MULTIFAMILY DEED OF TRUST,
                             ASSIGNMENT OF RENTS AND
                               SECURITY AGREEMENT

         THIS  MULTIFAMILY  DEED OF  TRUST,  ASSIGNMENT  OF RENTS  AND  SECURITY
AGREEMENT (the "Instrument") is dated as of the 10th day of August,  2000, among
the  trustor,  NORTH  WINN  ACQUISITION,  L.L.C.,  a limited  liability  company
organized and existing under the laws of Missouri,  whose address is 104 Armour,
North Kansas City, Missouri 64116,  ("Borrower"),  ASSURED QUALITY TITLE COMPANY
("Trustee"),  and the  beneficiary,  PRUDENTIAL  MUTLIFAMILY  MORTGAGE,  INC., a
corporation organized and existing under the laws of Delaware,  whose address is
1593 Spring Hill Road, Suite 400, Vienna, Virginia 22182 ("Lender").

         Borrower, in consideration of the Indebtedness and the trust created by
this Instrument  irrevocably  grants,  conveys and assigns to Trustee, in trust,
with power of sale,  the  Mortgaged  Property,  including but not limited to the
Land located in the County of Clay, State of Missouri and described in Exhibit A
attached to this Instrument.

         TO SECURE TO LENDER the  repayment  of the  Indebtedness  evidenced  by
Borrower's  Multifamily  Note payable to Lender dated as of August 10, 2000, and
maturing  on  September  1,  2007  (the  "Note")  in  the  principal  amount  of
$1,986,000.00,   and  all  renewals,   extensions  and   modifications   of  the
Indebtedness,  and the  performance  of the covenants and agreements of Borrower
contained in the Loan Documents.

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

Covenants.  Borrower and Lender covenant and agree as follows:

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

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

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


                                        1

<PAGE>
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 and  Hazardous  Materials  Law with  respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.

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

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

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

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

         (h)  "Hazardous  Materials  Laws" means all federal,  state,  and local
laws,  ordinances  and  regulations  and  standards,  rules,  policies and other
governmental  requirements,  administrative  rulings  and  court  judgments  and
decrees in effect now or in the future and including all amendments, that relate
to  Hazardous  Materials  and apply to  Borrower or to the  Mortgaged  Property.
Hazardous Materials Laws include, but are not


                                        2

<PAGE>
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C.  Section 9601, et seq.,  the Resource  Conservation  and Recovery
Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C.
Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and
the Hazardous Materials Transportation Act, 49 U.S.C. Section 5105, et seq., and
their state analogs.

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

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

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

         (l)      [Intentionally omitted]

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

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

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

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

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

         (r)  "Loan  Servicer"  means  the  entity  that  from  time  to time is
designated  by Lender to 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


                                        3

<PAGE>
the Note for the  benefit  of Lender.  Unless  Borrower  receives  notice to the
contrary,  the Loan  Servicer is the entity  identified as "Lender" in the first
paragraph of this Instrument.

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

                  (1)      the Land;

                  (2)      the Improvements;

                  (3)      the Fixtures;

                  (4)      the Personalty;

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

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


                                        4

<PAGE>
                  (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  hosing
                           corporation,   maintenance   charges  or  assessments
                           payable by shareholders or residents;

                  (12)     all Imposition Deposits;

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

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

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

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

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

         (v)   "Personalty"   means  all  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  personal  property (other than Fixtures) which
are used now or in the future in connection  with the  ownership,  management or
operation of the Land or the  Improvements  or are located on the Land or in the
Improvements,  and  any  operating  agreements  relating  to  the  Land  or  the
Improvements,  and any  surveys,  plans and  specifications  and  contracts  for
architectural, engineering and construction services relating to the Land or the
Improvements  and all other  intangible  property  and  rights  relating  to the
operation  of,  or used  in  connection  with,  the  Land  or the  Improvements,
including all governmental permits relating to any activities on the Land.

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

         (x)   "Rents"   means   all  rents   (whether   from   residential   or
non-residential   space),   revenues  and  other  income  of  the  Land  or  the
Improvements, including packing fees, laundry


                                        5

<PAGE>
and vending machine income and fees and charges for food,  health care and other
services  provided at the Mortgaged  Property,  whether now due, past due, or to
become due, and deposits forfeited by tenants.

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

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

         2.       UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.  This
Instrument is also a security  agreement  under the Uniform  Commercial Code for
any of the Mortgaged  Property which,  under applicable law, may be subject to a
security interest under the Uniform  Commercial Code, whether acquired now or in
the  future,   and  all  products  and  cash  and  non-cash   proceeds   thereof
(collectively,  "UCC  Collateral"),  and  Borrower  hereby  grants  to  Lender a
security  interest in the UCC Collateral.  Borrower 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.



                                        6

<PAGE>
         3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

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

         (b) After the  occurrence of an Event of Default,  Borrower  authorizes
Lender to collect,  sue for and compromise  Rents and directs each tenant of the
Mortgaged  Property to pay all Rents to, or as  directed  by,  Lender.  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


                                        7

<PAGE>
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.


                                        8

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

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

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

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

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

         (b) Until 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.


                                        9

<PAGE>
         (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  non-residential use (including
any Lease in existence on the date of this Instrument) without the prior written
consent of  Lender.  Borrower  shall,  without  request  by  Lender,  deliver an
executed copy of each non-residential  Lease to Lender promptly after such Lease
is signed.  All  non-residential  Leases,  including  renewals or  extensions of
existing Leases, shall specifically provide that (1) such Leases are subordinate
to the lien of this Instrument  (unless waived in writing,  by Lender);  (2) the
tenant shall  attorn to Lender and any  purchaser at a  Foreclosure  sale,  such
attornment to be  self-executing  and effective upon acquisition of title to the
Mortgaged Property by any purchaser at a foreclosure sale or


                                       10

<PAGE>
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


                                       11

<PAGE>
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 Leader 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


                                       12

<PAGE>
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 all times  maintain
records sufficient to demonstrate compliance with the provisions of this Section
10. Borrower shall take appropriate measures to prevent, and shall not engage in
or knowingly permit, any illegal activities at the Mortgaged Property that could
endanger tenants or visitors, result in damage to the Mortgaged Property, result
in forfeiture of the Mortgaged Property, or otherwise materially impair the lien
created by this  Instrument  or  Lender's  interest in the  Mortgaged  Property.
Borrower  represents  and  warrants to Lender  that no portion of the  Mortgaged
Property  has  been  or will be  purchased  with  the  proceeds  of any  illegal
activity.

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

         12.      PROTECTION OF LENDER'S SECURITY.

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



                                       13

<PAGE>
         (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  tune  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


                                       14

<PAGE>
                           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.



                                       15

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

         15.      TAXES; OPERATING EXPENSES.

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

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

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

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

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

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


                                       16

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

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




                                       17

<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  18(b),  Borrower  shall not  cause or permit  any of the
following:

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

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

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

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

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

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

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



                                       18

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

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

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

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

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

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

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

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


                                       19

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

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

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

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

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

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

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

         (g)  Borrower  shall  pay  promptly  the  costs  of  any  environmental
inspections, tests or audits ("Environmental Inspections") required by Lender in
connection  with  any  foreclosure  or  deed in  lieu  of  foreclosure,  or as a
condition of Lender's  consent to any Transfer  under Section 21, or required by
Lender following a reasonable determination by Lender that Prohibited Activities
or Conditions may exist.  Any such costs incurred by Lender  (including the fees
and out-of-pocket costs of attorneys and technical  consultants whether incurred
in connection with any judicial or  administrative  process or otherwise)  which
Borrower  fails  to  pay  promptly  shall  become  an  additional  part  of  the
Indebtedness  as  provided  in  Section  12. The  results  of all  Environmental
Inspections  made by Lender shall at all times remain the property of Lender and
Lender  shall have no  obligation  to disclose or  otherwise  make  available to
Borrower or any other party such  results or any other  information  obtained by
Lender in connection with its Environmental Inspections.  Lender hereby reserves
the right, and Borrower hereby expressly authorizes Lender, to make available to
any  party,  including  any  prospective  bidder  at a  foreclosure  sale of the
Mortgaged Property, the results of any Environmental  Inspections made by Lender
with respect to the Mortgaged  Property.  Borrower  consents to Lender notifying
any party (either


                                       20

<PAGE>
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;


                                       21

<PAGE>
                  (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 Indemnities shall be subject
to the  approval of those  Indemnities.  However,  any  Indemnitee  may elect to
defend  any  claim or  legal  or  administrative  proceeding  at the  Borrower's
expense.

         (l)  Borrower  shall not,  without the prior  written  consent of those
Indemnities  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  Indemnities,  satisfactory  in form and  substance to Lender,  or (2) may
materially  and  adversely  affect  Lender,  as  determined  by  Lender  in  its
discretion.

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

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

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

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

                  (3)      reimburse  Indemnities  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  Indemnities 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


                                       22

<PAGE>
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 Indemnities under this Section 18 shall be joint and several.  The
obligation of Borrower to indemnify the Indemnities  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.



                                       23

<PAGE>
         (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


                                       24

<PAGE>
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;



                                       25

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

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

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

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

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

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

                  (1)      a Transfer to which Lender has consented;

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

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

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

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



                                       26

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

                  (6)      if a guaranty  has been  executed  and  delivered  in
                           connection  with the Note,  this Instrument or any of
                           the other Loan Documents, the


                                       27

<PAGE>
                           Borrower  causes one or more  individuals or entities
                           acceptable to Lender to execute and deliver to Lender
                           a guaranty in a form acceptable to Lender; and

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

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

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

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

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

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

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

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

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

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



                                       28

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

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

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

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

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

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

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

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

         (e)      any Event of Default under Section 21;

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

         (g) any failure by Borrower  to perform  any of its  obligations  under
this  Instrument  (other than those specified in Sections 22(a) through (f)), as
and when required,  which continues for a period of 30 days after notice of such
failure by Lender to Borrower,


                                       29

<PAGE>
but no such notice or grace  period  shall apply in the case of any such failure
which could,  in Lender's  judgment,  absent  immediate  exercise by Lender of a
right or remedy under this Instrument,  result in harm to Lender,  impairment of
the Note or this  Instrument  or any other  security  given under any other Loan
Document;

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

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

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

         24.      FORBEARANCE.

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

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



                                       30

<PAGE>
         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  term 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


                                       31

<PAGE>
the  Indebtedness  or in  performing  or  observing  any  of  the  covenants  or
agreements  contained in this Instrument or any of the other Loan Documents (or,
if the Borrower is in default,  describing  such default in reasonable  detail);
(v) whether or not there are then  existing  any  setoffs or  defenses  known to
Borrower against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by Lender.

         30.      GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

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

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

         31.      NOTICE.

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

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

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



                                       32

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

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

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

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

         36.      RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

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

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

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



                                       33

<PAGE>
         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.

Additional Covenants. Borrower and Lender further covenant and agree as follows:



                                       34

<PAGE>
         43.  ACCELERATION;  REMEDIES.  At any time during the  existence  of an
Event of Default, Lender, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand,  and may invoke the power of
sale and any one or more other remedies  permitted by applicable law or provided
in this Instrument or in any other Loan Document. Borrower acknowledges that the
power of sale granted in this  Instrument  may be  exercised  by Lender  without
prior judicial hearing.  Borrower has the right to bring an action to assert the
non-existence  of an Event of  Default  or any  other  defense  of  Borrower  to
acceleration  and  sale.  Lender  shall be  entitled  to  collect  all costs and
expenses  incurred  in  pursuing  such  remedies,  including  but not limited to
attorneys' fees, costs of documentary evidence, abstracts and title reports.

         If Lender  invokes  the power of sale,  Lender or  Trustee  shall  mail
copies of the notice of sale to  Borrower  and to other  persons  prescribed  by
applicable law in the manner  provided by applicable  law.  Trustee may sell the
Mortgaged  Property at the time and place and under the terms  designated in the
notice  of  sale  in one or  more  parcels  and in such  order  as  Trustee  may
determine.  Trustee  may  postpone  sale of all or any  parcel of the  Mortgaged
Property to any later time on the same date by public  announcement  at the time
and place of any  previously  scheduled  sale.  Lender or Lender's  designee may
purchase the Mortgaged Property at any sale.

         Trustee  shall deliver to the purchaser  Trustee's  deed  conveying the
Mortgaged Property so sold without any covenant or warranty, express or implied.
The recitals in Trustee's deed shall be prima facie evidence of the truth of the
statements contained in those recitals.  Trustee shall apply the proceeds of the
sale  in the  following  order:  (a) to all  costs  and  expenses  of the  sale,
including, but not limited to, reasonable Trustee's fees and attorneys' fees and
costs of title evidence;  (b) to the  Indebtedness  in such order as Lender,  in
Lender's sole discretion,  directs; and (c) the excess, if any, to the person or
persons legally entitled to it.

         44. RELEASE. Upon payment of the Indebtedness, Lender shall release the
lien of this Instrument.

         45.  SUBSTITUTE  TRUSTEE.  Lender at Lender's  option,  with or without
cause,  may from time to time remove Trustee and appoint a successor  trustee by
an  instrument  recorded  in the city or  county  in which  this  Instrument  is
recorded.  Without conveyance of the Mortgaged  Property,  the successor trustee
shall succeed to all the title,  power and duties  conferred upon the Trustee in
this Instrument and by applicable law.

         46. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES  NOT TO ELECT A TRIAL BY JURY WITH  RESPECT TO ANY ISSUE  ARISING  OUT OF
THIS INSTRUMENT OR THE  RELATIONSHIP  BETWEEN THE PARTIES AS BORROWER AND LENDER
THAT IS  TRIABLE  OF RIGHT BY A JURY AND (B)  WAIVES  ANY RIGHT TO TRIAL BY JURY
WITH  RESPECT TO SUCH ISSUE TO THE EXTENT  THAT ANY SUCH RIGHT  EXISTS NOW OR IN
THE FUTURE. THIS WAIVER OF


                                       35

<PAGE>
RIGHT  TO  TRIAL  BY JURY IS  SEPARATELY  GIVEN  BY EACH  PARTY,  KNOWINGLY  AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

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

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

                  |X|      Exhibit B        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
representative.

                            NORTH WINN ACQUISITION, L.L.C., a
                                     Missouri limited liability company

                            By:      Maxus Realty Trust, Inc., a Missouri
                                     corporation, Manager



                                     By: /s/ Daniel W. Pishny
                                              Daniel W. Pishny
                                              President





                                       36

<PAGE>
STATE OF Missouri

CITY/COUNTY OF Clay, ss:

         On this  10th  day  of  August,  2000,  before me, the  undersigned,  a
Notary  Public  in and for  the  City/County  and  State  aforesaid,  personally
appeared  Daniel  W.  Pishny,  personally  known to me and known to me to be the
President of Maxus Realty Trust, Inc., a Missouri corporation,  Manager of North
Winn  Acquisition,  L.L.C., a Missouri limited liability  company,  and the same
person  who  executed  the  foregoing  instrument,  and duly  acknowledged  said
execution  to be for and on  behalf  of and as the act and deed of said  limited
liability company.

         IN WITNESS  WHEREOF,  I have  hereunto set my hand and notarial seal on
the day and year last above written.


                                                      /s/ Grace E. Bales
                                                      Notary Public

My Commission Expires:  Aug. 24, 2000

[Notarial Seal]










                                       37

<PAGE>
                                  KEY PRINCIPAL

Key Principal

Name:             Maxus Realty Trust, Inc., a Missouri corporation

Address:          104 Armour Road
                  North Kansas City, Missouri 64116



                                       38

<PAGE>
                                    EXHIBIT A

All that part of the Northeast Quarter of Section 6 and the Northwest Quarter of
Section 5, both in Township 50, Range 32, in Clay County, Missouri,  including a
portion  of  Block  "A" in  LAKESIDE,  an  addition  in  said  County  all  more
particularly  described as follows:  Beginning at a point that is 87.5 feet East
of the West  line and  201.63  feet  South of the  North  line of the  Northwest
Quarter of said Section 5; thence South 0 degrees 32 minutes 02 seconds West and
parallel  to the West line of said  Quarter a distance  of 255.46  feet;  thence
South 89 degrees 43 minutes 32 seconds  East and  parallel  to the North line of
said  Northwest  Quarter a distance of 362.50  feet;  thence  North 0 degrees 32
minutes 02 seconds East and parallel to the West line of said Quarter a distance
of 98.13  feet to a point  that is 358.90  feet  South of the North line of said
Northwest Quarter; thence North 74 degrees 09 minutes 31 seconds East a distance
of 322.85 feet;  thence South 22 degrees 26 minutes 34 seconds  East, a distance
of 53.88 feet to a point in the North Right-of-Way line of the Mid-Town Freeway;
thence South 49 degrees 07 minutes 34 seconds West along said  Right-of-Way line
a distance of 523.84  feet;  thence  South 56 degrees 43 minutes 14 seconds West
along said  Right-of-Way  a distance of 75.67 feet;  thence  South 49 degrees 07
minutes 34 seconds West along said  Right-of-Way a distance of 25.0 feet; thence
South 37 degrees 48 minutes 54 seconds West along said  Right-of-Way  a distance
of 50.99  feet;  thence  South 49 degrees 07 minutes 34 seconds  West along said
Right-of-Way  a distance of 272.85 feet to a point in the  centerline  of Barnes
Avenue as shown on the  recorded  plat of  LAKESIDE;  thence North 89 degrees 45
minutes 33 seconds  West along  said  centerline  a distance  of 70.73 feet to a
point in the West line of the Northwest  Quarter of said Section 5; thence South
0 degrees 32 minutes  02 seconds  West along said West line a distance  of 62.01
feet to a point in the North Right-of-Way line of said Mid-Town Freeway;  thence
South 49 degrees 07 minutes 34 seconds West along said  Right-of-Way  a distance
of 152.94 feet to a point in the East Right-  of-Way line of State  Highway #10;
thence  Northerly along said Highway #10  Right-of-Way  line which is a curve to
the left having a radius of 184.30 feet a distance of 13.76 feet to its point of
tangency;  thence  North 3  degrees  21  minutes  02  seconds  West  along  said
Right-of-  Way line and  tangent to said curve a distance  of 448.30 feet to the
point  of a  curve  to  the  right  having  a  radius  of  691.80  feet;  thence
Northeasterly  along  said  curve a  distance  of  234.75  feet to its  point of
tangency;  thence  North 16  degrees  05  minutes  31  seconds  East  along said
Right-of-Way  tangent a  distance  of 91.63  feet to the point of a curve to the
right  having  a  radius  of  166.0  feet;  thence   Northeasterly   along  said
Right-of-Way  curve a distance  of 210.96  feet to the point of tangency of said
curve;  thence  North 88 degrees 54 minutes 23 seconds East along said tangent a
distance  of 29.44  feet to the point of  beginning,  all in Kansas  City,  Clay
County, Missouri.




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<PAGE>
                                    EXHIBIT B

                           MODIFICATIONS TO INSTRUMENT
                            (Key Principal Transfers)

         The following modifications are made to the text of the Instrument that
precedes this Exhibit:

         1.       Section  21(b) is  modified to delete the period at the end of
                  Section 21(b)(6) and substitute "; and" therefore and to add a
                  new Section 21(b)(7):

                  "(7)     a Transfer by Key  Principal of  ownership  interests
                           held  by  the  Key   Principal   in   Borrower  to  a
                           partnership (the "Operating  Partnership")  that will
                           be the sole member of  Borrower;  provided,  however,
                           that (A) after such Transfer, Key Principal shall own
                           no less than 51% of the  partnership  interest in the
                           Operating  Partnership  and shall  maintain  the same
                           right and  ability  to manage  and  control  Borrower
                           (through the Operating Partnership as an intermediate
                           entity)  as  existed  prior to the  Transfer  and (B)
                           Lender shall be provided  with written  notice of all
                           such Transfers  permitted under this section 21(b)(7)
                           no  later  than  5 days  prior  to  the  date  of any
                           Transfer."

         2.       All  capitalized  terms used in this Exhibit not  specifically
                  defined  herein  shall have the meanings set forth in the text
                  of the Instrument that precedes this Exhibit.




                                                    /s/ DWP
                                                     INITIALS




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