PROMISSORY NOTE


$2,635,000.00         Dallas, Texas              May 13, 1998


         FOR VALUE RECEIVED, VILLAGE FUND XI ASSOCIATES LIMITED PARTNERSHIP,  an
Oregon limited  partnership  ("Maker"),  hereby  promises to pay to the order of
NATIONSBANK OF TEXAS, N.A., a national banking  association  ("Lender"),  at its
banking house in the City of Dallas,  Dallas County, Texas, the principal sum of
TWO MILLION SIX HUNDRED THIRTY-FIVE THOUSAND AND NO/100 DOLLARS  ($2,635,000.00)
(the  "Maximum  Principal  Amount")  (or the  unpaid  balance  of all  principal
advanced  against this Note, if that amount is less),  together with interest on
the  unpaid  principal  balance  of this  Note from day to day  outstanding,  as
hereinafter provided.

         1.       Definitions. When used in this Note, the following terms shall
have the following meanings:

                  (a) "Adjusted  LIBOR Rate" means a rate per annum equal to the
         quotient   (rounded   upwards,   if  necessary,   to  the  next  higher
         one/one-hundredth [1/100] of one percent [1%]) obtained by dividing (i)
         the applicable  "Euro-Dollar  Rate" (as such term is hereafter defined)
         by (ii) 1.00 minus the "Euro-Dollar  Reserve  Percentage" (as such term
         is hereafter  defined) and increased by the amount of any  impositions,
         assessments  or other reserves  (collectively,  the  "Assessments")  to
         which Lender or any participant (a "Participant") in the Loan may be or
         become  subject,  including,  but not  limited  to, the cost of Federal
         Deposit Insurance Corporation  insurance or other insurance,  and other
         fees,  assessments  and  surcharges  allocable to Lender's  sale of the
         certificate(s)  of deposit that  establish  the  Euro-Dollar  Rate with
         respect to a particular  Matching  Funds  Election;  provided  that the
         Adjusted LIBOR Rate shall  automatically  be adjusted from time to time
         during  the  term of a  Matching  Funds  Election  to  account  for any
         fluctuations in the Euro-Dollar  Reserve Percentage and the other costs
         to Lender of such Assessments.

                  (b)  "Election" means a Matching Funds Election.

                  (c)  "Euro-Dollar   Business Days" means any domestic business
         day  on  which  commercial  banks  are open for international  business
         (including dealings in U.S. dollar deposits) in London.

                  (d) "Euro-Dollar  Reserve Percentage" means for any day during
         the term of this Note, that percentage (expressed as a decimal) that is
         in  effect  on such  day,  as the same is  prescribed  by the  Board of
         Governors  of  the  Federal  Reserve  System  (or  its  successor)  for
         determining  the  maximum   reserve   requirement  for  Lender  or  any
         Participant in respect of "Euro-currency liabilities" (or in respect of
         any other category of liabilities which includes deposits, by reference
         to  which  the  interest  rate on a  borrowing  is  determined,  or any
         category of extensions of credit or other assets which  includes  loans
         by a non-United States office of any bank to United States residents).

                  (e)  "Formula   Rate"  means  the  per  annum  interest  rate,
         calculated for the  applicable  day, equal to the "Prime Rate" (as such
         term is hereafter defined) for that day, computed for the actual number
         of calendar  days elapsed  during  which the  principal of this Note is
         outstanding  but as if each year consisted of 360 days,  subject to the
         controlling terms of Section 2(d) hereinbelow.
<PAGE>
                  (f)  "Euro-Dollar  Rate"  means  the rate per  annum  (rounded
         upwards,  if  necessary,  to the  nearest  1/100  of 1%)  appearing  on
         Telerate  Page 3750 (or any  successor  page) as the  London  interbank
         offered rate for deposits in U.S. dollars at  approximately  11:00 a.m.
         (London  time) two Business Days prior to the first day of any interest
         period for a term comparable to such interest period. If for any reason
         such rate is not available,  the term "Eurodollar  Rate" shall mean the
         rate per annum (rounded upwards, if necessary,  to the nearest 1/100 of
         1%)  appearing  on Reuters  Screen  LIBO Page as the  London  interbank
         offered rate for deposits in U.S. dollars at  approximately  11:00 a.m.
         (London  time) two Business  Days prior to the first day of an interest
         period  for a  term  comparable  to  such  interest  period;  provided,
         however,  if more than one rate is  specified  on Reuters  Screen  LIBO
         Page,  the  applicable  rate shall be the  arithmetic  mean of all such
         rates.


                  (g) "Matching  Funds  Election"  means an election by Maker to
         cause  the  principal  balance  of the  Loan  to be  segregated  into a
         separate account and to bear interest at the applicable "Matching Funds
         Rate"  rather  than the  "Stated  Rate" (as such  terms  are  hereafter
         defined) for the term of the Election.

                  (h)      "Matching Funds Principal" means the then-outstanding
         principal balance of the Loan at  the time of an effective Election.

                  (i)   "Matching   Funds   Rate"   means  a  rate  one  hundred
         seventy-five (175) basis points (the "LIBOR Rate Adjustment") per annum
         in excess of the Adjusted LIBOR Rate as it exists from time to time.

                  (j)  "Maturity  Date"  means  the first to occur of (i) May 1,
         2001; (ii) the date on which the entity  comprising the Maker ceases to
         exist; or (iii) the date on which Maker makes a Disposition [as defined
         in the  Mortgage  (hereinafter  defined)]  of all or any portion of the
         Property (hereinafter defined), other than a Permitted Disposition.

                  (k)  "Maximum  Rate"  means the  maximum  nonusurious  rate of
         interest per annum  permitted by whichever of applicable  United States
         federal law or Texas law permits the higher interest rate, including to
         the  extent  permitted  by  applicable  law,  any  amendments   thereof
         hereafter or any new law  hereafter  coming into effect to the extent a
         higher Maximum Rate is permitted  thereby.  To the extent, if any, that
         Chapter 1D of the Texas Credit Title (Articles 5069-1D.001 et seq.), as
         the same may be amended  (the  "Texas  Credit  Code")  establishes  the
         Maximum  Rate,  the  Maximum  Rate shall be the  "weekly  ceiling"  (as
         defined in the Texas Credit Code). The Maximum Rate shall be applied by
         taking into  account all amounts  characterized  by  applicable  law as
         interest on the debt  evidenced by this Note,  so that the aggregate of
         all interest does not exceed the maximum  nonusurious  amount permitted
         by applicable law.

                  (l) "Outstanding  Principal  Balance" means the portion of the
         Maximum Principal Amount then advanced and outstanding and payable from
         Maker to Lender in accordance with this Note. The Outstanding Principal
         Balance  shall  be  reduced  by any  Principal  Reduction  Payment  and
         interest  earned  on the  Principal  Reduction  Account,  as  described
         hereinbelow.

<PAGE>
                  (m) "Past Due Rate" means,  on any day, a rate per annum equal
         to the lesser of (a) the Maximum Rate, or (b) the Stated Rate plus four
         percent (4%) per annum  computed for the actual number of calendar days
         elapsed during which such a past due amount is outstanding.

                  (n) "Prime  Rate" means that  variable  rate of  interest  per
         annum  established  and announced by Lender at its principal  office in
         Dallas,  Texas from time to time as its "prime  rate." Such rate is set
         by Lender as a general reference rate of interest,  taking into account
         such factors as Lender may deem  appropriate,  it being understood that
         it is not necessarily  the lowest or best rate actually  charged to any
         customer or a favored rate and that Lender may make various business or
         other loans at rates of interest having no relationship to that rate.

                  (o) "Stated Rate" means, on any day, a rate per annum equal to
         and  calculated  on the basis of the  Formula  Rate.  If on any day the
         Stated Rate shall exceed the maximum  permitted by  application  of the
         Maximum  Rate in effect on that day,  the Stated Rate shall be fixed at
         the maximum  permitted by  application  of the Maximum Rate on that day
         and on each day thereafter  until the total amount of interest  accrued
         at the fixed Stated Rate on the unpaid  balance of this Note equals the
         total  amount of  interest  which  would have  accrued if there were no
         limitation  by the  Maximum  Rate and the  Stated  Rate had not been so
         fixed.

         2 Interest. As hereinafter provided, the principal balance of this Note
may be segregated into separate accounts and shall bear interest as follows:


                  (a) At any time when the principal  balance of this Note as is
         not subject to an effective Election, such balance shall constitute one
         account (the "Stated Rate Account") and shall bear interest prior to an
         Event of Default or maturity  at a varying  rate per annum equal to the
         lesser of (i) the Maximum Rate, or (ii) the Stated Rate.

                  (b) The principal  balance of this Note which may from time to
         time be subject to an effective  Election  shall  constitute a separate
         account (the "Matching Funds Account") and shall bear interest prior to
         an Event of Default or maturity at a rate per annum equal to the lesser
         of (i) the Maximum Rate, or (ii) the Matching Funds Rate  applicable to
         such Election.

                  (c)  Any  principal  of,  and  to  the  extent   permitted  by
         applicable  law any  interest  on, this Note which is not paid when due
         shall bear  interest at a varying  rate per annum equal to the Past Due
         Rate from the date due and payable until paid.

                  (d) Subject always to limitation by the Maximum Rate, interest
         on this Note shall be  calculated  on the basis of the 360-day  method,
         which  computes a daily amount of interest for a  hypothetical  year of
         360 days,  then  multiplies  such  amount by the actual  number of days
         elapsed in an interest calculation period.

                  (e) Without notice to Maker or anyone else, the Prime Rate and
         the Maximum Rate shall each automatically fluctuate upward and downward
         as and in the amount by which the Lender's  prime rate and such maximum
         nonusurious rate of interest permitted by applicable law, respectively,
         fluctuate, subject always to limitation of the Stated Rate and the Past
         Due Rate by the Maximum Rate.
<PAGE>
         3        Payment of Principal and Interest.

                  (a) The entire principal  balance of this Note then unpaid and
         all interest then outstanding  shall be due and payable on the Maturity
         Date or upon any earlier termination of this Note.

                  (b) Accrued but unpaid  interest  shall be due and payable (i)
         in monthly  installments  beginning on June 1, 1998, (ii) continuing on
         the  first  (1st) day of each  consecutive  calendar  month  thereafter
         before  maturity,  and (iii) at the final maturity of this Note.  Maker
         agrees and acknowledges that Lender has no obligation to give notice to
         Maker of the amount of interest  which is due and  payable  each month.
         Maker further agrees and acknowledges that Maker is solely  responsible
         for, and shall not be relieved of, its  obligation to pay such interest
         on  the  first  day  of  each  month  until   maturity  of  this  Note,
         notwithstanding  the fact that  notice of such amount may not have been
         sent by Lender and/or received by Maker even if Lender  regularly gives
         such notice.

                  (c) Whenever any payment shall be due under this Note on a day
         which is not a "Business Day" (as such term is hereafter defined),  the
         date on  which  such  payment  is due  shall  be  extended  to the next
         succeeding  Business  Day.  "Business  Day"  means a day  other  than a
         Saturday,  Sunday or other day on which national banks in Dallas, Texas
         are authorized or required to be closed.

                  (d) All principal,  interest and other sums payable under this
         Note shall be paid,  not later than 2:00  o'clock p.m.  (Dallas,  Texas
         time) on the day when due, in immediately available funds and in lawful
         money of the  United  States of  America.  Funds  received  after  2:00
         o'clock p.m. (Dallas,  Texas time) shall be treated for all purposes as
         having been  received by Lender on the Business Day next  following the
         date of receipt of such funds. Any payment under this Note or under any
         other "Loan Document" (as such term is hereafter defined) other than in
         the  required  amount  in good,  unrestricted  U.S.  funds  immediately
         available to the holder hereof shall not,  regardless of any receipt or
         credit issued therefor, constitute payment until the required amount is
         actually  received by the holder hereof in such funds and shall be made
         and accepted  subject to the  condition  that any check or draft may be
         handled  for  collection  in  accordance   with  the  practice  of  the
         collecting bank or banks.


                  (e) Except to the extent specific  provisions are set forth in
         this Note or another  Loan  Document  with  respect to  application  of
         payments,  all payments received by the holder hereof shall be applied,
         to the extent thereof, to the "secured indebtedness" (as defined in the
         Mortgage)  in the order and manner  which the holder  hereof shall deem
         appropriate,    any   instructions   from   Maker   to   the   contrary
         notwithstanding.  All payments  made as scheduled on this Note shall be
         applied,  to the extent  thereof,  first to accrued but unpaid interest
         and the balance to unpaid principal. All prepayments on this Note shall
         be applied, to the extent thereof, first to accrued but unpaid interest
         which is then past due under the terms of this Note and the  balance to
         the remaining  principal  installments.  Nothing  herein shall limit or
         impair any rights of the holder hereof to apply as provided in the Loan
         Documents any past due payments,  any proceeds from the  disposition of


<PAGE>
         any collateral by foreclosure  or other  collections  after an Event of
         Default. Except to the extent specific provisions are set forth in this
         Note or another Loan Document with respect to  application of payments,
         all payments  received by the holder  hereof  shall be applied,  to the
         extent  thereof,  to the  indebtedness  secured by the Mortgage in such
         order and  manner as the holder  hereof  shall  deem  appropriate,  any
         instructions from Maker or anyone else to the contrary notwithstanding.

         4 Prepayment.  Maker may at any time pay the full amount or any part of
this Note  without  payment of any premium or fee;  provided,  however,  that if
Maker prepays any portion of the Matching  Funds Account prior to the expiration
of the term of the Matching  Funds  Election  applicable to such portion,  Maker
shall pay Lender  the  prepayment  charges  hereinafter  described  in Section 7
hereof. All prepayments shall be applied first to accrued interest,  the balance
to principal.  Such prepayment charges are not a penalty but, rather, are agreed
to by Maker and Lender as representing  reasonable charges for costs incurred by
Lender.

         5 Mortgage. This Note has been issued in connection with and is secured
by, among other things, a certain Deed of Trust, Assignment of Rents and Leases,
Security  Agreement and Fixture  Filing of even date herewith  executed by Maker
for the  benefit  of  Lender,  covering  and  affecting  certain  property  (the
"Property") located in Gresham,  Oregon, more fully described therein (which, as
it may have been or may be amended, restated, modified or supplemented from time
to time,  herein called the  "Mortgage").  Lender is entitled to the benefits of
and security provided for in the Mortgage. This Note, the Mortgage, any guaranty
executed  in  connection  therewith  and any  other  document  now or  hereafter
evidencing,  securing,  guaranteeing  or  executed in  connection  with the loan
currently  evidenced  by this Note are, as the same have been or may be amended,
restated,  modified or supplemented  from time to time,  herein sometimes called
individually  a "Loan  Document" and together the "Loan  Documents."  Terms used
herein with initial  capital  letters and not defined  herein,  if any, have the
meanings  given them in the  Mortgage.  Any notice  required  or which any party
desires to give under this Note shall be given and  effective as provided in the
Mortgage.

         6 Matching Funds Election.

                  (a) From time to time during the term of the Loan,  so long as
         no Event of Default has occurred and is continuing,  Maker may elect to
         cause  the  then-outstanding  principal  amount  of the  Loan  to  bear
         interest  at the  Matching  Funds Rate  rather  than the  Stated  Rate;
         provided,  however,  that (i) Maker may not exercise an Election at any
         time when the Matching  Funds Rate would exceed the Maximum Rate,  (ii)
         no more than one Election  may be in force at any time,  and (iii) such
         Election  must  include the entire  outstanding  principal of the Loan.
         Upon the effective  date of the Election,  the Loan shall bear interest
         prior to an Event of Default or maturity from the effective date of the
         Election to the end of the term of the Election at the  Matching  Funds
         Rate  applicable on the effective  date of the Election;  provided that
         the Matching  Funds Rate shall be adjusted from time to time during the
         term  of the  Election  in  accordance  with  any  fluctuations  in the
         Adjusted LIBOR Rate caused solely by  fluctuations  in the  Euro-Dollar
         Reserve  Percentage and the Assessments  referenced in Section l(a)(ii)
         hereinabove.




<PAGE>
                  (b) Maker shall inform Lender when Maker wishes to exercise an
         Election,  and  Lender  shall  advise  Maker as to the then  applicable
         Matching  Funds  Rates and the  available  periods  for which Maker may
         exercise the  Election.  To exercise the  Election,  Maker shall advise
         Lender by 1:00 p.m. (Dallas,  Texas time) at least three (3) days prior
         to the  desired  effective  date of the  Election  of (i)  the  desired
         effective  date  of the  election  and  (ii)  the  desired  term of the
         Election,  which term shall be a 30, 60, 90 day period,  provided  that
         the term of an Election for the  Adjusted  LIBOR Rate must not end on a
         day other than a Euro-Dollar Business Day, and no Election may end on a
         day that is later  than the  stated  maturity  date of this  Note.  The
         Election shall become  effective  three (3)  Euro-Dollar  Business Days
         following the date of Maker's  advising Lender of the particular  terms
         of the Election. On or before the effective date of the Election, Maker
         shall execute and deliver to Lender a written  confirmation  of (i) the
         amount of the Matching Funds  Principal,  (ii) the term of the Election
         and (iii) the initial Matching Funds Rate applicable to the Election.


                  (c) Maker may not extend an Election  beyond the original term
         thereof at the Matching Funds Rate applicable during the original term.
         However,  at the end of the  term of an  Election,  Maker  may  make an
         additional  Election  to cause the  Matching  Funds  Principal  to bear
         interest  at the  Matching  Funds  Rate  applicable  on the  day of the
         expiration of the prior Election for the term of the new Election by so
         advising  Lender  three  (3)  Euro-Dollar   Business  Days  before  the
         expiration  of the  prior  Election,  and  giving  to  Lender a written
         confirmation  by the  effective  date of the new Election in the manner
         specified above  accompanied by the payment of an additional fee if any
         is required by this Note.  Otherwise,  upon the expiration of the prior
         Election,  the Matching Funds Principal shall bear interest prior to an
         Event of Default or maturity at the Stated Rate.

                  (d)  Notwithstanding  any other provision of this Note, if (i)
         any  change  in   applicable   law,   rule  or  regulation  or  in  the
         interpretation  or  administration  thereof  shall make it unlawful for
         Lender to issue  certificates of deposit or impair or restrict Lender's
         ability to do so for terms and at rates which permit  Lender to respond
         to an Election by obtaining  funds at the Adjusted  LIBOR Rate, or (ii)
         Lender reasonably determines that by reason of circumstances  affecting
         the  Interbank   euro-dollar  market  generally,   either  adequate  or
         reasonable  means do not exist for ascertaining the Adjusted LIBOR Rate
         for any  period,  or  (iii)  Lender  reasonably  determines  that it is
         impracticable  for  Lender  to  obtain  funds  against  which  to match
         Matching Funds  Principal in connection with an Election (by purchasing
         U.S. Dollars in the Interbank euro-dollar market);  then, in any of the
         foregoing instances,  Maker's right to make any further Elections or to
         continue  any  Elections  then in  force  shall  be  suspended  for the
         duration of such illegality or impairment or restriction.

         7 Prepayment of Matching Funds Principal. If Maker prepays the Matching
Funds  Principal  prior  to the  expiration  of the term of the  Matching  Funds
Election  applicable  thereto,  Maker  shall pay Lender a  prepayment  fee in an
amount calculated as follows:

                     D  x  (A-B)  x    C
                                      ---       
                                      360

<PAGE>
         A = the 360-day  interest yield (as of the beginning of the term of the
applicable  Matching  Funds  Election  and  expressed  as a  decimal)  on a U.S.
Government  Treasury bill,  note or bond (a "Treasury  Obligation")  selected by
Lender in Lender's reasonable  discretion and having, as of the beginning of the
term  of  the  applicable   Election,   a  remaining  term  until  its  maturity
approximately equal to the term of the Election.

         B = the 360-day  interest  yield (as of the  Business  Day  immediately
preceding  the  prepayment  date  and  expressed  as a  decimal)  on a  Treasury
Obligation selected by Lender in Lender's  reasonable  discretion and having, as
of the Business Day preceding the prepayment date, a term approximately equal to
the unexpired term of the term of the applicable Matching Funds Election.

         C = the number of calendar days from the date of prepayment to the date
on which the  applicable  Matching Funds Election would have expired but for the
prepayment.

         D = the amount of the Matching Funds Principal that is being prepaid.

The amount so determined shall then be discounted to its present value as of the
date of prepayment; the interest rate used to compute such discount shall be the
rate used in item B in the above formula. In no event shall the result of A-B be
less than 0.00.


         The  Treasury  Obligation  selected by Lender shall be from among those
included in the over the counter quotations  supplied to The Wall Street Journal
by the Federal Reserve Bank of New York City based on transactions of $1,000,000
or more.

         It is expressly  understood that all provisions of this Note, including
but not  limited to the  provisions  regarding  the  charging  of  interest at a
Matching  Funds Rate for the term of an Election,  are subject to the provisions
hereof  limiting the amount of interest  contracted  for,  charged,  received or
collected hereunder to the maximum amount permitted under applicable law.

         8 Loan  Limitation.  Notwithstanding  anything in this Agreement to the
contrary, the amount of the Loan, at the time of the initial disbursement of the
proceeds  of the Loan,  shall not  exceed an amount  equal to the  lesser of the
following:  (i) the amount equal to sixty percent (60%) of the fair market value
of the Mortgaged Property, as reflected in an appraisal acceptable to Lender; or
(ii) the amount which would allow a Debt Coverage Ratio (hereinafter defined) of
not less than 1.40 to 1.00, as calculated in accordance with the other terms and
provisions therefor as herein required. In calculating the debt service coverage
ratio  specified  above,  the  calculation  shall  be based on  annual  (or,  if
applicable,   annualized)  Net  Operating  Income   (hereinafter   defined)  and
applicable  debt service for the  corresponding  annual (or  annualized)  period
(being  all  principal  and  interest  payments  required  or  anticipated,   if
annualized,  pursuant to the Note).  As used herein,  the following  terms shall
have the following meanings:









<PAGE>
                  (a)  "Operating  Expenses"  for each  such  applicable  annual
         period  shall mean all  reasonable  expenses in an amount  equal to the
         greater of (i) those  specific  sums set forth in the annual  operating
         budget for the Mortgaged  Property for the applicable  calendar period,
         or (ii) those amounts actually  incurred and paid by Owner with respect
         to the ownership,  operation,  management, leasing and occupancy of the
         Mortgaged  Property  determined  on a cash basis,  except as  otherwise
         specified  herein,  including,  but not  limited to, any and all of the
         following (but without duplication of any item):

                           (i)   ad valorem taxes calculated on an accrual basis
                  (and not on the cash  basis) of  accounting  for the  calendar
                  period;  such accrual accounting for ad valorem taxes shall be
                  based upon taxes  actually  assessed for the current  calendar
                  year, or if such  assessment for the current year has not been
                  made,  then until such  assessment has been made (and with any
                  retroactive  adjustments  for  prior  calendar  months  as may
                  ultimately  be needed  when the  actual  assessments  has been
                  made),  ad  valorem  taxes for the  calendar  period  shall be
                  estimated to be an amount equal to one hundred  percent (100%)
                  of the  assessment  for  the  immediately  preceding  calendar
                  period;

                           (ii)  foreign,  U.S.,  state and local sales,  use or
                  other taxes  (except for taxes measured by net income);

                           (iii) special assessments or similar charges  against
                  the Mortgaged Property;

                           (iv)  costs   of utilities,  air   conditioning   and
                  heating for the Mortgaged Property to the extent not  paid  by
                  lessees or tenants;

                           (v)  maintenance  and repair costs for the  Mortgaged
                  Property,   including   the   replenishment   of  any  reserve
                  account(s)  required by Lender  pursuant to the Loan Documents
                  and assuming,  at a minimum,  an annual capital expenditure of
                  $300 per unit;

                           (vi) the greater of actual  management fees under any
                  management  agreement  for the  Property or an assumed  annual
                  management fee of four percent (4%) of the annual Gross Income
                  of the Property;

                           (vii)  all  salaries,  wages and  other  benefits  to
                  "on-site"   employees  of  Owner  or  its   property   manager
                  (excluding all salaries,  wages and other benefits of officers
                  and supervisory personnel, and other general overhead expenses
                  of Owner and its property manager) employed in connection with
                  the  leasing,  maintenance  and  management  of the  Mortgaged
                  Property;

                           (viii)  insurance  premiums  calculated on an accrual
                  basis  (and  not on the  cash  basis)  of  accounting  for the
                  calendar  period;   such  accrual   accounting  for  insurance
                  premiums  shall be based upon the  insurance  premiums for the
                  Mortgaged Property which was last billed to Owner, adjusted to
                  an  annualized  premium if  necessary,  and  multiplied by one
                  hundred percent (100%);
<PAGE>
                           (ix)   costs,    including    leasing    commissions,
                  advertising  and promotion  costs,  to obtain new leases or to
                  extend  or  renew  existing  leases,  and  the  costs  of work
                  performed and materials  provided to ready tenant space in the
                  Property for new or renewal occupancy under leases;

                           (x) outside  accounting  and audit fees and costs and
                  administrative  expenses in each case  reasonably  incurred by
                  Owner in connection  with the direct  operation and management
                  of the Mortgaged Property;

                           (xi) any payments,  and any related interest thereon,
                  to lessees or tenants of the  Mortgaged  Property with respect
                  to security  deposits or other deposits required to be paid to
                  tenants but only to the extent any such security  deposits and
                  related  interest  thereon  have been  previously  included in
                  Gross Income; and

                           (xii)  to  the  extent  not  included  in  any  other
                  Operating  Expense  category,  the sums actually paid by Owner
                  into any tax accounts or other reserve account(s) for the time
                  period in question and approved by Lender.

Notwithstanding  anything to the contrary as being included in the definition of
Operating  Expenses,  there  shall  be  excluded  from  Operating  Expenses  the
following:  (i) depreciation and any other non-cash  deduction  allowed to Owner
for income tax purposes;  (ii) any  compensation or fees paid to leasing agents,
brokers or other  third  parties or  affiliates  of Owner which are in excess of
reasonable  and  necessary  compensation  or fees  which  would  be  payable  to
unrelated third parties in arms' length transactions for similar services in the
area in which the Mortgaged Property is located;  (iii) all salaries,  wages and
other benefits to "off-site" employees and all other general "off-site" overhead
expenses of Owner,  its property  manager or other  professional  manager of the
Mortgaged  Property;  (iv) any and all  payments of ad valorem  taxes for either
real or personal  property  (except for the accrual amount  allowed  pursuant to
subpart (i) above);  (v) any and all payments of insurance  premiums (except for
the accrual amount allowed  pursuant to subpart (viii) above);  (vi) the initial
funding of the reserve account and any subsequent replenishment thereof up to or
exceeding the amount required pursuant to the Loan Documents;  (vii) any and all
principal,  interest or other costs paid under or with respect to the Loan,  and
the  subordinate  loans or with respect to any other  financings with respect to
the Mortgaged  Property,  whether  unsecured or secured by all or any portion of
the Mortgaged Property;  and (viii) capital improvements (only to the extent not
paid from any reserve account).

                  (b) "Gross  Income"  for each such  applicable  annual  period
         shall   mean   rentals,   revenues   and  other   recurring   forms  of
         consideration, received by, or paid to or for the account of or for the
         benefit of, Owner  resulting  from or  attributable  to the  operation,
         leasing and  occupancy of the Mortgaged  Property  determined on a cash
         basis  (except  as  specified  herein)  and using for all  calculations
         hereunder the greater of (i) actual  vacancy of the Mortgaged  Property
         at the  time of such  calculation  or (ii) a  vacancy  factor  of seven
         percent (7%), including, but not limited to, the following:

                           (i)   rents  by   any  lessees   or   tenants  of the
                  Mortgaged Property;


<PAGE>
                           (ii)  proceeds  received by or  for  the   benefit of
                  Owner  in   connection  with   any   rental   loss or business
                  interruption insurance with respect to the Mortgaged Property;


                           (iii) any other fees or rents  collected  by, for  or
                  on behalf  of Owner with  respect to the leasing and operating
                  the Mortgaged Property; and

                           (iv)  interest,  if any,  earned by Owner on security
                  and other type  deposits of and advance  rentals  paid by, any
                  lessees or tenants of the Mortgaged Property.

Notwithstanding  anything  included within the above definition of Gross Income,
there shall be excluded  from Gross  Income the  following:  (i) any security or
other  deposits  of lessees  and  tenants  (even when  applied to sums due under
leases);  (ii) rents and  receipts  received by or for the benefit of Owner with
respect to  services  provided  by Owner to lessees  relating  to the  Mortgaged
Property; (iii) the proceeds of any financing or refinancing with respect to all
or any part of the  Mortgaged  Property  which has been  previously  approved in
writing by Lender;  (iv) the proceeds of any sale or other  capital  transaction
(excluding  leases for  occupancy  purposes  only) of all or any  portion of the
Mortgaged Property; (v) any insurance or condemnation proceeds paid with respect
to the Mortgaged Property to the extent such proceeds are available and are used
to restore or rebuild the  Mortgaged  Property as may be permitted in accordance
with the terms of the Mortgage,  except for rental loss or business interruption
insurance;  (vi) any insurance and condemnation proceeds applied in reduction of
the  principal of the Note in accordance  with the terms of the Loan  Documents;
and (vii) any Collateral Account Payment  (hereinafter  defined) on deposit with
Lender in the  Collateral  Account  (hereinafter  defined);  provided,  however,
nothing set forth herein shall in any manner imply  Lender's  consent to a sale,
refinancing or other capital transaction.

                  (c) "Net Operating  Income" for the  applicable  annual period
         shall mean all Gross Income for such annual  period less all  Operating
         Expenses  for  such  corresponding  annual  period,  as  determined  or
         approved by Lender.


                  (d) "Debt Coverage Ratio" means the ratio of (i) Net Operating
         Income  from  the  Property  for any  calendar  month in  question,  as
         verified to Lender,  to (ii) the greater of (A) the amount of principal
         and  interest  that would be due monthly on a  promissory  note with an
         outstanding  principal  balance  equal  to  the  Outstanding  Principal
         Balance and an obligation of Maker to pay equal monthly installments of
         principal  and  interest   calculated  by  amortizing  the  Outstanding
         Principal Balance over twenty (20) years at a rate of interest equal to
         the higher of (1) nine percent (9%) per annum or (2) the per annum rate
         equal to the  Treasury  Note  Rate plus 250  basis  points,  or (B) the
         actual  monthly  interest  payment due under the Note for the  calendar
         month in question. In determining the Outstanding Principal Balance for
         the purposes of this Section 8 of the Note, no monies  deposited in any
         Accounts  (hereinafter defined) or any interest earned thereon shall be
         considered to reduce the Outstanding Principal Balance unless and until
         such  deposits and interest  have  actually been applied to the Loan in
         accordance  with  Section  9 of this  Note.  As used  herein,  the term
         "Treasury Note Rate" means the latest Treasury Constant Maturity Series
         yields reported, as of the first day of the calendar month in question,

<PAGE>
         in  the  Federal  Reserve   Statistical  Release  H.15  (519)  (or  any
         comparable  successor  publication)  for actively traded U.S.  Treasury
         securities  having a constant  maturity equal to seven (7) years.  Such
         implied yield shall be determined,  if necessary, by (i) converting U.S
         Treasury bill quotations to  bond-equivalent  yields in accordance with
         accepted  financial  practice and (ii)  interpolating  linearly between
         reported yields.

         9        Additional Financial Covenants.

                  (a)  Maker  shall  establish  an  interest  bearing  principal
         reduction  account (the  "Principal  Reduction  Account")  with Lender.
         Concurrently  herewith,  Maker  shall  execute  and deliver to Lender a
         "Security  Agreement"  (herein so called) granting to Lender a security
         interest in the Principal  Reduction Account and the Collateral Account
         (hereinafter   defined;   the  Principal   Reduction  Account  and  the
         Collateral Account are sometimes  hereinafter  collectively referred to
         as the  "Accounts"),  including all monies deposited in the Accounts at
         any time and all interest earned thereon. On June 30, 1998, Maker shall
         deposit into the Principal  Reduction  Account monies,  which shall not
         include any proceeds of the loan  evidenced  by the Note,  in an amount
         equal to two and one-half percent (2.50%) of the Outstanding  Principal
         Balance (the "Principal Reduction  Payment").  On each of September 30,
         1998 and  December  31,  1998,  March  31,  June 30,  September  30 and
         December 31 1999, and March 31, June 30, September 30, and December 31,
         2000,  Maker  shall  deposit  into the  Principal  Reduction  Account a
         Principal  Reduction Payment equal to one and 25/100 percent (1.25%) of
         the Outstanding  Principal Balance.  Interest earned on deposits in the
         Principal  Reduction  Account  may be used  as a part  of the  next-due
         Principal  Reduction  Payment.  Provided  there  has  been no  Event of
         Default (as hereinafter defined),  then (i) on each of January 15, 1999
         and January 15, 2000, as  applicable,  Lender shall apply all sums then
         on  deposit  in the  Principal  Reduction  Account  (together  with all
         interest  earned  thereon  that has not already  been used as part of a
         Principal  Reduction  Payment)  to the Loan to reduce the amount of the
         Outstanding  Principal  Balance  on the Note  and  (ii)  all  Principal
         Reduction  Payments made in the year 2000 and interest  earned  thereon
         will be applied to reduce the Outstanding Principal Balance on the Note
         at the end of the Term;  provided,  however, if an Event of Default has
         occurred,  then upon any such Event of Default, Lender may exercise all
         remedies  available to Lender under the Security Agreement or any other
         Loan  Document,  including  using the funds on deposit in the Principal
         Reduction  Account and all interest thereon at Lender's  discretion for
         any purpose permitted under the Loan Documents.


                  (b) Maker shall  provide to Lender,  on a monthly  basis,  the
         financial and operating  information  required by the Mortgage.  If, at
         the end of any quarter of a calendar year, such data indicates that the
         Debt  Coverage  Ratio for the Property is less than 1.40 to 1.00,  then
         Lender shall so notify Maker and, within five (5) business days of such
         notice, Maker (i) shall establish with Lender a collateral account (the
         "Collateral  Account")  and (ii)  shall  deposit  into  the  Collateral
         Account  sufficient funds,  which shall not include any proceeds of the
         loan evidenced by the Note,  such that if such funds were to be applied
         to reduce the Outstanding  Principal  Balance,  the Debt Coverage Ratio
         would  return  to a ratio  equal to or  greater  than 1.40 to 1.00 (the
         "Collateral  Account Payment").  A Collateral Account Payment shall not
         be applied to reduce the Outstanding  Principal Balance, but, unless an
<PAGE>
         Event of Default has occurred,  shall be held by Lender pursuant to the
         terms of the Security  Agreement  and this Note.  If the Debt  Coverage
         Ratio for the Property at the end of the next calendar year quarter (or
         any subsequent  quarter) is equal to or greater than 1.40 to 1.00, then
         within  twenty (20) days after  Lender's  determination  of such ratio,
         Lender shall  refund to Maker any  Collateral  Account  Payment then on
         deposit in the Collateral  Account. If during any subsequent quarter of
         a  calendar  year the Debt  Coverage  Ratio is again  less than 1.40 to
         1.00, Maker shall make an additional  Collateral  Account Payment in an
         amount such that if such Collateral  Account Payment were to be applied
         to reduce the Outstanding  Principal  Balance,  the Debt Coverage Ratio
         would  return  to a ratio  equal  to or  greater  than  1.40  to  1.00;
         provided,  however,  that so long as no Event of Default has  occurred,
         any funds then being held in the Collateral Account shall be applied to
         reduce the amount of such subsequent  Collateral  Account Payment.  The
         Security  Agreement  shall also grant to Lender a security  interest in
         all funds  deposited in the Collateral  Account and all interest earned
         thereon.  If an Event of Default has occurred,  Lender may exercise all
         remedies  available to Lender under the Security  Agreement,  including
         using the funds in the Collateral  Account and all interest  thereon at
         Lender's discretion for any purpose permitted under the Loan Documents.
         If no  Event  of  Default  has  occurred,  upon  the end of the Term or
         earlier payment in full to Lender of the Outstanding  Principal Balance
         under this Note, any monies then on deposit in the  Collateral  Account
         and any interest  earned thereon  shall,  at Maker's  election,  (i) be
         applied to reduce such Outstanding Principal Balance or (ii) be paid by
         Lender to Maker.

         10       Events of Default.  The occurrence of any one of the following
shall be a default  under this Note ("Event of Default"):

                  (a) Any  principal  and interest  payment and any other sum of
         money  due  under  this  Note,  including  any  Earnings  Deposit,  any
         Principal Reduction Payment or any obligation  involving the payment of
         money by Maker  under the Loan  Documents  is not paid  within five (5)
         days  after  written  notice  from  Lender  that such  payment  is due;
         provided that such five (5) day grace period shall not be applicable to
         sums  due and  payable  at the  Maturity  Date or upon  prepayment,  by
         acceleration or otherwise; or


                  (b) The Debt Coverage Ratio for the Property falls below  1.25
         to 1.00; or

                  (c) The  occurrence of any other  default,  breach or Event of
         Default  (however  such term is defined  therein or whether or not such
         term is defined)  under any Loan  Document and such default or Event of
         Default is not cured  within  any  applicable  notice and cure  periods
         provided therein.

         Any  Event of  Default  under  this  Note  shall  constitute  a default
(however  such term is  defined  therein  or whether or not such term is defined
therein) under each of the Loan Documents,  and any default, breach, or event of
default  (however  such term is  defined  therein or whether or not such term is
defined  therein) under any of the Loan Documents  shall  constitute an Event of
Default  under  this  Note  and  under  each of the  Loan  Documents.  Upon  the



<PAGE>
occurrence  of an Event of Default,  the holder  hereof  shall have the right to
declare the unpaid  principal  balance  and accrued but unpaid  interest on this
Note at once due and payable  (and upon such  declaration,  the same shall be at
once due and payable),  to foreclose any liens and security  interests  securing
payment  hereof and to exercise  any of its other  rights,  powers and  remedies
under this Note, under any other Loan Document, or at law or in equity.

         11 No Waiver by Holder.  Neither  the  failure by the holder  hereof to
exercise, nor delay by the holder hereof in exercising,  the right to accelerate
the maturity of this Note or any other right,  power or remedy upon any Event of
Default  shall be  construed as a waiver of such Event of Default or as a waiver
of the right to exercise any such right,  power or remedy at any time. No single
or partial  exercise by the holder  hereof of any right,  power or remedy  shall
exhaust the same or shall preclude any other or further  exercise  thereof,  and
every such right,  power or remedy may be exercised at any time and from time to
time. All remedies  provided for in this Note and in any other Loan Document are
cumulative of each other and of any and all other remedies existing at law or in
equity, and the holder hereof shall, in addition to the remedies provided herein
or in any other Loan  Document,  be entitled  to avail  itself of all such other
remedies as may now or hereafter exist at law or in equity for the collection of
the  indebtedness  owing  hereunder,  and the resort to any remedy  provided for
hereunder  or under any such other Loan  Document or  provided  for by law or in
equity shall not prevent the  concurrent or  subsequent  employment of any other
appropriate remedy or remedies. Without limiting the generality of the foregoing
provisions, the acceptance by the holder hereof from time to time of any payment
under this Note  which is past due or which is less than the  payment in full of
all  amounts  due  and  payable  at the  time  of such  payment,  shall  not (i)
constitute a waiver of or impair or  extinguish  the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other right, power or
remedy at the time or at any  subsequent  time, or nullify any prior exercise of
any such right,  power or remedy, or (ii) constitute a waiver of the requirement
of punctual payment and performance, or a novation in any respect.

         12 Collection of Costs.  If any holder of this Note retains an attorney
in connection  with any Event of Default or at maturity or to collect,  enforce,
or defend this Note or any other Loan Document in any lawsuit or in any probate,
reorganization,  bankruptcy or other proceeding,  or if Maker sues any holder in
connection with this Note or any other Loan Document and does not prevail,  then
Maker agrees to pay to each such holder,  in addition to principal and interest,
all reasonable  costs and expenses  incurred by such holder in trying to collect
this Note or in any such suit or  proceeding,  including  reasonable  attorneys'
fees,  which shall include the reasonable  fees and costs incurred in connection
with the appeal of any judgment.

         13       Interest Provisions.

                  (a) Savings Clause.  It is expressly  stipulated and agreed to
         be the intent of Maker and Lender at all times to comply  strictly with
         the  applicable  Texas  law  governing  the  maximum  rate or amount of
         interest payable on this Note (or applicable  United States federal law
         to the extent that it permits  Lender to contract  for,  charge,  take,
         reserve or receive a greater  amount of interest than under Texas law).
         If the  applicable law is ever  judicially  interpreted so as to render
         usurious any amount (i) contracted  for,  charged,  taken,  reserved or
         received  pursuant to this Note, any of the other Loan Documents or any
         other  communication  or writing by or between Maker and Lender related
         to the transaction or  transactions  that are the subject matter of the
         Loan Documents,  (ii) contracted for,  charged or received by reason of

<PAGE>
         Lender's  exercise  of the option to  accelerate  the  maturity of this
         Note,  or (iii)  Maker will have paid or Lender  will have  received by
         reason of any voluntary prepayment by Borrower of this Note, then it is
         Maker's and Lender's  express intent that all amounts charged in excess
         of the Maximum Lawful Rate shall be automatically cancelled, ab initio,
         and all  amounts  in  excess of the  Maximum  Lawful  Rate  theretofore
         collected by Lender shall be credited on the principal  balance of this
         Note  (or,  if this  Note has been or  would  thereby  be paid in full,
         refunded to Maker),  and the provisions of this Note and the other Loan
         Documents  immediately  be deemed  reformed and the amounts  thereafter
         collectible hereunder and thereunder reduced,  without the necessity of
         the execution of any new document,  so as to comply with the applicable
         law, but so as to permit the recovery of the fullest  amount  otherwise
         called for hereunder and thereunder;  provided,  however,  if this Note
         has been paid in full  before the end of the stated  term of this Note,
         then  Maker  and  Lender  agree  that  Lender  shall,  with  reasonable
         promptness  after Lender discovers or is advised by Maker that interest
         was received in an amount in excess of the Maximum Lawful Rate,  either
         refund such excess interest to Maker and/or credit such excess interest
         against this Note then owing by Maker to Lender.  Maker  hereby  agrees
         that as a condition  precedent  to any claim  seeking  usury  penalties
         against Lender,  Maker will provide written notice to Lender,  advising
         Lender in reasonable  detail of the nature and amount of the violation,
         and Lender  shall have sixty (60) days after  receipt of such notice in
         which to correct such usury violation, if any, by either refunding such
         excess interest to Maker or crediting such excess interest against this
         Note then owing by Maker to Lender. All sums contracted for, charged or
         received by Lender for the use,  forbearance  or  detention of any debt
         evidenced by this Note shall,  to the extent  permitted  by  applicable
         law, be amortized or spread, using the actuarial method, throughout the
         stated term of this Note  (including  any and all renewal and extension
         periods)  until  payment in full so that the rate or amount of interest
         on account of this Note does not exceed the  Maximum  Lawful  Rate from
         time to time in effect and  applicable to this Note for so long as debt
         is outstanding.  In no event shall the provisions of Chapter 346 of the
         Texas  Finance  Code (which  regulates  certain  revolving  credit loan
         accounts  and  revolving   triparty   accounts)  apply  to  this  Note.
         Notwithstanding  anything to the contrary contained herein or in any of
         the  other  Loan  Documents,  it is not  the  intention  of  Lender  to
         accelerate  the  maturity of any  interest  that has not accrued at the
         time of such  acceleration or to collect unearned  interest at the time
         of such acceleration.


                  (b)  Definitions.  As used herein,  the term  "Maximum  Lawful
         Rate"  shall mean the  maximum  lawful  rate of  interest  which may be
         contracted  for,  charged,  taken,  received  or  reserved by Lender in
         accordance  with  the  applicable  laws  of  the  State  of  Texas  (or
         applicable  United  States  federal  law to the extent  that it permits
         Lender to  contract  for,  charge,  take,  receive or reserve a greater
         amount of  interest  than under Texas  law),  taking  into  account all
         Charges (as herein  defined)  made in connection  with the  transaction
         evidenced  by this Note and the other Loan  Documents.  As used herein,
         the term "Charges" shall mean all fees, charges and/or any other things
         of value, if any, contracted for, charged,  received, taken or reserved
         by Lender in connection with the transactions relating to this Note and
         the  other  Loan  Documents,   which  are  treated  as  interest  under
         applicable law.

<PAGE>
                  (c) Ceiling Election.  To the extent that Lender is relying on
         Chapter 1D of the Texas Credit Title to  determine  the Maximum  Lawful
         Rate  payable  on  this  Note  and/or  this  Note  and/or  the  Related
         Indebtedness,  Lender will utilize the weekly ceiling from time to time
         in effect as  provided in such  Chapter  1D, as amended.  To the extent
         United States federal law permits Lender to contract for, charge, take,
         receive or reserve a greater  amount of interest  than under Texas law,
         Lender will rely on United  States  federal law instead of such Chapter
         1D  for  the  purpose  of   determining   the  Maximum   Lawful   Rate.
         Additionally,  to  the  extent  permitted  by  applicable  law  now  or
         hereafter  in effect,  Lender may, at its option and from time to time,
         utilize any other method of establishing  the Maximum Lawful Rate under
         such  Chapter 1D or under other  applicable  law by giving  notice,  if
         required,  to Maker as provided by  applicable  law now or hereafter in
         effect.

         14 Joint  and  Several  Liability.  If more  than one  person or entity
executes this Note as Maker,  all of said parties shall be jointly and severally
liable for payment of the indebtedness evidenced hereby. Maker and all sureties,
endorsers,  guarantors  and any other  party  now or  hereafter  liable  for the
payment of this Note in whole or in part,  hereby  severally  (i) waive  demand,
presentment for payment,  notice of dishonor and of nonpayment,  protest, notice
of protest, notice of intent to accelerate, notice of acceleration and all other
notice (except only for any notices which are specifically required by this Note
or any other Loan  Document),  filing of suit and diligence in  collecting  this
Note or enforcing any of the security therefor;  (ii) agree to any substitution,
subordination,  exchange  or release of any such  security or the release of any
party primarily or secondarily liable hereon; (iii) agree that the holder hereof
shall not be required  first to institute  suit or exhaust its  remedies  hereon
against  Maker or others  liable or to become  liable  hereon or to enforce  its
rights against them or any security  therefor;  (iv) consent to any extension or
postponement  of time of  payment of this Note for any period or periods of time
and  to any  partial  payments,  before  or  after  maturity,  and to any  other
indulgences with respect hereto, without notice thereof to, any of them; and (v)
submit (and waive all rights to object) to non-exclusive  personal  jurisdiction
in the State of Texas, and venue in Dallas County, Texas, for the enforcement of
any and all obligations under the Loan Documents.


         15 Amendments. This Note may not be changed, amended or modified except
in a writing  expressly  intended  for such  purposes  and executed by the party
against whom enforcement of the change, amendment or modification is sought.

         16 Purpose of Loan.  The loan evidenced by this Note is made solely for
business  purposes and is not for personal,  family,  household or  agricultural
purposes.

         17 Participation.  The holder of this Note may, from time to time, sell
or offer to sell the loan evidenced by this Note, or interests  therein,  to one
or more assignees or  participants  and is hereby  authorized to disseminate any
information it now has or hereafter obtains  pertaining to the loan evidenced by
this Note including,  without limitation,  any security for this Note and credit
information  on Maker,  any of its  principals and any guarantor of this Note to
any assignee or participant or prospective assignee or prospective  participant,
the holder's affiliates including NationsBanc Montgomery Securities, Inc. in the
case of Lender, any regulatory body having  jurisdiction over the holder, and to



<PAGE>
any other parties as necessary or appropriate in holder's  reasonable  judgment.
Maker shall execute,  acknowledge and deliver any and all instruments reasonably
requested  by  Lender  in  connection  therewith,  and to the  extent,  if  any,
specified in any such assignment or participation,  such companies, assignee(s),
and participant(s)  shall have the rights and benefits with respect to this Note
and the other Loan Documents as such person(s)  would have had if such person(s)
had been Lender hereunder.

         18  Successors  and  Assigns.  The  terms,  provisions,  covenants  and
conditions  of this Note  shall be binding  upon Maker and the heirs,  devisees,
representatives, successors and assigns of Maker.

         19  Governing  Law.  THIS  NOTE,  AND  ITS  VALIDITY,  ENFORCEMENT  AND
INTERPRETATION,  SHALL BE GOVERNED BY LAWS OF THE STATE OF TEXAS (WITHOUT REGARD
TO ANY CONFLICT OF LAWS  PRINCIPLES)  AND APPLICABLE  UNITED STATES FEDERAL LAW.
MAKER HEREBY  ACKNOWLEDGES THAT ITS BUSINESS OFFICE IS IN DALLAS COUNTY,  TEXAS,
AND THAT THE NOTE IS PAYABLE IN DALLAS COUNTY,  TEXAS;  THEREFORE,  MAKER HEREBY
CONFIRMS AND AGREES THAT ALL LEGAL ACTIONS INVOLVING THE VALIDITY OR ENFORCEMENT
OF THIS  NOTE  (INCLUDING,  BUT  NOT  LIMITED  TO,  ANY  BANKRUPTCY  PROCEEDINGS
INVOLVING MAKER) SHALL HAVE JURISDICTION AND VENUE IN DALLAS COUNTY, TEXAS.

         20  Time of  Essence.  Time  shall be of the  essence in this Note with
respect  to all of  Maker's obligations hereunder.

         21  Captions.  The  paragraph  headings  used  in  this  Note  are  for
convenience of reference only and shall not affect the meaning or interpretation
of this Note.

         22 Limited  Recourse.  Subject  to the  exceptions  and  qualifications
described  below,  Maker shall not be  personally  liable for the payment of the
indebtedness evidenced by or created or arising under this Note and any judgment
or decree in any action  brought to enforce the  obligation of Maker to pay such
indebtedness  shall be  enforceable  against  Maker  only to the  extent  of its
interest in the  Mortgaged  Property (as defined in the  Mortgage)  and any such
judgment or decree shall not be subject to execution  upon or be a lien upon the
assets  of Maker  other  than  its  interest  in such  Mortgaged  Property.  The
foregoing  limitation  of personal  liability  shall be subject to the following
exceptions and qualifications:


         (a)      Maker  shall be fully and personally liable for the following:
                  (i) failure to pay taxes,  assessments  and any other  charges
                  which  could  result  in  liens  against  any  portion  of the
                  Mortgaged Property; (ii) fraud or material  misrepresentation;
                  (iii)  retention by Maker of any  payments,  rental  income or
                  other  funds  arising  with  respect  to any of the  Mortgaged
                  Property which, under the terms of the Loan Documents,  should
                  have  been  paid  to  Lender;  (iv)  all  insurance  proceeds,
                  condemnation   awards  or  other  similar  funds  or  payments
                  attributable to the Mortgaged  Property which, under the terms
                  of the Loan  Documents,  should have been paid to Lender;  (v)
                  failure to protect  and  maintain  the  Mortgaged  Property in
                  accordance with the terms of the Loan Documents;  and (vi) the
                  failure of the Loan  Documents to constitute a first and prior
                  lien,  assignment,  pledge or security interest in or upon the
                  Mortgaged  Property,  subject only to the matters permitted by
                  the Loan Documents.


<PAGE>
         (b)      Nothing  contained in this paragraph shall affect or limit the
                  ability of the holder  hereof to enforce  any of its rights or
                  remedies with respect to the Mortgaged Property.

         (c)      Nothing  contained in this paragraph shall affect or limit the
                  rights of the holder  hereof to proceed  against any person or
                  entity,  including  Maker,  any  partner in Maker or any other
                  party,  with respect to the  enforcement  of any guarantees of
                  payment,  guarantees of performance and completion,  hazardous
                  materials indemnification agreements or other similar rights.

         23       Statute of Frauds Notice.  THE  LOAN DOCUMENTS  REPRESENT  THE
FINAL  AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR
PRIOR,  CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

         IN WITNESS  WHEREOF,  Maker has duly  executed this Note as of the date
first above written.



                            MAKER:

                            VILLAGE FUND XI ASSOCIATES
                            LIMITED PARTNERSHIP,
                            an Oregon limited partnership

                               By:  McNeil Village Apartments XI Corp.,
                                    a Texas corporation,
                                    its general partner


                                    By:  /s/  Ron Taylor
                                       -------------------------------
                                       Name:  Ron Taylor
                                       Title: President