in accordance with the November Subsequent Loan Promissory Note since
January 1, 2004.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of January 1, 2005.

     
ASSIGNEE
  BAYFIELD ACQUISITION LIMITED
 
  PARTNERSHIP, a Minnesota limited partnership
 
  By: Bayfield Acquisition, LLC
 
  a Minnesota limited liability company
 
  Its: General Partner

                  By:   /s/ [ILLEGIBLE]      Its:  Manager             

     
ASSIGNOR
  BAYFIELD LOW INCOME HOUSING
 
  LIMITED PARTNERSHIP,
 
  a Delaware limited partnership
 
  By: Megan Asset Management, Inc.,
 
  a Delaware corporation
 
  Its: General Partner

                  By:   /s/ Paul J. Maddock      Its: Pres.          

2

--------------------------------------------------------------------------------

 

         

Exhibit A
1. ANDERSON COUNTRY ESTATES, L.P., a Missouri partnership

  •   Amended and Restated Agreement and Certificate of Limited Partnership
dated as of December 1, 1988     •   Amendment to Amended and Restated Agreement
and Certificate of Limited Partnership dated as of July 1, 1990     •  
Amendment Certificate of Limited Partnership filed January 9, 1992

 

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of $10,874 in hand paid from Assignee and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bayfield Low Income Housing Limited Partnership (“Assignor”)
hereby:

  1)   assigns and transfers to Dominium Acquisition Limited Partnership
(“Assignee”) the following:         Forty-nine and one-half percentage (49.5%
points) of all of Assignor’s rights, interests, powers and obligations as the
Limited or Investor Partner under the Partnership Agreement, as amended (the
“Partnership Agreement”), of OAKWOOD APARTMENTS, L. P., a Missouri limited
partnership (the “Partnership”) in which Assignor owns an interest, including
forty-nine and one-half percentage points (49.5% points) of Assignor’s Accounts
Receivable due from the Partnership, excluding any Annual Distributions due
Assignor from the Partnership;

and

  2)   as grantee of all of Continental Construction Management Corporation’s
(“Continental”) rights, title and interests in and to any and all amounts
payable to Continental under the Plan (“Continental Interests”) pursuant to that
Bill of Sale, Assignment and Power of Attorney, granted it in December, 1991,
Assignor does hereby release Assignee from and assume and indemnify and hold
Assignee harmless from the payment of One Hundred percentage (100% points) of
any Continental Interests with respect to the Partnership, including, but not
limited to those Continental Interests to which Megan Asset Management, Inc.
(“Megan”) is or may become entitled with respect to the Partnership and agrees
to timely pay the same to Megan.

Assignee hereby assumes and agrees to timely and faithfully perform forty-nine
and one-half percentage (49.5% points) of all obligations of Assignor:

  1)   as the Limited or Investor Partner under the Partnership Agreement
arising from and after the effective date hereof, except the Continental
Interests.     2)   with respect to the eight percent (8%) interest in the
amount of approximately Ten Thousand Eight Hundred Four and No/100 ($10,804)
Dollars still due by Assignor to the Partnership payable pursuant to Article 15
(1)(a)(ii) of the Plan as a first priority from the proceeds of any

 

--------------------------------------------------------------------------------

 

      Capital Events.

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of April 10, 2004.

     
 
  BAYFIELD LOW INCOME HOUSING
ASSIGNOR
  LIMITED PARTNERSHIP,
 
  a Delaware limited partnership
 
  By: Megan Asset Management, Inc.,
 
  a Delaware corporation
Its: General Partner

             
 
  By:        
 
     
 
   
 
  Its:        
 
     
 
   

     
 
  BAYFIELD ACQUISITION LIMITED
ASSIGNEE
  PARTNERSHIP, a Minnesota limited partnership
 
  By: Bayfield Acquisition, LLC
 
  a Minnesota limited liability company
 
  Its: General Partner

             
 
  By:        
 
     
 
   
 
  Its:   Manager    

2

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of $2,923 in hand paid from Assignee and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bayfield Low Income Housing Limited Partnership (“Assignor”)
hereby:

  1)   assigns and transfers to Dominium Acquisition Limited Partnership
(“Assignee”) the following:         Forty-nine and one-half percentage (49.5%
points) of all of Assignor’s rights, interests, powers and obligations as the
Limited or Investor Partner under the Partnership Agreement, as amended (the
“Partnership Agreement”), of PERRY APARTMENTS, L.P. , a Missouri limited
partnership (the “Partnership”) in which Assignor owns an interest, including
forty-nine and one-half percentage points (49.5% points) of Assignor’s Accounts
Receivable due from the Partnership, excluding any Annual Distributions due
Assignor from the Partnership;

and

  2)   as grantee of all of Continental Construction Management Corporation’s
(“Continental”) rights, title and interests in and to any and all amounts
payable to Continental under the Plan (“Continental Interests”) pursuant to that
Bill of Sale, Assignment and Power of Attorney, granted it in December, 1991,
Assignor does hereby release Assignee from and assume and indemnify and hold
Assignee harmless from the payment of One Hundred percentage (100% points) of
any Continental Interests with respect to the Partnership, including, but not
limited to those Continental Interests to which Megan Asset Management, Inc.
(“Megan”) is or may become entitled with respect to the Partnership and agrees
to timely pay the same to Megan.

Assignee hereby assumes and agrees to timely and faithfully perform forty-nine
and one-half percentage (49.5% points) of all obligations of Assignor:

  1)   as the Limited or Investor Partner under the Partnership Agreement
arising from and after the effective date hereof, except the Continental
Interests.     2)   with respect to the eight percent (8%) interest in the
amount of approximately Two Thousand Five Hundred Seventy-eight and No/100
($2,578) Dollars still due by Assignor to the Partnership payable pursuant to
Article 15 (1)(a)(ii) of the Plan as a first priority from the

 

--------------------------------------------------------------------------------

 

      proceeds of any Capital Events.

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of April 10, 2004.

     
 
  BAYFIELD LOW INCOME HOUSING
ASSIGNOR
  LIMITED PARTNERSHIP,
 
  a Delaware limited partnership
 
  By: Megan Asset Management, Inc.,
 
  a Delaware corporation
Its: General Partner

             
 
  By:        
 
     
 
   
 
  Its:        
 
     
 
   

     
 
  BAYFIELD ACQUISITION LIMITED
ASSIGNEE
  PARTNERSHIP, a Minnesota limited partnership
 
  By: Bayfield Acquisition, LLC
 
  a Minnesota limited liability company
 
  Its: General Partner

             
 
  By:        
 
     
 
   
 
  Its:   Manager    

2

--------------------------------------------------------------------------------

 

EXHIBIT P
POWER OF ATTORNEY
THE UNDERSIGNED, having entered into that certain PURCHASE AGREEMENT made and
entered into as of the 27th day of August, 2003, by and between Bayfield Low
Income Housing Limited Partnership, as Seller (the “Investor Partner”), and
Bayfield Acquisition Limited Partnership (“BALP”), the Additional Limited
Partner as Buyer (the “Purchase Agreement”), for the acquisition of [Forty-nine
and one-half percentage (49.5% points)or thirty-three percentage (33% points)or
Sixteen and one-half percentage (16.5% points) or One Hundred percentage (100%
points)— whichever is applicable] of the Investor Partner’s rights, interests,
powers and obligations as the Limited or Investor Partner under that certain
AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF
[Operating Partnership Name], effective as of the                     day of
                    , 198___, as amended, (the “Operating Partnership
Agreement”) and desiring to be admitted to the Operating Partnership Agreement
and Operating Partnership as an Additional Limited Partner, the Undersigned
hereby agrees to bound by the terms and provisions of the Operating Partnership
Agreement and hereby joins in the execution of the Operating Partnership
Agreement and authorizes this document to be attached thereto.
The Undersigned hereby irrevocably constitutes and appoints the general partner
of the Operating Partnership (the “General Partner”) as its true and lawful
attorney-in-fact, with full power of substitution and delegation, for it and in
its name, place and stead and for its use and benefit, to execute, acknowledge,
certify, swear to, file and record (i) the Partnership Agreement and all
amendments thereto, (ii) any other certificates and limited partnership required
by law and all amendments thereto, (iii) any other certificates or instruments
which may be required to be filed by the Partnership under the laws of any state
or by any Governmental Agency, or which the General Partner may deem appropriate
to file and (iv) any documents which may be required to effect the continuation
of the Partnership, the admission of the Undersigned as an additional or
substitute Limited Partner.
This Power of Attorney shall (i) be deemed coupled with an interests, (ii) be
irrevocable and shall survive the dissolution of the Undersigned and
(iii) survive the delivery of any assignment by the Undersigned of all or any
part of the Undersigned’s Interest in the Partnership, except that where the
assignee thereof has been admitted to the Partnership as a substituted Limited
Partner, this Power of Attorney shall survive the delivery of such assignment
for the sole purpose of enabling the General Partner to execute, acknowledge,
certify, swear to, file and record any instrument(s) necessary to effect such
substitution.
IN WITNESS WHEREOF, the Undersigned hereby executes this document both
individually

--------------------------------------------------------------------------------

 

and as a Limited Partner of the Partnership as of the ___day of ___, 2003.

     
 
  BAYFIELD ACQUISITION LIMITED
 
  PARTNERSHIP
 
  Additional Limited Partner
 
Witness
  a Minnesota limited partnership

  By: Bayfield Acquisition, LLC
 
  a Minnesota limited liability company
 
  Its: General Partner
 
   
 
  By:                                                               
 
       Its:   Manager

2

--------------------------------------------------------------------------------

 

ASSIGNMENT AND ASSUMPTION
          In consideration of the agreement by Bayfield Acquisition Limited
Partnership (“Assignee”) to treat this transfer as a partial payment of the
outstanding indebtedness that Bayfield Low Income Housing Limited Partnership
(“Assignor”) owes to Assignee pursuant to (i) the Promissory Note dated
April 16, 2003 in the original principal amount of $116,130 that Assignor gave
to Dominium Development & Acquisition, LLC (“DDA”) and that DDA assigned to
Assignee and (ii) the Promissory Note dated July 18, 2003 in the original
principal amount of $46,335 that Assignor gave to DDA and that DDA assigned to
Assignee (collectively, the “Promissory Notes”), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor hereby assigns and transfers to Assignee the following:
Forty-nine and one-half percentage points (49.5% points) of Assignor’s limited
partnership interest under each, and every Operating Partnership Agreement, as
amended (as identified on the Exhibit A that is attached to this Assignment and
Assumption — the “Transferred Interests”), consisting of all of Assignor’s
rights, interests, powers, and obligations as the Limited or Investor Partner
with respect to such Transferred Interests, and Assignor’s Accounts Receivable
due from such Operating Partnerships with respect to, and to the extent of, the
Transferred Interests, excluding any Annual Distributions due Assignor from any
such Operating Limited Partnership.
          Assignee hereby assumes and agrees to timely and faithfully perform
all obligations of Assignor as the limited or Investor Partner under the
respective Operating Partnerships’ agreements, as amended (as identified on the
Exhibit A that is attached to this Assignment and Assumption), with respect to,
and to the extent of, the Transferred Interests arising from and after
January 1, 2004, the effective date hereof. Assignee’s assumption does not
include, and shall not be understood or interpreted to include, the assumption
of any obligation that Assignor may have under any of (i) the Joint Plan of
Reorganization of 52 Debtors dated May 9, 1990 — In re Bayfield Estates Limited
Partnership and Related Cases (Bankruptcy EDNY Chapter 11 Case Nos. 189-92514
through 189-92516, 189-92683, 189-92817 through 189-92823, & 189-92955 through
189-92992) (the “Plan”), (ii) that certain letter settlement agreement dated
December 4, 1991 from Assignor and addressed to First American Holdings, Inc.;
(iii) Amended and Restated Management Agreement dated as of July 10, 1990
between Assignor and Megan Asset Management, Inc.; (iv) any amendments of,
restatements of, or successors to any of the documents that are listed in the
preceding clauses (i), (ii), or (iii). Without limiting the preceding sentence,
each of Assignor and Megan Asset Management, Inc. (“Megan”) specifically
acknowledges and agrees that neither Assignee nor any of the Operating Limited
Partnerships that are identified on the Exhibit A has any obligation with
respect to the rights that Continental Construction Management Corporation
originally had under the Plan and, at least as to some of which, Borrower and
Megan succeeded.
          Assignor and Assignee agree that (i) the outstanding aggregate balance
of the Promissory Notes as of January 1, 2004 is $167,734, (ii) the amount of
the partial payment that

 

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Assignor is deemed to be making by assigning the Transferred Interests is
$83,028, and (iii) the remaining outstanding aggregate balance of the Promissory
Notes is $84,706, which will continue to accrue interest at the rate of Five
Percent (5.0%) per annum in accordance with the Promissory Notes.
          IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption effective as of January 1, 2004.

          ASSIGNOR   BAYFIELD LOW INCOME HOUSING     LIMITED PARTNERSHIP,     a
Delaware limited partnership
 
  By:   Megan Asset Management, Inc.,
 
      a Delaware corporation
 
  Its:   General Partner
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
  Its:   President
 
        ASSIGNEE   BAYFIELD ACQUISITION LIMITED     PARTNERSHIP, a Minnesota
limited partnership
 
  By:   Bayfield Acquisition, LLC
 
      a Minnesota limited liability company
 
  Its:   General Partner
 
       
 
  By:   [ILLEGIBLE]
 
       
 
  Its:   Manager

 
ACKNOWLEDGED AND AGREED AS TO THE LAST SENTENCE OF THE SECOND PARAGRAPH:

              MEGAN ASSET MANAGEMENT, INC.,     a Delaware corporation
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
  Its:   President

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Exhibit A

1.   Blanchard Seniors Apartments, a Louisiana partnership in commendam

  *   Amended and Restated Agreement and Certificate of Limited Partnership
dated as of November 1, 1987     *   Amendment to Amended and Restated Agreement
and Certificate of Limited Partnership dated as of July 1, 1990     *   First
Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated September 21, 2000     *   Amendment to Articles of
Partnership dated June 4, 2001

2.   Bunkle Seniors Apartments, a Louisiana partnership in commendam

  *   Amended and Restated Agreement and Certificate of Limited Partnership
dated a of November 1, 1987     *   Amendment to Amended and Restated Agreement
and Certificate of Limited Partnership dated as of July 1, 1990     *   First
Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated September 20, 2000     *   Amendment to Articles of
Partnership dated June 4, 2001

3.   Cottonwood Seniors Apartments, a Louisiana partnership in commendam Amended
and Restated

  *   Agreement and Certificate of Limited Partnership dated as of August 1,
1988     *   Amendment to Amended and Restated Agreement and Certificate of
Limited Partnership dated as of July 1, 1990     *   First Amendment to Amended
and Restated Agreement and Certificate of Limited Partnership dated
September 20, 2000     *   Amendment to Articles of Partnership dated June 4,
2001

4.   Lockport Seniors Apartments (a/k/a Donaldsonville Seniors), a Louisiana
partnership in commendam

  *   Amended and Restated Agreement and Certificate of Limited Partnership
dated as of June 1, 1988     *   Amendment to Amended and Restated Agreement and
Certificate of Limited Partnership dated as of July 1, 1990     *   First
Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated September 18, 2000     *   Amendment to Articles of
Partnership dated June 4, 2001

5.   Many Seniors Apartments, a Louisiana partnership in commendam

  *   Amended and Restated Agreement and Certificate of Limited Partnership
dated as of August 1, 1988     *   Amendment to Amended and Restated Agreement
and Certificate of Limited Partnership dated as of July 1, 1990     *  
Amendment to Articles of Partnership dated June 4, 2001     *   Amendment to
Amended and Restated Agreement and Certificate of Limited Partnership dated
October 2, 2001

 

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(DOMINIUM LOGO) [w14889w1488903.gif]
FACSIMILE

             
TO:
  Paul Markwardt   FAX#:   (612) 604-6800
 
           
FROM:
  Sandy for Tom McAllister   VOICE:   (763) 354-5605
 
           
DATE:
  January 24, 2005   FAX:   (763) 354-5650

Number Of Pages Being Transmitted — Including This Cover Sheet: 9
COMMENTS:
Re: Bayfield
Attached are the executed Collateral Assignment and Assumption Agreement, &
Assignment and Assumption
Please call Tom at (763) 354-5604 if you have any questions, Thank you.
Sandy
                     Sent Via Federal Express
                     Sent Via UPS
                     Sent Via Courier Service
                     Sent Via U. S. Postal Service
                     Other
If Fax Is Not Received Properly, Please Call (612) 354-5500
NOTICE— CONFIDENTIAL INFORMATION
The information in this fax communication is privileged and strictly
confidential. It is intended solely for the use of the individual of entity
named above. If the reader of this message is not the intended recipient, or the
employee or agent responsible to deliver it to the intended recipient, any
dissemination, distribution, copying, or other use of the information contained
in this communication is strictly prohibited. If you have received this
communication in error, please first notify the sender immediately at the above
telephone number of your erroneous receipt and then return this fax
communication at once to the sender at the above address either via U. S. Postal
Service or by the method of delivery specified by the sender.
Minneapolis • Milwaukee • Chicago • Atlanta •Miami
2355 Polaris Lane North, Suite 100, Minneapolis, MN 55447 Phone (612) 354-5500
Fax (612) 354-5650
Development • Construction • Management

 

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COLLATERAL ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT, effective as of the 1st day of January 2004, by BAYFIELD LOW
INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an
office address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102,
Bismarck, N.D. 58503 (referred to herein as “Borrower”) and Bayfield Acquisition
Limited Partnership, a Minnesota limited partnership, having an office address
of 2355 Polaris Lane N, Suite 100, Minneapolis, MN 55447 (referred to herein as
“Assignee”).
     WHEREAS, Borrower and DDA (as hereinafter defined) entered into the
following transactions:

A.   THE LOAN       Pursuant to that certain Loan Agreement dated April 16, 2003
by and between Borrower and Dominium Development and Acquisition, LLC, as Lender
(“DDA”), as amended by that certain First Amendment to Loan Agreement dated as
of July 1, 2003 by and between the Borrower and DDA (collectively the “Loan
Agreement”), Lender agreed to and loaned (i) $162,465 to Borrower evidenced by
the Promissory Note dated April 16, 2003 in the original principal amount of
$116,130 that Borrower gave to DDA and that DDA assigned to Assignee and (ii)
$46,335 to Borrower (collectively the “Loan”) evidenced by the Promissory Note
dated July 18, 2003 in the original principal amount of $46,335 that Borrower
gave to DDA and that DDA assigned to Assignee (collectively, the “Loan
Promissory Notes”).       To secure the Loan, Borrower executed and delivered to
Lender a Security Agreement dated April 16, 2003, granting Lender a security
interest to Borrower’s limited partnership interests (the “Partnership
Interests”) in BLANCHARD SENIORS APARTMENTS, BUNKIE SENIORS APARTMENTS,
COTTONWOOD SENIORS APARTMENTS, LOCKPORT SENIORS APARTMENTS (AKA DONALDSONVILLE
SENIORS) and MANY SENIORS APARTMENTS, each a Louisiana limited partnership (the
“Loan Collateral Partnerships”).   B.   THE SUBSEQUENT LOAN       Pursuant to
that certain SUBSEQUENT LOAN AGREEMENT, made the 19th day of September 2003, by
Borrower and DDA, DDA agreed to and made a further loan to Borrower in the
amount of $120,000 (the “September Subsequent Loan”) evidenced by the Promissory
Note dated September_____, 2003 in the original principal amount of $120,000
that Borrower gave to DDA and that DDA assigned to Assignee (the “September
Subsequent Loan Promissory Note”) and agreed to make further loans each in the
amount of $60,000 on the tenth (10th) day of each of October and November, 2003
(the “October Subsequent Loan” and “November Subsequent Loan” respectively).

 

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    To secure the September Subsequent Loan, Borrower executed and delivered to
Lender a Subsequent Loan Security Agreement dated September 18, 2003, granting
Lender a security interest in the Borrower’s Partnership Interests in COUSHATTA
SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, SOUTHERN APARTMENTS, A
LOUISIANA PARTNERSHIP IN COMMENDAM, OAKDALE SENIOR APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM, each a Louisiana limited partnership and JOAQUIN
APARTMENTS, LTD. and PECANWOOD APARTMENTS III, LTD., each a Texas limited
partnership (the “Subsequent Loan Collateral Partnerships”).   C.   THE FIRST
AMENDMENT TO SUBSEOUENT LOAN       Pursuant to that certain FIRST AMENDMENT TO
SUBSEQUENT LOAN AGREEMENT, made the 19th day of September 2003, by Borrower and
DDA, DDA agreed to and made a further loan to Borrower in the amount of $60,000
(the “October Subsequent Loan”) evidenced by the Promissory Note dated
October 17, 2003 in the original principal amount of $60,000 that Borrower gave
to DDA and that DDA assigned to Assignee (the “October Subsequent Loan
Promissory Note”).       To secure the October Subsequent Loan, Borrower
executed and delivered to Lender a Second Subsequent Loan Security Agreement
dated November 17, 2003, granting Lender a security interest in the Borrower’s
Partnership Interests in OAKWOOD APARTMENTS, LTD. and PERRY APARTMENTS, L.P.,
each a Missouri limited partnership (the “Missouri Collateral Partnerships”).  
D.   THE SECOND AMENDMENT TO SUBSEQUENT LOAN       Pursuant to that certain
SECOND AMENDMENT TO SUBSEQUENT LOAN AGREEMENT, made the 10th day of
November 2003, by Borrower and DDA, DDA agreed to and made a further loan to
Borrower in the amount of $60,000 (the “November Subsequent Loan”) evidenced by
the Promissory Note dated November 10, 2003 in the original principal amount of
$60,000 that Borrower gave to DDA and that DDA assigned to Assignee (the
“November Subsequent Loan Promissory Note”).       To secure the November
Subsequent Loan, Borrower executed and delivered to Lender a Third Subsequent
Loan Security Agreement dated November 10,2003, granting Lender a security
interest in the Borrower’s Partnership Interests in AFM RRH, LTD., a Florida
limited partnership and ANDERSON COUNTRY ESTATES, L.P., a Missouri limited
partnership (the “Third Subsequent Loan Collateral Partnerships”).

     WHEREAS, Assignee has elected to accept Borrower’s Partnership Interests in
the Loan Collateral Partnerships, the Subsequent Loan Collateral Partnerships,
the Missouri Collateral Partnerships and the Third Subsequent Loan Collateral
Partnerships in repayment of and in satisfaction of the Loan Promissory Notes,
the September Subsequent Loan Promissory Note, the October Subsequent Loan
Promissory Note and the November Subsequent Loan Promissory Note (collectively
the “Indebtedness”), such that it will not cause a technical termination of any
of the Collateral Partnerships.

2

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     NOW, THEREFORE, for food and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and the mutual covenants herein,
contained, the parties mutually agree as follows:
1) Pursuant to the election of Assignee to accept part of the Collateral
Partnerships as a partial payment of the outstanding Indebtedness that Borrower
owes to Assignee:
(a) Effective as of January 1, 2004, Borrower will assign and transfer to
Assignee forty-nine and one-half percentage points (49.5% points) of Its
interests in each of the Collateral Partnership, consisting of all of Assignor’s
rights, interests, powers, and obligations as the Limited or Investor Partner
with respect to such Transferred Interests, and Borrower’s Accounts Receivable
due from such Collateral Partnerships with respect to, and to the extent of, the
Transferred Interests, excluding any Annual Distributions due Borrower from any
such Collateral Partnerships as long as Borrower owns any interest therein and
must have any asset management services provided for it in connection therewith.
(b) Effective as of January 1,2004, Assignee will assume and agree to timely and
faithfully perform (i) all obligations of Borrower as the Limited or Investor
Partner under the respective Collateral Partnerships agreements, as amended (as
identified on the Exhibit A that is attached to this Assignment), and (ii) the
eight percent (8%) interest obligation still due by Borrower to the Missouri
Collateral Partnerships and Anderson Country Estates, L.P. in the amount of, as
of January 1, 2004, approximately $24,256 in the aggregate as to all three
partnerships, which amount is fixed, does not accrue additional interest, and is
payable pursuant to Article 15(l)(a)(ii) of the Plan as a first priority from
the proceeds of any Capital Events (the “8% Interest Obligation”) and, as to
each of (i) and (ii), with respect to, and to the extent of, the Transferred
Interests arising, except as to the 8% Interest Obligation, from and after
January 1, 2004, the effective date hereof. Assignee’s assumption does not
include, and shall not be understood or interpreted to include, the assumption
of any obligation that Borrower may have under any of (i) the Joint Plan of
Reorganization of 52 Debtors dated May 9, 1990 — In re Bayfield Estates Limited
Partnership and Related Cases (Bankruptcy EDNY Chapter 11 Case Nos. 189-92514
through 189-92516,189- 92683, 189-92814 through 189-92823, 189-92838 through
189-92842, & 189- 92955 through 189-92992) (the “Plan”), except 8% Interest
Obligation; (ii) that certain letter settlement agreement dated December 4,1991
from Borrower and addressed to First American Holdings, Inc.; (iii) Amended and
Restated Management Agreement dated as of July 10, 1990 between Borrower and
Megan Asset Management, Inc.; and (iv) any amendments of, restatements, of or
successors to any of the documents that are listed in the preceding clauses (i),
(ii) or (iii). Without limiting the preceding sentence, each of Borrower and
Megan Asset Management, Inc. (“Megan”) will specifically acknowledge and agree
that neither Assignee nor any of the Collateral Partnerships that are identified
on the Exhibit A has any obligation with respect to the rights that Continental
Construction Management Corporation originally had under the Plan and, at least
es to some of which, Borrower and Megan succeeded.

3

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2) Pursuant to the election of Assignee to accept the balance of Borrower’s
Partnership Interest in the Collateral Partnerships as payment of the balance of
principal and interest on the outstanding Indebtedness that Borrower owes to
Assignee:
(a) Borrower will assign and transfer to Assignee one hundred percentage points
(100% points) of its remaining interests in each of the Collateral Partnership
twelve (12) months and one (1) day from the execution of this Agreement,
including any Annual Distributions due Borrower from any such Collateral
Partnerships, with all Tax Items (as defined in each Collateral Partnership
Agreement) for the year 2005 relating to the Borrower’s remaining interests in
the Collateral Partnerships allocated to Assignor; and
(b) Assignee will assume and agree to timely and faithfully perform all
obligations of Borrower as the Limited or Investor Partner under the respective
Collateral Partnerships’ agreements, as amended (as identified on the Exhibit A
that is attached to this Assignment), with respect to, and to the extent of, the
Transferred Interests arising from and after twelve (12) months and one (1) day
from the execution of this Agreement. Assignee’s assumption does not include,
and shall not be understood or interpreted to include, the assumption of any
obligation that Borrower may have under any of (i) the Plan, except the 8%
Interest Obligation; (ii) that certain letter settlement agreement dated
December 4, 1991 from Borrower and addressed to First American Holdings, Inc.,
(iii) Amended and Restated Management Agreement dated as of July 10, 1990
between Borrower and Megan Asset Management, Inc., (iv) any amendments of,
restatements of, or successors to any of the documents that an listed in the
preceding clauses (i), (ii), or (iii). Without limiting the preceding sentence,
each of Borrower and Megan Asset Management, Inc. will specifically acknowledge
and agree that neither Assignee nor any of the Collateral Partnerships that are
identified on the Exhibit A has any obligation with respect to the rights that
Continental Construction Management Corporation originally had under the Plan.
3) This Agreement and the exhibit attached embodies the entire agreement between
the parties with relation to the transactions contemplated hereby, and there
have been and are no covenants, agreements, representations, warranties or
restrictions between the parties with regard thereto.
4) The undersigned agree that this instrument may be signed in any number of
counterparts, each of which will constitute an original, and that a facsimile
copy of any signature of any party will be deemed as enforceable and effective
as an original signature. All such counterparts together will constitute one and
the same instrument.

4

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     IN WITNESS WHEREOF, the undersigned have executed this AGREEMENT effective
as of the above written-date.

          BORROWER   BAYFIELD LOW INCOME HOUSING     LIMITED PARTNERSHIP,     a
Delaware limited partnership
 
  By:   Megan Asset Management, Inc.,
 
      a Delaware corporation
 
  Its:   General Partner
 
       
 
  By:   /s/ Paul J. Maddock
 
       
 
  Its:   Pres.
 
        ASSIGNEE   BAYFIELD ACQUISITION LIMITED     PARTNERSHIP, a Minnesota
limited partnership
 
  By:   Bayfield Acquisition, LLC
 
      a Minnesota limited liability company
 
  Its:   General Partner
 
       
 
  By:   /s/ [ILLEGIBLE]
 
       
 
  Its:   Manager

5