MULTIFAMILY MORTGAGE,
                          ASSIGNMENT OF RENTS
                        AND SECURITY AGREEMENT

      BE IT KNOWN, that on the dates  hereinafter set forth,  before each of us,
 the undersigned Notaries Public, duly commissioned and qualified in and for the
 Parish/County  and States  hereinafter  set forth,  and in the  presence of the
 undersigned competent witnesses,  personally came and appeared 402 JULIA STREET
 ASSOCIATES LIMITED  PARTNERSHIP,  a Delaware limited  partnership,  represented
 herein by Historic Preservation Properties 1989 Limited Partnership, a Delaware
 limited  partnership,  Henry M. Lambert and R. Carey Bond, its General Partners
 (Taxpayer Identification No. 72-1149319) ("Borrower"),  whose permanent mailing
 address is c/o RC!B Developers,  Inc., 333 Julia Street, New Orleans, Louisiana
 70130,  who by me duly sworn did  declare  and  acknowledge  that  Borrower  is
 indebted in favor of INVESTMENT PROPERTY MORTGAGE,  L.L.C., a limited liability
 company organized and existing under the laws of Louisiana, and whose permanent
 mailing address is 300 Plaza,  One Shelf Square,  New Orleans,  Louisiana 70139
 (Taxpayer  Identification  No.  72-1283369)  (together  with its successors and
 assigns and any subsequent  holders,  "Lender"),  under Borrower's  Multifamily
 Note,  dated as of the date of this  Instrument,  in the principal  amount of $
 1,100,000,  which Note is payable to the order of the above-named Lender, has a
 stated maturity date of August 1, 2008, and, together with and as a part of the
 Indebtedness,  is secured by this Multifamily Mortgage, Assignment of Rents and
 Security Agreement (the "Instrument").

      TO SECURE TO LENDER  the  repayment  of the  Indebtedness  (including  the
 payment of attorneys fees),  and all renewals,  extensions,  modifications  and
 refinancings  of the  Indebtedness,  and the  performance  of the covenants and
 agreements  of  Borrower  contained  in the  Loan  Documents,  Borrower  hereby
 mortgages, hypothecates and assigns to Lender the Mortgaged Property, including
 the Land located in the Parish of Orleans,  State of Louisiana and described in
 Exhibit A attached to this  Instrument.  The maximum amount of the Indebtedness
 outstanding  at any  time  and  from  time to  time  that  is  secured  by this
 Instrument  shall be  limited  to an  amount  equal to the  original  principal
 balance of the Note multiplied by three, inclusive of principal, interest, late
 charges, default interest, prepayment premiums, additional advances pursuant to
 this Instrument, costs, expenses and attorneys' fees.

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




<PAGE>


 Covenants. Borrower and Lender covenant and
 agree as follows:

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

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

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

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

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

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

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




<PAGE>


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

      (h) "Hazardous  Materials Laws" means all federal,  state, and local laws,
 ordinances  and   regulations   and  standards,   rules,   policies  and  other
 governmental  requirements,  administrative  rulings  and court  judgments  and
 decrees  in effect  now or in the future and  including  all  amendments,  that
 relate to  Hazardous:  Materials  and  apply to  Borrower  or to the  Mortgaged
 Property.  Hazardous  Materials  Laws  include,  but are not  limited  to,  the
 Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
 Section 9601, et seq.,  the Resource  Conservation  and Recovery Act, 42 U.S.C.
 Section 6901, et seq., the Toxic Substance  Control Act, 15 U.S.C.  Section 260
 1, et seq.,  the Clean  Water Act, 33 U.S.C.  Section  125 1, et seq.,  and the
 Hazardous Materials Transportation Act, 49 U.S. C. Section 5 10 1, et seq., and
 their state analogs.

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

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

      (k)  "Indebtedness"  means the  principal  of,  interest on, and all other
 amounts  due at any time under,  the Note,  this  Instrument  or any other Loan
 Document,  including  prepayment  premiums,  late  charges,  default  interest,
 attorneys' fees, keeper fees, collection and foreclosure expenses,  advances as
 provided in Section 12 to protect  the  security  of this  Instrument,  and any
 other sums that  Lender may  advance  or incur  with  respect to the  Mortgaged
 Property,  or as  otherwise  provided  in this  Instrument  or any  other  Loan
 Document.

      (1)   [Intentionally
      omitted]

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

      (n)  "Land"  means the  immovable  property  described  in  Exhibit A. The
      immovable property is located at 402 Julia Street, New Orleans,  Louisiana
      70130.










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

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

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

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

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

           (1)
           the Land;

            (2)  the
            Improvements;

            (3)  the
            Fixtures;

            (4)  the
            Personalty;

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

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








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

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

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

           (10) all Rents and Leases;

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

           (12) all Imposition Deposits;

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

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

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




<PAGE>


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

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

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

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

      (x) "Rents" means all rents (whether from  residential or  non-residential
 space),  revenues and other income of the Land or the  Improvements,  including
 parking fees, laundry and vending machine income and fees and charges for food,
 health care and other services provided at the Mortgaged Property,  whether now
 due, past due, or to become due, and deposits forfeited by tenants.

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

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

      (aa) "Uniform  Commercial Code" or "UCC" means the Uniform Commercial Code
 as adopted in any state or the District of  Columbia.  In  Louisiana,  "Uniform
 Commercial  Code"  or  "UCC"  shall  refer to the  Louisiana  Commercial  Laws,
 Louisiana Revised Statues Title 10, Sections 1-101, et seq.




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

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

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

(b)   After  the   occurrence   of  an  Event  of  Default,   Borrower
           authorizes  Lender  to  collect,  sue for  and  compromise
           Rents and directs  each tenant of the  Mortgaged  Property
           to pay all Rents to, or as directed by,  Lender.  However,
           until  the  occurrence  of an  Event  of  Default,  Lender
           hereby  grants to Borrower a revocable  license to collect
           and receive all Rents,  to hold all Rents in trust for the
           benefit  of  Lender  and to  apply  all  Rents  to pay the
           installments  of  interest  and  principal  then  due  and
           payable  under the Note and the other amounts then due and
           payable   under  the  other  Loan   Documents,   including
           Imposition  Deposits,  and to pay the  current  costs  and
           expenses  of  managing,   operating  and  maintaining  the
           Mortgaged  Property,   including   utilities,   Taxes  and
           insurance   premiums   (to  the  extent  not  included  in
           Imposition   Deposits),   tenant  improvements  and  other
           capital  expenditures.  So long as no Event of Default has
           occurred  and is  continuing,  the Rents  remaining  after
           application  pursuant  to the  preceding  sentence  may be
           retained  by  Borrower  free and  clear of,  and  released
           from,  Lender's  rights  with  respect to Rents under this
           Instrument.





 From and after the occurrence of an Event of Default, and without the necessity
 of Lender  entering  upon and taking and  maintaining  control of the Mortgaged
 Property directly, or by a receiver,  Borrower's license to collect Rents shall
 automatically  terminate  and Lender  shall  without  notice be entitled to all
 Rents as they  become due and  payable,  including  Rents then due and  unpaid.
 Borrower shall pay to Lender upon demand all Rents to which Lender is entitled.
 At any time on or after the date of Lender's demand for Rents, Lender may give,
 and  Borrower  hereby  irrevocably  authorizes  Lender  to give,  notice to all
 tenants of the Mortgaged Property  instructing them to pay all Rents to Lender,
 no tenant  shall be  obligated  to  inquire  further  as to the  occurrence  or
 continuance of an Event of Default,  and no tenant shall be obligated to pay to
 Borrower any amounts  which are  actually  paid to Lender in response to such a
 notice. Any such notice by Lender shall be delivered to each tenant personally,
 by mail or by delivering  such demand to each rental unit.  Borrower  shall not
 interfere with and shall cooperate with Lender's collection of such Rents.

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

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

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

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

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

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

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

      (b) Until  Lender  gives  notice to Borrower  of Lender's  exercise of its
 rights  under  this  Section  4,  Borrower  shall  have all  rights,  power and
 authority  granted to Borrower under any Lease (except as otherwise  limited by
 this Section or any other provision of this  Instrument),  including the right,
 power and authority to modify the terms of any Lease or extend or terminate any
 Lease.  Upon the  occurrence of an Event of Default,  the  permission  given to
 Borrower pursuant to the preceding  sentence to exercise all rights,  power and
 authority  under Leases shall  automatically  terminate.  Borrower shall comply
 with and observe Borrower's obligations under all Leases,  including Borrower's
 obligations  pertaining to the  maintenance  and disposition of tenant security
 deposits.







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

      (d) Upon delivery of notice by Lender to Borrower of Lender's  exercise of
 Lender's  rights  under this Section 4 at any time after the  occurrence  of an
 Event of Default,  and without the necessity of Lender entering upon and taking
 and maintaining control of the Mortgaged Property directly,  by a receiver,  or
 by any  other  manner  or  proceeding  permitted  by the  laws of the  Property
 Jurisdiction,  Lender  immediately shall have all rights,  powers and authority
 granted to Borrower under any Lease,  including the right,  power and authority
 to modify the terms of any such Lease, or extend or terminate any such Lease.

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

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

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

      5. PAYMENT OF INDEBTEDNESS;  PERFORMANCE UNDER LOAN DOCUMENTS;  PREPAYMENT
 PREMIUM.  Borrower shall pay the  Indebtedness  when due in accordance with the
 terms of the Note and the other Loan Documents and shall  perform,  observe and
 comply  with all other  provisions  of the Note and the other  Loan  Documents.
 Borrower shall pay a prepayment premium in connection with certain  prepayments
 of the  Indebtedness,  including a payment made after Lender's  exercise of any
 right of acceleration of the Indebtedness, as provided in the Note.





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

       7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

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

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

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

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



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

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

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

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

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












       12.  PROTECTION OF LENDER'S SECURITY.

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

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

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

 action.

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


       14.  BOOKS AND RECORDS; FINANCIAL REPORTING.

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






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

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

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

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

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

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

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

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

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

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

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

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

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

       15.  TAXES; OPERATING EXPENSES.

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

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

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

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

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






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

       17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

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

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










<PAGE>


       18.  ENVIRONMENTAL HAZARDS.

      (a) Except for  matters  covered by a written  program of  operations  and
 maintenance  approved  in  writing  by Lender  (an "O&M  Program")  or  matters
 described  in  Section I 8(b),  Borrower  shall not cause or permit  any of the
 following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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







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

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

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

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

      (g)  Borrower   shall  pay   promptly  the  costs  of  any   environmental
 inspections,  tests or audits ("Environmental  Inspections") required by Lender
 in connection  with any  foreclosure  or deed in lieu of  foreclosure,  or as a
 condition of Lender's consent to any Transfer under Section 2 1, or required by
 Lender   following  a  reasonable   determination  by  Lender  that  Prohibited
 Activities  or  Conditions  may  exist.  Any  such  costs  incurred  by  Lender
 (including  the  fees  and  out-of-pocket  costs  of  attorneys  and  technical
 consultants  whether incurred in connection with any judicial or administrative
 process or  otherwise)  which  Borrower  fails to pay promptly  shall become an
 additional  part of the  Indebtedness as provided in Section 12. The results of
 all  Environmental  Inspections  made by Lender  shall at all times  remain the
 property of Lender and Lender shall have no obligation to disclose or otherwise
 make  available  to  Borrower  or any other  party  such  results  or any other
 information   obtained  by  Lender  in   connection   with  its   Environmental
 Inspections.  Lender hereby reserves the right,  and Borrower hereby  expressly
 authorizes  Lender,  to make available to any party,  including any prospective
 bidder at a  foreclosure  sale of the  Mortgaged  Property,  the results of any
 Environmental  Inspections  made  by  Lender  with  respect  to  the  Mortgaged
 Property.  Borrower consents to Lender notifying any party (either as part of a
 notice of sale or  otherwise)  of the results of any of Lender's  Environmental
 Inspections.  Borrower  acknowledges  that Lender  cannot  control or otherwise
 assure the truthfulness or accuracy of the results of any of its  Environmental
 Inspections  and that the release of such results to  prospective  bidders at a
 foreclosure  sale of the  Mortgaged  Property  may have a material  and adverse
 effect upon the amount which a party may bid at such sale. Borrower agrees that
 Lender shall have no liability whatsoever as a result of delivering the results
 of any of its Environmental Inspections to any third party, and Borrower hereby
 releases and forever  discharges  Lender from any and all claims,  damages,  or
 causes of action,  arising out of,  connected with or incidental to the results
 of, the delivery of any of Lender's Environmental Inspections.

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

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

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

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

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

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

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

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

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

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

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

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

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

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




<PAGE>


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

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

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

       19.  PROPERTY AND LIABILITY INSURANCE.

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

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



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

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

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

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

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

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








      20.   CONDEMNATION.

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

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

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

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

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

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

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

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

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

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

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

 Lender  shall not be  required  to  demonstrate  any actual  impairment  of its
 security  or any  increased  risk of  default in order to  exercise  any of its
 remedies with respect to an Event of Default under this Section 2 1.

      (b) The occurrence of any of the following  events shall not constitute an
 Event of Default  under  this  Instrument,  notwithstanding  any  provision  of
 Section 2 1 (a) to the contrary:

           (1)  a Transfer to which Lender
           has consented;

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

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

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

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

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

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

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

           (2)   the absence of any Event
           of Default;

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




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

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

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

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

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

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

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

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

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

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

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


                 (iii)if such entity is a limited liability company or a limited
                      liability  partnership,  a Transfer of any  membership  or
                      other  ownership  interest  which  would cause the Initial
                      Owners to own less than 5 1 % of all  membership  or other
                      ownership interests in such entity;

                 (iv) if  such   entity   is  a   corporation   (other   than  a
                      Publicly-Held  Corporation)  with only one class of voting
                      stock,  a Transfer  of any voting  stock which would cause
                      the Initial  Owners to own less than 5 1 % of voting stock
                      in such corporation;

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

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

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

      22.   EVENTS OF DEFAULT. The occurrence of any one or more of
 the following shall constitute an Event of Default under this
 Instrument:

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

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

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

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

       (e)  any Event of Default under Section 2 1;

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

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

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

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

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

      24.   FORBEARANCE.

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

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

      25. LOAN CHARGES. If any applicable law limiting the amount of interest or
 other charges  permitted to be collected  from Borrower is  interpreted so that
 any charge provided for in any Loan Document,  whether considered separately or
 together with other charges levied in connection  with any other Loan Document,
 violates  that law, and  Borrower is entitled to the benefit of that law,  that
 charge is hereby reduced to the extent  necessary to eliminate that  violation.
 The  amounts,  if any,  previously  paid to Lender  in excess of the  permitted
 amounts shall be applied by Lender to reduce the principal of the Indebtedness.
 For the purpose of  determining  whether any applicable law limiting the amount
 of interest or other charges  permitted to be collected  from Borrower has been
 violated,  all Indebtedness  which constitutes  interest,  as well as all other
 charges levied in connection with the Indebtedness  which constitute  interest,
 shall be deemed to be allocated  and spread over the stated tern-i of the Note.
 Unless  otherwise  required by applicable  law, such  allocation  and spreading
 shall be  effected  in such a manner  that the rate of  interest so computed is
 uniform throughout the stated term of the Note.

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

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

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

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

      30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

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

      (b) Borrower agrees that any  controversy  arising under or in relation to
      the Note, this
 Instrument, or any other Loan Document shall be litigated
 exclusively in the Property Jurisdiction.
 The state and federal courts and authorities with       I       I I
                                1   jurisdiction   in  the   Property
 Jurisdiction  shall have exclusive  jurisdiction over all  controversies  which
 shall  arise  under  or  in  relation  to  the  Note,   any  security  for  the
 Indebtedness,  or any other Loan  Document.  Borrower  irrevocably  consents to
 service,  Jurisdiction,  and venue of such courts for any such  litigation  and
 waives any other  venue to which it might be  entitled  by virtue of  domicile,
 habitual residence or otherwise.


      31.   NOTICE.

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

      (b) Any party to this  Instrument  may change the address to which notices
 intended  for it are to be directed by means of notice given to the other party
 in accordance  with this Section 3 1. Each party agrees that it will not refuse
 or reject  delivery of any notice  given in  accordance  with this Section 3 1,
 that it will acknowledge, in writing, the receipt of any notice upon request by
 the other  party and that any notice  rejected or refused by it shall be deemed
 for purposes of this Section 31 to have been received by the rejecting party on
 the date so refused or rejected, as conclusively  established by the records of
 the U.S. Postal Service or the courier service.

      (c) Any notice under the Note and any other Loan  Document  which does not
 specify  how notices  are to be given  shall be given in  accordance  with this
 Section 3 1.

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

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

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

      35. JOINT AND SEVERAL  LIABILITY.  If more than one person or entity signs
 this Instrument as Borrower, the obligations of such persons and entities shall
 be solidary.

      36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

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





<PAGE>


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

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

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

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

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

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

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

      43. ACCELERATION;  FORECLOSURE; CONFESSION OF JUDGMENT. At any time during
 the  existence  of an  Event  of  Default,  Lender,  at  Lender's  option,  may
 accelerate the maturity of and declare the  Indebtedness  to be immediately due
 and payable,  and may cause the  Mortgaged  Property and UCC  Collateral  to be
 immediately seized and sold, in whole, in part, or separately,  whether in term
 of court or in vacation,  under  ordinary or executory  process,  in accordance
 with applicable  Louisiana law, to the highest bidder for cash, with or without
 appraisement,  and without the  necessity of making  additional  demand upon or
 notifying  Borrower or placing Borrower in default,  all of which are expressly
 waived.  For purposes of  foreclosure  under the  Louisiana  executory  process
 procedures,  Borrower confesses judgment and acknowledges to be indebted to and
 in favor  of  Lender  up to the  full  amount  of the  Indebtedness,  including
 principal,  interest,  prepayment  premiums,  late charges,  default  interest,
 costs,  expenses,  collection  attorneys'  fees, and any  additional  sums that
 Lender may advance as provided under this  Instrument.  To the extent permitted
 under applicable  Louisiana law, Borrower  additionally waives: (a) the benefit
 of appraisal as provided in Articles 2332, 2336, 2723 and 2724 of the Louisiana
 Code of Civil  Procedure,  and all other  laws with  regard to  appraisal  upon
 judicial  sale;  (b) the demand  and three (3) days'  delay as  provided  under
 Articles 2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the notice
 of seizure as provided  under  Articles 2293 and 2721 of the Louisiana  Code of
 Civil Procedure; (d) the three (3) days' delay provided under Articles 2331 and
 2722 of the  Louisiana  Code of Civil  Procedure;  and (e) all  other  benefits
 provided  under  Articles  2331,  2722 and 2723 of the Louisiana  Code of Civil
 Procedure and all other articles not  specifically  mentioned  above.  Borrower
 agrees  that Lender  shall have all of the  additional  enforcement  rights and
 remedies of a secured  party under the  Louisiana  Commercial  Laws  (Louisiana
 Revised  Statutes,  Title  10) and  under the  Uniform  Commercial  Code of any
 applicable state with respect to the UCC Collateral wherever located.  Borrower
 further agrees that any declarations of fact made under an authentic act before
 a Notary Public in the presence of two  witnesses,  by a person  declaring such
 facts to lie within his or her knowledge,  shall constitute  authentic evidence
 for  purposes of executory  process and also for purposes of Louisiana  Revised
 Statutes, Title 9, Sections 3509.1 and 3504(b)(6), and Title 10, Section 9-508.

      44.  RELEASE.  Upon  payment of the  Indebtedness  in full,  Borrower  may
 request Lender in writing to provide Borrower with the Note marked  "Canceled,"
 or alternatively,  at Lender's option, with a certificate  sufficient to permit
 Borrower to cancel this  Instrument  from the public  records,  Borrower agrees
 that Lender may delay  providing  the  foregoing  to Borrower for up to 30 days
 following receipt of Borrower's written request. If Borrower requests Lender to
 perform  the  necessary  services  to cancel  this  Instrument  from the public
 records,   Borrower  agrees  to  pay  Lender's  reasonable  costs  incurred  in
 connection with such cancellation.

      45. WAIVER OF HOMESTEAD. Borrower and Borrower's spouse, if any, waive all
 homestead  and other  exemptions  from seizure  with  respect to the  Mortgaged
 Property and the UCC Collateral.

      46.   VENDOR'S LIEN MORTGAGE. If Lender is a savings and loan
      association, the
 Note and the other  amounts  secured by this  Instrument  shall be secured by a
 vendor's lien and privilege on and against the Mortgaged  Property  pursuant to
 the provisions of Louisiana Revised
 Statutes, Title 6, Section 833.

      47. ATTORNEYS' FEES.  Whenever referred to in this Instrument,  other than
 in Section 43, "attorneys' fees" shall mean a fee of $ 10,000-00.

      48. MORTGAGE AND CONVEYANCE  CERTIFICATES.  The production of Mortgage and
 conveyance  certificates  is waived by Lender and  Borrower,  who  release  me,
 Notary, from all liability for nonproduction.

      49. LATE CHARGE.  Borrower  shall pay to Lender a late charge of S% of any
 monthly  installment  of  principal  and  interest  as provided in the Note not
 received by Lender within 10 days after that installment is due.

      50. KEEPER OF MORTGAGED PROPERTY.  Pursuant to the provisions of Louisiana
 Revised Statutes, Title 9, Section 5136, Borrower and Lender covenant and agree
 that  Lender  shall  have the  right to  designate  a keeper  of the  Mortgaged
 Property at the time any seizure of the Mortgaged Property is effected and that
 Lender may designate itself or its employees, agents or independent contractors
 as such keeper. Borrower agrees that the reasonable fees of such a keeper shall
 be treated as a disbursement made under Section 12 and shall be secured by this
 Instrument.  At no time has or will Borrower occupy the Mortgaged Property,  or
 any portion of the Mortgaged Property, as its home.

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

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

            X Exhibit A Description of the Land (required).

                 Exhibit B      Modifications to
                 Instrument



























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

 STATE OF
 MASSACHUSETTS

 COUNTY OF
 Suffolk

     THUS DONE and signed in the County of  Suffolk,State of  Massachusetts,  in
the presence of the undersigned  competent  witnesses,  who have hereunto signed
their names together with said appearer and me, Notary,  on the 6th day of July,
1998.

                      BORROWER:
                      402 JULIA STREET ASSOCIATES LIMITED
                      PARTNERSHIP,
                      a Delaware limited partnership

                      By:  HISTORIC PRESERVATION PROPERTIES 1989
                      LIMITED
                           PARTNERSHIP, a Delaware limited
                      partnership ("HPP"),
                           its General Partner

                      By: BOSTON HISTORIC PARTNERS LIMITED
                           PARTNERSHIP,
                                a Massachusetts limited partnership
                           ("BHP"),
                                HPP's General Partner

 Witness/Attest:                By:  PORTFOLIO ADVISORY
 SERVICES, INC.
                                 a Massachusetts
 corporation,
                              BHP's General Partner

 Name:

                                     By:
                                          Terrence P. Sullivan,
 Name:                                    President

                                By:
                              Terrence P. Sullivan,
                              BHP's General Partner





                               Notary Public       JOANNE M.
                               LAURIA
                                                      Notary Public
                                               My Commission
                                               Expires October
                                               29,200-1

                  [SIGNATURES CONTINUED ON FOLLOWING
                  PAGE]












<PAGE>


 STATE OF
 LOUISIANA

 PARISH OF
 ORLEANS

      THUS DONE and signed in the Parish of Orleans, State of Louisiana,  in the
 presence of the undersigned competent witnesses, who have hereunto signed their
 names together with said appearer and me, Notary, on the day of July, 1998.

                      BORROWER:
                      402 JULIA STREET ASSOCIATES LIMITED
                      PARTNERSHIP,
                      a Delaware limited partnership

                      By:

                           Henry M. Lambert, its
                           General Partner
 Name:

 Name:

                      By:
                           R. Carey Bond, its
                           General Partner

                           Borrower's Employer ID
                           Number: 72-1149319





                              Notary
                              Public































<PAGE>


 KEY PRINCIPAL

 Name:     Henry M. Lambert
 Address:  225 Girod Street
           New Orleans,
 Louisiana 70130

 Key
 Principal

 Name:     R. Carey Bond
 Address:  225 Girod Street
           New Orleans,
 Louisiana 70130





































                              EXHIBIT A

                                Tract I

 THAT CERTAIN  PIECE OR PORTION OF GROUND,  together  with all the buildings and
 improvements  thereon  and all of the  rights,  ways,  privileges,  servitudes,
 advantages and appurtenances  thereunto  belonging or in anywise  appertaining,
 situated in the State of Louisiana, Parish of Orleans, in the FIRST DISTRICT of
 the City of New Orleans,  in SQUARE NO. 123, bounded by  Tchoupitoulas  Street,
 Julia  Street,  Constance  Street  (side) (late  Foucher) and St. Joseph Street
 (side).  Said  portion of ground is  designated  as LOTS NOS.  23, 24, 25 and a
 small undesignated  triangle adjoining Lot No. 25 on the Constance Street side,
 which said lots adjoin each other and measures as follows, to-wit:

 Commencing at the intersection of Julia and Tchoupitoulas  Streets, which point
 is the POINT OF BEGINNING,  measure North 78 degrees 49 minutes West a distance
 of 87.3.0 feet to a point;  thence measure South I I degrees I I minutes West a
 distance  of 62.  10. 0 feet to a point;  thence  measure  South 78  degrees 49
 minutes East a distance of 99.8.0 feet to a point;  thence  measure due North a
 distance of 64.0.5 feet to the POINT OF BEGINNING.

 LOTS NOS. 23 and 24 adjoin each other on the Tchoupitoulas Street
 side, said Lot No. 24 forming the corner of Tchoupitoulas Street
 and Julia Street. Lot No. 24 adjoins Lot 25 on the Julia Street
 side, which said lots front on Julia Street. Lot No. 25 adjoins
 the small undesignated triangle portion of ground on the Constance
 Street side and said lots 23 and 25 adjoin each other on the St.
 Joseph Street side.

 The improvements thereon bear the No. 402 Julia Street.

                               Tract II

 Those predial servitudes of light, view and passage as established by the owner
 of Lot 3, Square 123,  First  District of the City of New Orleans,  in favor of
 the  immovable  property  described as Tract I as set forth and described in an
 Agreement to Abandon Common Wall by and between ' ) 3 0 Julia Street Associates
 Limited Partnership [owner of the servient estate] and 402 Julia Street Limited
 Partnership  [owner of the dominant estate] passed before Paul E. Ramoni,  Jr.,
 Notary Public on the I " day of August,  1989,  registered in C.O.B. 832, folio
 11 - 16, of the conveyance records of the Parish of Orleans, State of Louisiana
 on August 1, 1989, under N.A. 4811011.