.



Exhibit 10KKK

 

 

Prepared
by, and after recording

return
to: 

Amy
B. Connelly, Esq.

Krooth
& Altman LLP

1850
M Street, NW, Suite 400

Washington,
DC 20036

 

 

 

 

 

 

 

 

 

 

 

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS 

AND SECURITY AGREEMENT AND FIXTURE FILING

 

(TEXAS)




           
TABLE OF CONTENTS

 

                                                                                                                                                 
PAGE

 



	
1.
	
DEFINITIONS.
	
2

	
2.
	
UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT.
	
7

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

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

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

	
6.
	
EXCULPATION.
	
11

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

	
8.
	
COLLATERAL
AGREEMENTS.
	
13

	
9.
	
APPLICATION
OF PAYMENTS.
	
13

	
10.
	
COMPLIANCE
WITH LAWS.
	
13

	
11.
	
USE
OF PROPERTY.
	
14

	
12.
	
PROTECTION
OF LENDER'S SECURITY.
	
14

	
13.
	
INSPECTION.
	
14

	
14.
	
BOOKS
AND RECORDS; FINANCIAL REPORTING.
	
15

	
15.
	
TAXES;
OPERATING EXPENSES.
	
16

	
16.
	
LIENS;
ENCUMBRANCES.
	
17

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

	
18.
	
ENVIRONMENTAL
HAZARDS.
	
18

	
19.
	
PROPERTY
AND LIABILITY INSURANCE.
	
24

	
20.
	
CONDEMNATION.
	
25

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

	
22.
	
EVENTS
OF DEFAULT.
	
30

	
23.
	
REMEDIES
CUMULATIVE.
	
31

	
24.
	
FORBEARANCE.
	
31

	
25.
	
[INTENTIONALLY
DELETED].
	
31

	
26.
	
WAIVER
OF STATUTE OF LIMITATIONS.
	
31

	
27.
	
WAIVER
OF MARSHALLING.
	
31

	
28.
	
FURTHER
ASSURANCES.
	
32

	
29.
	
ESTOPPEL
CERTIFICATE.
	
32

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

	
31.
	
NOTICE.
	
33

	
32.
	
SALE
OF NOTE; CHANGE IN SERVICER.
	
33

	
33.
	
SINGLE
ASSET BORROWER.
	
33

	
34.
	
SUCCESSORS
AND ASSIGNS BOUND.
	
34

	
35.
	
JOINT
AND SEVERAL LIABILITY.
	
34

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

	
37.
	
SEVERABILITY;
AMENDMENTS.
	
34

	
38.
	
CONSTRUCTION.
	
34

	
39.
	
LOAN
SERVICING.
	
35

	
40.
	
DISCLOSURE
OF INFORMATION.
	
35

	
41.
	
NO
CHANGE IN FACTS OR CIRCUMSTANCES.
	
35

	
42.
	
SUBROGATION.
	
35

	
43.
	
ACCELERATION;
REMEDIES.
	
35

	
44.
	
RELEASE.
	
39

	
45.
	
TRUSTEE.
	
39

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

	
47.
	
NO
FIDUCIARY DUTY.
	
40

	
48.
	
FIXTURE
FILING.
	
40

	
49.
	
ADDITIONAL
PROVISIONS REGARDING ASSIGNMENT OF RENTS.
	
40

	
50.
	
LOAN
CHARGES.
	
40

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

	
52.
	
ENTIRE
AGREEMENT.
	
41

	
53.
	
WAIVER
OF TRIAL BY JURY.
	
41



 

 

 

 




MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS

SECURITY AGREEMENT AND FIXTURE FILING 

 

 

           
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”) is dated as of the 30th day of November, 2009,
by AIMCO COVINGTON POINTE, L.P.,a limited partnership organized and existing
under the laws of Delaware, whose address is Stanford Place 3, 4582 South
Ulster Street Parkway, Suite 1100, Denver, Colorado 80237,  as trustor (“Borrower”), to J.
Paxton, Esq., as trustee (“Trustee”), for the benefit of KeyCorp Real Estate Capital Markets,
Inc., a corporation organized
and existing under the laws of Ohio, whose address is 911 Main Street,
Suite 1500, Kansas City, Missouri 64105,
as beneficiary (“Lender”).

 

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

 

           
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by Borrower’s
Multifamily Note payable to Lender, dated as of the date of this Instrument, and
maturing on February 1, 2016, in the principal amount of $5,850,000.00, 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 warrants and represents that Borrower is lawfully seized of the
Mortgaged Property and has the right, power and authority to grant, convey and
assign the Mortgaged Property, and that the Mortgaged Property is
unencumbered.  Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and
demands, subject to any easements and restrictions listed in a schedule of
exceptions to coverage in any title insurance policy issued to Lender
contemporaneously with the execution and recordation of this Instrument and
insuring Lender’s interest in the Mortgaged Property.

 

Covenants. 
Borrower and Lender covenant and agree as follows:

 

           
1.        
DEFINITIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

           
(l)         [Intentionally
omitted]

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

                       
(1)        the Land;

 

                       
(2)        the Improvements;

 

                       
(3)        the Fixtures;

 

                       
(4)        the Personalty;

 

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

 

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

 

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

 

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

 

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

 

                       
(10)      all Rents and Leases;

 

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

 

                       
(12)      all Imposition Deposits; 

 

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

 

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

 

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

 

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


 

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

 

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

 

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

 

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

 

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

 

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

 

           
2.         UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT. 

 

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


 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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


 

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

 

           
6.        
EXCULPATION.  

 

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

 

           
7.        
DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

 

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

 

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

 

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

 

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

 

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

 

           
8.        
COLLATERAL AGREEMENTS.  

 

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

 

           
9.        
APPLICATION OF PAYMENTS.  

 

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

 

           
10.       COMPLIANCE WITH
LAWS.  

 

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

 

           
11.       USE OF
PROPERTY.  

 

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

 

           
12.       PROTECTION OF
LENDER'S SECURITY.

 

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

 

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

 

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

 

           
13.      
INSPECTION.  

 

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

 

           
14.         
BOOKS AND RECORDS; FINANCIAL REPORTING.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

           
15.       TAXES; OPERATING
EXPENSES.

 

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

 

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


 

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

 

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

 

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

 

           
16.       LIENS;
ENCUMBRANCES.  

 

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

 

           
17.       PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

 

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

 

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

 

           
18.       ENVIRONMENTAL
HAZARDS. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

                       


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

 

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


 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

                       


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

                       


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

 

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

 

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

 

           
19.       PROPERTY AND
LIABILITY INSURANCE.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

           


           
20.       CONDEMNATION.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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


 

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


 

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

 

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

 

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

 

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

 

                       
(1)        a Transfer to which Lender has
consented;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

                       
(2)        the absence of any Event of
Default;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

           
22.       EVENTS OF
DEFAULT.  

 

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

 

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

 

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

 

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

 

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

 

           
(e)        any Event of Default under
Section 21;

 

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

 

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


 

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

 

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

 

           
23.       REMEDIES
CUMULATIVE.  

 

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

 

           
24.      
FORBEARANCE.

 

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

 

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

 

           
25.      
[INTENTIONALLY DELETED].  

 

           
See Section 50. 

 

           
26.       WAIVER OF STATUTE
OF LIMITATIONS.  

 

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

 

           
27.       WAIVER OF
MARSHALLING. 

 

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

 

           
28.       FURTHER
ASSURANCES.  

 

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

 

           
29.       ESTOPPEL
CERTIFICATE.  

 

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

 

           
30.       GOVERNING LAW;
CONSENT TO JURISDICTION AND VENUE.

 

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

 

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

 

           
31.       NOTICE.

 

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

 

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

 

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

 

           
32.       SALE OF NOTE;
CHANGE IN SERVICER.  

 

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

 

           
33.       SINGLE ASSET
BORROWER.   

 

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

 

           
34.       SUCCESSORS AND
ASSIGNS BOUND.  

 

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

 

           
35.       JOINT AND SEVERAL
LIABILITY.  

 

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

 

           
36.       RELATIONSHIP OF
PARTIES; NO THIRD PARTY BENEFICIARY.

 

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

 

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

 

           
37.       SEVERABILITY;
AMENDMENTS.  

 

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

 

           
38.      
CONSTRUCTION.  

 

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

 

           
39.       LOAN
SERVICING.  

 

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

 

           
40.       DISCLOSURE OF
INFORMATION.  

 

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

 

           
41.       NO CHANGE IN FACTS
OR CIRCUMSTANCES.  

 

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

 

           
42.      
SUBROGATION.  

 

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


 

           
43.       ACCELERATION;
REMEDIES.  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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


 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

           
44.      
RELEASE.  

 

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

 

           
45.      
TRUSTEE.  

 

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

 

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

 

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

 

           
46.       VENDOR’S
LIEN; RENEWAL AND EXTENSION.  Intentionally
Deleted.

 

           
47.       NO
FIDUCIARY DUTY.  

           


           
Lender owes no fiduciary or
other special duty to Borrower.

 

           
48.       FIXTURE
FILING.  

 

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

 

           
49.       ADDITIONAL
PROVISIONS REGARDING ASSIGNMENT OF RENTS.  

 

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

 

           
50.       LOAN
CHARGES.  

 

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

 

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

 

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

 

           
52.       ENTIRE
AGREEMENT.  

 

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

 

           
53.       WAIVER OF
TRIAL BY JURY.

 

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

 

 

 

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

 

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

 

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

 

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

           


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

 

 

[DOCUMENT EXECUTION AND
ACKNOWLEDGMENT OCCUR ON THE FOLLOWING PAGES]


 

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

 

 

AIMCO
COVINGTON POINTE, L.P.,

a
Delaware limited partnership

 

By:      
DAVIDSON GP, L.L.C.,

           
a South Carolina limited liability company,

           
its General Partner

 

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

                       
a Delaware limited partnership,

                       
its Sole Member

 

           
By:       Davidson Diversified Properties,
Inc.,

                                   
a Tennessee corporation,

                                   
its Managing General Partner

 

 

 

                                   
By:       /s/Patti K. Fielding

                                   
Patti K. Fielding

                                   
Executive Vice President and 

                                   
Treasurer

 

 

[ACKNOWLEDGMENT APPEARS ON THE FOLLOWING PAGE]


 

           
ACKNOWLEDGMENT

 

STATE
OF
COLORADO                              
)

                                                                       
) ss:

CITY
AND COUNTY OF
DENVER            
)

 

           
BEFORE ME, the undersigned, a Notary Public in and for said County and State, on
this day personally appeared Patti K. Fielding, known to me to be the Executive
Vice President and Treasurer of Davidson Diversified Properties, Inc., the
corporation that executed the foregoing instrument, and known to me to be the
person who executed the foregoing instrument on behalf of said corporation, said
corporation being known to me to be Managing General Partner of Davidson Income
Real Estate, L.P., which is the Sole Member of Davidson GP, L.L.C., which is the
General Partner of AIMCO Covington Pointe, L.P., the limited partnership that
executed the foregoing instrument, and acknowledged to me that such corporation
executed the same as such Managing General Partner of the Sole Member of the
General Partner of the limited partnership and that such limited partnership
executed the same for the purposes and consideration therein expressed.

 

           
GIVEN UNDER MY HAND AND SEAL OF OFFICE this ____ day of November, 2009.

 

                                                           
____________________________________________

                                                           
Notary Public in and for Denver County, Colorado

 

My Commission expires:

 


                                                              
KEY PRINCIPAL

 

 

 

Key Principal

 

Name:            
AIMCO Properties, L.P.

 

Address:        
Stanford Place 3, 4582 South Ulster Street Parkway, Suite 1100

                       
Denver, Colorado 80237

 

 

 

 

 

 

 




 

EXHIBIT A

 

 

                                                 
[DESCRIPTION OF THE LAND]

 

 




EXHIBIT B-I

 

MODIFICATION
TO INSTRUMENTS

(Bankruptcy)

 

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

 

1.        
The following terms, when used in the Instrument, shall have the following
meanings:

 

           
"Bankruptcy Event" means any one or more of the following: (i) the
commencement of a voluntary case under one or more of the Insolvency Laws by the
Borrower; (ii) the acknowledgment in writing by the Borrower that it is unable
to pay its debts generally as they mature; (iii) the making of a general
assignment for the benefit of creditors by the Borrower; (iv) the filing of an
involuntary case under one or more Insolvency Laws against the Borrower; (v) the
appointment of a receiver, liquidator, custodian, sequestrator, trustee or other
similar officer who exercises control over the Borrower or any substantial part
of the assets of the Borrower provided that any proceeding or case under (iv) or
(v) above is not dismissed within 90 days after filing.

 

           
"Borrower Affiliate" means, as to either Borrower or Key Principal, any
entity that directly or indirectly controls, is controlled by or
is under common control with either Borrower or Key Principal, as
applicable.  As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of Borrower or Key Principal,
whether through ownership of voting securities, by contract or
otherwise.

 

           
"Insolvency Laws" means the United States Bankruptcy Code, 11 U.S.C. §
101, et seq., together with any other federal or state law affecting
debtor and creditor rights or relating to the bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding, as amended from time to time, to the extent applicable to
the Borrower.

 

2.        
The definition of "Transfer"in Section 1 is modified to replace the reference in
(E)(ii) to the "United States
Bankruptcy Code" with "Insolvency
Laws."

 

3.        
Section 12(a) is modified to read as follows:

 

           
"(a)      
If Borrower fails to perform any of its obligations under this Instrument or any
other Loan Document, or if any action or proceeding (including a Bankruptcy
Event) 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."

 

4.        
Section 22 is modified to delete "and"
at the end of Section 22(h); delete the period at the end of Section 22(i) and
substitute "; and"
therefor; and to add the following as a new Section 22(j):

 

         "(j)      
the occurrence of a Bankruptcy
Event."

 

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.

 

 

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EXHIBIT B-II

MODIFICATIONS TO INSTRUMENT

(First Lien)

 

 

           
1.         The following new Sections
are added to the end of the Instrument after the last numbered Section:

                       


           
"54.      CONSENT TO SUBORDINATE MORTGAGE. 
Notwithstanding any provisions of this Instrument or any other Loan Document
to the contrary, it is understood and agreed that Lender has consented to
additional financing on the Mortgaged Property as evidenced by a Multifamily
Note dated as of March 31, 2009, in the original principal amount of
$1,500,000.00 (as the same may be modified or amended with the approval of
noteholder, the "Subordinate Note") made by the Borrower and payable to
the order of Lender and secured by a Multifamily Deed of Trust, Assignment of
Rents and Security Agreement and Fixture Filing dated the same date as the
Subordinate Note (the "Subordinate Instrument").

 

           
55.       CROSS-DEFAULT.  If
Borrower is in default under any promissory note evidencing a subordinate loan,
including without limitation, the Subordinate Note, the Subordinate Instrument,
or any other loan document executed in connection with the indebtedness
evidenced by the Subordinate Note, which default remains uncured after the
applicable cure period, if any, such default shall constitute an Event of
Default under the Note and this Instrument.  The occurrence of an Event of
Default under the Note or this Instrument shall constitute an Event of Default
under the Subordinate Note and the Subordinate Instrument.

 

           
56.       PARTIES INTENT REGARDING
MERGER.  Borrower waives the application of the doctrine of merger as
applied to any foreclosure affecting the Property (or other manner of obtaining
title to the Property) and agrees that such doctrine shall not affect the
enforceability of any obligation described in this Instrument.  It is the
intent of the parties hereto that (i) in the event that Lender or any of
Lender's successors, assigns or transferee, obtains title to the Mortgaged
Property pursuant to the Instrument (by virtue of a foreclosure sale, a deed in
lieu of foreclosure or otherwise) and such party is also or subsequently becomes
the holder of the Subordinate Note and Subordinate Instrument, such party's
title interest and lien interest SHALL NOT merge so as to effect an
extinguishment of any indebtedness secured by the Subordinate Instrument or
evidenced by the Subordinate Note, and (ii) in the event that the holder of the
Subordinate Note and Subordinate Instrument obtains title to the Mortgaged
Property pursuant to the Subordinate Instrument (by virtue of a foreclosure
sale, a deed in lieu of foreclosure or otherwise) and such party is also or
subsequently becomes the holder of the Note and this Instrument, such party's
title interest and lien interest SHALL NOT merge so as to effect an
extinguishment of this Instrument or any indebtedness secured by this Instrument
or evidenced by the Note.  Borrower further acknowledges and agrees that no
course of conduct by Borrower, Lender or holder of the Subordinate Note, or any
of their successors, assigns or transferees subsequent to the date hereof shall
be used to demonstrate any intent contrary to the express intent stated
herein.  

 

           
57.       REPLACEMENT RESERVE.  Borrower
hereby assigns to Lender all amounts in the "Replacement Reserve" (as defined in
the Replacement Reserve Agreement executed in connection with the Note and this
Instrument) as additional security for all of the Borrower's obligations under
the Subordinate Note and Subordinate Instrument."

 

           
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.

 

 

 

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EXHIBIT
B-III

AIMCO MODIFICATIONS TO
INSTRUMENT

 

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

A.     Section 1(v) is modified to read as
follows:

(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 exclusively 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 exclusively relating
to the operation of, or used exclusively in connection with, the Land or the
Improvements including all governmental permits relating to any activities on
the Land.

B.   Section 7 is modified
by adding a new subsection 7(f) as follows:

“(f)      
Notwithstanding the foregoing provisions of this Section 7, Lender hereby
conditionally waives the requirement of Imposition Deposits for (i) water and
sewer charges which, if not paid, may result in a lien on all or any part of the
Mortgaged Property, (ii) insurance premiums and (iii) Taxes, as required
pursuant to Sections 7(a)(1), (2) and (3) above; provided, that:

(i)        
Borrower provides Lender with annual proof of payment of any such water and
sewer charges and insurance premiums (in the form of a paid invoice) no later
than ten (10) days prior to the date the same are due or the expiration of the
insurance policy, as applicable.  Further, Lender shall have the right to
examine Borrower’s records relating to the payment of any water and sewer
charges, insurance premiums and other expenses of the Mortgaged Property upon
reasonable notice from Lender;

(ii)       
Lender’s annual property inspections show that the Mortgaged Property is in good
condition;

(iii)              
No change to,
or replacement of, any insurance policy shall be made by Borrower without the
express written consent of Lender; provided, however, that Borrower shall be
permitted to change insurance carriers so long as the material terms of the
insurance policy remain the same, the new insurance policy complies with all
requirements of the Loan Documents, and Lender is named as an additional
insured;

(iv)      
Lender will engage a third-party search service to annually

confirm payment of Taxes;

 

(v)       
Upon the occurrence of any Event of Default, whether monetary or non-monetary,
the suspension of the collection of monthly Imposition Deposits will
automatically terminate and Borrower shall, on the first day of the month
following notice by Lender, and throughout the remaining loan term resume and
continue to pay Imposition Deposits;

(vi)      
If a Transfer of the Mortgaged Property occurs (other than a Transfer permitted
under Sections 21(b)(7) – (10) of this Instrument), Imposition Deposits will
automatically and immediately be reinstated; and

(vii)     
In the event Lender exercises this right to reinstate the collection of monthly
Imposition Deposits, Borrower shall, on the first month following notice by
Lender and throughout the remaining loan term, resume and continue to pay
Imposition Deposits.

C.    Except in a case where Lender in
its discretion determines that an emergency exists, Lender may take actions
specified in Section 12(a) only if Lender has notified Borrower of Borrower's
failure to perform any of its obligations under this Instrument or any other
Loan Document and Borrower does not cure the failure within ten (10) days after
such notice.  If Lender so determines that an emergency exists, Lender
shall notify Borrower of the action taken within ten (10) days after the action
is taken.

D.  Sections 14(b)(4) and
14(b)(5) are modified to read as follows:

(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 each general partner in Borrower, and confirming that the ownership
of each other Controlling Entity has not changed in a manner that violates
Section 21(a);

(5)        promptly
following Lender’s request, quarterly or monthly income and expense statements
for the Property relating to a quarterly or monthly period, as the case may be,
ending no later than 45 days before the request;

E.   For purposes of Section 14(b), Borrower
shall be deemed to have delivered any statement or document "upon Lender's
request" if Borrower has delivered the document promptly following Lender's
request.

F.     
Notwithstanding Section (14)(c),
unless (i) an Event of Default has occurred and is continuing, or (ii) three (3)
or more Events of Default have occurred (whether cured or continuing) during the
prior twelve (12) calendar months, Lender may require that the financial
statements required by Sections 14(b)(1), 14(b)(2) and 14(b)(3) be audited, but
may not require that any other financial statements required by Section 14 be
audited.  Certification of a statement by the chief financial officer of
the entity that is the subject of the statement or, in the case of a
partnership, the chief financial officer of the general partner, will be
acceptable to Lender as certification by an individual having authority to bind
Borrower.

G.  Lender shall not have
Borrower's books and records audited pursuant to Section 14(d) unless Lender has
given Borrower notice specifying the statements, schedules and reports required
by Section 14(b) that Borrower has failed to provide, and Borrower has not
provided such statements by the expiration of ten days after such
notice.

H.  So long as Borrower is contesting the amount
and validity of any Imposition other than insurance premiums diligently and in
good faith as described in Section 15(d) and all of the conditions specified in
clauses (1) through (4) of Section 15(d) are satisfied, Lender will refrain from
applying Imposition Deposits to payment of the contested Imposition.

I.    Section 15(e) is modified to read as
follows:

15(e)    Borrower shall promptly deliver
to Lender a copy of all notices of, and invoices for Impositions, and if
Borrower pays any Imposition directly (which Borrower has no obligation to do
unless Imposition Deposits have been waived or are insufficient and Lender has
notified Borrower of that insufficiency), Borrower shall promptly furnish to
Lender receipts evidencing such payments. 

J.    For purposes of Section 18(b),
"pre-packaged supplies, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable multifamily properties"
shall include, without limitation, pool, spa, maintenance and gardening
materials.

K.  The second sentence of
Section 18(c) is modified to read as follows:

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 be reasonably expected to cause or permit any Prohibited Activity or
Condition.

L.   For purposes of Section 18(d), Borrower
shall only be obligated to pay out-of-pocket expenses incurred by Lender in
connection with the monitoring and review of an O&M Program and Borrower's
performance to the extent such expenses are reasonable.

M.  Borrower's representation and warranty in
Section 18(e)(4) regarding requirements for notification regarding releases of
Hazardous Materials shall relate only to such releases, if any, at or affecting
the Mortgaged Property.

N.  Section 18(e)(5) is modified
to read as follows:

(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 reasonably be expected to
constitute, noncompliance with the terms of any Environmental Permit;

O.  Section 18(g) is modified to
read as follows:

(g)        Borrower
shall pay promptly the costs of any environmental inspections, tests or audits
("Environmental Inspections") required by Lender in connection
with or in preparation for any foreclosure or deed in lieu
of foreclosure.  Borrower shall also pay promptly the reasonable costs of
any Environmental Inspections required by Lender in connection with, 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 in connection with or in preparation for any
foreclosure or deed in lieu of foreclosure shall at all times remain the
property of Lender and Lender shall have no obligation to disclose such results
to or otherwise make such results available to Borrower or any other
party.  Lender will make available to Borrower the results of all other
Environmental Inspections made by Lender.  Lender hereby reserves the
right, and Borrower hereby expressly authorizes Lender, to make available to any
party, including any prospective bidder at a foreclosure sale of the Mortgaged
Property, the results of any Environmental Inspections made by Lender with
respect to the Mortgaged Property.  Borrower consents to Lender notifying
any party (either as part of a notice of sale or otherwise) of the results of
any of Lender's Environmental Inspections.  Except in the case of an
Environmental Inspection performed in connection with a foreclosure or deed in
lieu of foreclosure, or a disclosure of Environmental Inspection results that
Lender is required by law to make, Lender shall notify Borrower of its intention
to disclose such information and shall give Borrower ten days to provide
supplemental information, explanations or corrections to accompany the
disclosure. 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.

P.   Lender shall not commence Remedial Work
under the second sentence of Section 18(h) unless Lender has given Borrower
notice of its intention to do so and Borrower has not begun performing the
Remedial Work within 10 days after such notice.

Q.  The following sentence is
added at the end of Section 18(j):

However, Borrower shall have no obligation to indemnify
any of the foregoing parties to the extent that the proceedings, claims,
damages, penalties or costs arise out of the gross negligence or willful
misconduct of Lender, any prior owner or holder of the Note, the Loan Servicer
or any prior Loan Servicer.

R.  
For purposes of Section 19(b), Lender will accept a duplicate original of any
insurance policy.

S.   For purposes of Section 19(d), an
insurance company will be acceptable to Lender if it has a rating in Best’s Key
Rating Guide of at lease “A” and a financial size category of at least “v,”
provided that if Fannie Mae changes its requirements for the financial rating of
insurers generally, Lender may change the requirement set forth in this sentence
in a manner consistent with any such change.

T.   Clause (2) of Section
19(g) is modified to read as follows:

(2)              
Lender determines, in its
discretion, that the combination of insurance proceeds and amounts provided by
the Borrower will be sufficient to complete the Restoration.

U.  For purposes of Section 19(h), Lender shall
automatically succeed to rights of Borrower in and to insurance policies and
unearned premiums only to the extent permitted by the applicable policies and
insurance companies.

V.  Section 21(a)(2) is modified to read as
follows:

(2)        if
Borrower is a limited partnership, a Transfer of (A) any general partnership
interest (except for a Transfer to a Qualified REIT Subsidiary, as defined in
Section 856(i)(2) of the Internal Revenue Code of 1986, 100% owned by Apartment
Investment and Management Company, a Maryland corporation or to a
Qualified REIT Subsidiary, as defined in Section 856 (l)(1) of the Internal
Revenue Code of 1986, 100% owned by AIMCO OP), or (B) limited partnership
interests in Borrower that would cause the Initial Owners of Borrower to own
less than 51% of all limited partnership interests in Borrower;

W.   New Sections 21(b)(7), 21(b)(8), 21(b)(9), 21(b)(10)
and 21(b)(11) are added, as follows:

(7)        The
Transfer of the Mortgaged Property to an entity controlled by the AIMCO REIT,
provided that such Transfer cannot result in a Change of Control and shall
require the consent of Lender, but will not be subject to the one percent (1%)
Transfer fee, but Borrower shall pay a $3,000 underwriting and processing fee to
Lender in connection with such Transfer.

(8)        The
Transfer of any limited or general partnership interests in Borrower provided no
Change of Control occurs as a result of such Transfer.

(9)        The
Transfer of shares of common stock, limited partnership interests or other
beneficial or ownership interests or other forms of securities in AIMCO REIT or
AIMCO OP, and the issuance of all varieties of convertible debt, equity and
other similar securities of AIMCO REIT or AIMCO OP, and the subsequent Transfer
of such securities; provided, however, that no Change of Control occurs as a result of such Transfer, either upon such
Transfer or upon the subsequent conversion to equity of such convertible debt or
other securities.

(10)      The issuance by
AIMCO REIT or AIMCO OP of additional common stock, limited partnership interests
or other beneficial or ownership interests, convertible debt, equity and other
similar securities, and the subsequent Transfer of such convertible debt or
securities; provided, however, that no Change of Control occurs as the result of
such Transfer, either upon such Transfer or upon the subsequent conversion to
equity of such convertible debt or other securities.

(11)      So long as AIMCO
REIT owns 100% of the stock of AIMCO-LP, Inc., a Transfer of limited partnership
interests that results in AIMCO-LP, Inc. owning not less than 50.1% of the
limited partnership interests in AIMCO OP.

X.     Section 21(b)(9) shall apply only to a Transfer of an
interest in a Controlling Entity that is prohibited by Section
21(a)(7).

Y.     A new Section 21(d) is added, as
follows:

(d)        For
purposes of this Section 21, the following terms shall be defined as
follows:

(1)        "Change
of Control" shall mean the earliest to occur of (A) the date an Acquiring Person
becomes (by acquisition, consolidation, merger or otherwise), directly or
indirectly, the beneficial owner of more than forty percent (40%) of the total
Voting Equity Capital of AIMCO REIT then outstanding, or (B) the date on which
AIMCO REIT shall cease to hold (whether directly or indirectly through a wholly
owned intermediary entity such as AIMCO-LP, Inc. or AIMCO-GP, Inc.) at least
50.1% of the limited partnership interests in AIMCO OP, or (C) the date on which
AIMCO REIT shall cease for any reason to hold (whether directly or indirectly)
(i) the interests in the Managing General Partner held as of the date of this
Instrument (as evidenced by organizational charts and documents submitted to
Lender as of such date) and (ii) the Controlling Interest(s) in the Borrower, or
(D) the replacement (other than solely by reason of retirement at age sixty-five
or older, death or disability) of more than 50% (or such lesser percentage as is
required for decisionmaking by the board of directors of trustees, if
applicable) of the members of the board of directors (or trustee, if applicable)
of AIMCO REIT over a one-year period where such replacement shall not have been
approved by a vote of at least a majority of the board of directors (or
trustees, if applicable) of AIMCO REIT then still in office who either were
members of such board of directors (or trustees, if applicable) at the beginning
of such one year period or whose election as members of
the board of directors (or trustees, if applicable) was previously so
approved.

(2)       
"Acquiring Person" shall mean a "person" or group of "persons" within the
meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended.  However, notwithstanding the foregoing, “Acquiring Person” shall
not be deemed to include any member of the Borrower Control Group unless such
member has, directly or indirectly, disposed of, sold or otherwise transferred
to, or encumbered or restricted (whether by means of voting trust agreement or
otherwise) for the benefit of an Acquiring Person, all or any portion of the
Voting Equity Capital of AIMCO REIT directly or indirectly owned or controlled
by such member or such member directly or indirectly votes all or any portion of
the Voting Equity Capital of AIMCO REIT, directly or indirectly, owned or
controlled by such member for the taking of any action which, directly or
indirectly constitutes or would result in a Change of Control, in which event
such member of the Borrower Control Group shall be deemed to constitute an
Acquiring Person to the extent of the Voting Equity Capital of AIMCO REIT owned
or controlled by such member.

(3)        "Borrower
Control Group" shall mean a majority of the board of directors of AIMCO
REIT.

(4)        A
"Person" shall mean an individual, an estate, a trust, a corporation, a
partnership, a limited liability company or any other organization or entity
(whether governmental or private).

(5)       
"Security" shall have the same meaning as in Section 2(1) of the Securities Act
of 1933, as amended.

(6)       
"Controlling Interest(s)" shall mean (i) with respect to a partnership, such
majority and/or managing general partner interests which, together with a
majority of limited partnership interests if necessary for consent purposes,
vest in the holder of such interests the sole power, right and authority to
control the day to day operations of the Borrower; including, without
limitation, the authority to manage, operate and finance the Mortgaged Property,
(ii) with respect to a corporation, the number of shares which entitle the
holder to elect a majority of the board of directors of the Borrower, and (iii)
with respect to a limited liability company, such majority and/or managing
member interests as vest in the holder of such interests the sole power, right
and authority to control the day to day operations of the Borrower; including,
without limitation, the authority to manage, operate and
finance the Mortgaged Property.

(7)        "AIMCO
REIT" shall mean Apartment Investment and Management Company, a corporation
organized and existing under the laws of the State of Maryland.

(8)        "AIMCO
OP" shall mean AIMCO Properties, L.P., a limited partnership organized and
existing under the laws of the State of Delaware.

(9)        "Managing
General Partner" shall mean the entity executing this Instrument on behalf of
the Borrower and/or its successors or assigns in interest.

(10)      “Voting Equity
Capital” shall mean Securities of any class or classes, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect a majority of the
board of directors (or Persons performing similar functions).

Z.     
Section 22(a) is modified to read
as follows:

“(a)      any failure by Borrower
to pay or deposit (i) any Imposition Deposit within three days after it is due,
or (ii) any other amount required by the Note, this Instrument, or any other
Loan Document when due.”

AA.                      
Section 28 shall obligate Borrower
to provide such further assurances as Lender may reasonably
require.

BB.The words
"Except as otherwise disclosed to Lender in writing, before the date of this
Instrument" are added at the beginning of the second sentence of Section
41.

CC.                      
A new section is added to the end
of the Instrument as follows:

“58. SURVIVAL OF INSTRUMENT MODIFICATIONS.
The modifications set forth in Exhibit B shall be null and void unless title
to the Mortgaged Property is vested in an entity whose Controlling Interest(s)
are directly or indirectly held by AIMCO REIT or AIMCO OP.”

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