Document:

Unassociated Document

    
      

    

    Exhibit
      10.67.12

     

    
      PROMISSORY
        NOTE

       

      
        	
                $49,800,000.00

              	
                August
                  15, 2007

              

      

       

      FOR
        VALUE
        RECEIVED, the eight (8) undersigned limited liability companies and limited
        partnerships, having an address at 3131 Elliott Avenue, Suite 500, Seattle,
        Washington 98121 (collectively, the “Borrower”), hereby jointly
        and severally promise to pay to the order of CAPMARK FINANCE
        INC., a California corporation, having an address at 116 Welsh Road,
        P.
        O. Box 809, Horsham, PA 19044, together with its successors and assigns or,
        if
        this Note has then been endorsed “to bearer,” to the bearer of this Note
        (collectively the “Lender”), at Lender’s said address or at
        such other place or to such other person as may be designated in writing
        to
        Borrower by Lender, the principal sum of Forty-Nine Million Eight Hundred
        Thousand and No/100 Dollars ($49,800,000.00) (the “Loan”),
        together with interest on the unpaid balance thereof at the rate hereinafter
        set
        forth. Capitalized terms used herein without definition shall have the meaning
        given to such terms in the Loan Agreement (defined herein).

       

      ON
        THE
        TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set
        forth:

       

      Section
        1.                Interest
        Rate.

       

      1.1           Initial
        Note Rate.  Interest shall accrue on the outstanding principal
        balance of the Loan from and after the date hereof (“Closing
        Date”) at the rate of 7.31% per annum (“Initial Note
        Rate”).  If the Loan is funded on a date other than the first
        (1st) day of a calendar month, Borrower shall pay to Lender at the time of
        funding of the Loan an interest payment calculated by multiplying (i) the
        number
        of days from and including the Closing Date to (and including) the last day
        of
        the current month or by (ii) the Initial Note Rate calculated based on a
        360 day
        year and paid for the actual number of days elapsed for any whole or partial
        month in which interest is being calculated.

       

      1.2           Calculation
        Basis; Interest Accrual Period.  Interest on the outstanding
        principal balance of the Loan shall be calculated utilizing a 360 day year
        and
        paid for the actual number of days elapsed for any whole or partial month
        in
        which interest is being calculated.  The interest rate on the
        outstanding principal balance hereof from time to time shall be adjusted
        on the
        dates (each being a “Rate Adjustment Date”) described in this
        paragraph.  The first Rate Adjustment Date shall be September 1, 2007,
        and subsequent Rate Adjustment Dates shall fall on the first day of each
        subsequent one month anniversary thereafter.  The first payment
        adjustment date shall be October 1, 2007, and subsequent payment adjustment
        dates shall fall on the first day of each calendar month thereafter during
        the
        term of the Loan.  As used herein, “Interest Accrual
        Period” shall mean the period beginning on the 1st
        day of a month
        through the end of such month.

       

      1.3           Default
        Interest Rate.  If Borrower fails to make any payment of
        principal, interest or fees on the date on which such payment becomes due
        and
        payable whether at maturity or by acceleration, or if an Event of Default
        (as
        defined below) exists, the Note Rate then payable on the Loan shall immediately
        increase to the Note Rate plus five hundred (500) basis points (the
“Default Rate”) and shall continue to accrue at the Default
        Rate until full payment of all amounts then due is received or such Event
        of
        Default is cured or waived in writing by Lender.  Interest at the
        Default Rate shall also accrue on any judgment obtained by Lender in connection
        with collection of the Loan or enforcement of any obligations due under the
        Loan
        Documents until such judgment is paid in full.

       

      
        
          
          

        

        
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      1.4           Note
        Rate and Note Rate Adjustment Dates.  The “Note
        Rate” shall mean an interest rate which is the average of London
        Interbank Offered Rates (“LIBOR”), in U.S. dollar deposits, for
        a term of one month determined solely by Lender on each Note Rate Adjustment
        Date (defined below) plus one hundred seventy (170) basis points
        (“Margin”), which combined figure shall be rounded upwards to
        the nearest one-eighth percent (.125%).  On each Note Rate Adjustment
        Date, Lender will obtain the close-of-business LIBOR from “Page 3750” on the
        Telerate Service (or such other page as may replace Page 3750 on that service)
        on the Note Rate Adjustment Date.  If Telerate Service ceases
        publication or ceases to publish LIBOR, Lender shall select a comparable
        publication to determine the LIBOR and provide notice thereof to
        Borrower.  LIBOR may or may not be the lowest rate based upon the
        market for U.S. dollar deposits in the London Interbank Eurodollar Market
        at
        which Lender prices loans on the date on which LIBOR is determined by Lender
        as
        set forth above.  Adjustments to the Note Rate in connection with
        changes in LIBOR shall be made two (2) Business Days prior to the beginning
        of
        any Interest Accrual Period (each “Note Rate Adjustment Date”)
        except than the Initial Note Rate shall be determined two (2) Business Days
        prior to the Closing Date.

       

      1.5           Adjustments
        due to Calculation Errors.  This Note shall bear interest at the
        Initial Note Rate and Note Rate as determined in accordance with the provisions
        hereof; provided, however, that, if Lender at any time determines, in the
        sole
        but reasonable exercise of its discretion that it has miscalculated the amount
        of the monthly payment of principal and/or interest (whether because of a
        miscalculation of the Initial Note Rate, the Note Rate or otherwise), Lender
        shall give notice to Borrower of the corrected amount of such monthly payment
        (and the corrected amount of the Note Rate, if applicable) and (a) if the
        corrected amount of such monthly payment represents an increase thereof,
        Borrower shall, within ten (10) calendar days after the date of such notice,
        pay
        to Lender any sums that Borrower would have otherwise been obligated under
        this
        Note to pay to Lender had the amount of such monthly payment not been
        miscalculated or (b) if the corrected amount of such monthly payment represents
        a decrease thereof, and Borrower is not otherwise in breach or default under
        any
        of the terms and provisions of the Note, the Loan Agreement of even date
        herewith by and between Borrower and Lender (the “Loan Agreement”) or any of the
        other Loan Documents, Borrower shall, within ten (10) calendar days thereafter
        be paid the sums that Borrower would not have otherwise been obligated to
        pay to
        Lender had the amount of such monthly payment not been
        miscalculated.

       

      1.6           LIBOR
        Unascertainable.  Lender’s obligation to maintain interest based
        on LIBOR shall be suspended and the Note Rate shall be based on the Interest
        Rate Index (plus Margin) upon Lender’s determination, in good faith, that
        adequate and reasonable means do not exist for ascertaining LIBOR or that
        a
        contingency has occurred which materially and adversely affects the London
        Interbank Eurodollar Market at which Lender prices loans (which determination
        by
        Lender shall be conclusive and binding on Borrower in the absence of manifest
        error).  Computation of the Note Rate based on the Interest Rate Index
        shall continue until Lender determines that the circumstances giving rise
        to
        Lender’s substitution of the Interest Rate Index for LIBOR no longer exists and
        Lender shall promptly notify Borrower of such determination.  For
        purposes hereof “Interest Rate Index” shall mean the weekly
        average yield on United States Treasury Securities adjusted to a constant
        maturity of one year, as made available by the Federal Reserve Board forty-five
        (45) days prior to each Note Rate Adjustment Date.

       

      
        
          
          

        

        
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      1.7           Adjustment
        for Impositions on Loan Payments.  All payments made by Borrowers
        under this Note and the other Loan Documents (described in Section 8.1.1
        below)
        shall be made free and clear of, and without deduction or withholding for
        or on
        account of, any present or future income, stamp or other taxes, levies, imposts,
        duties, charges, fees, deductions or withholdings, and all liabilities with
        respect thereto, now or hereafter imposed, levied, collected, withheld or
        assessed by any governmental authority, excluding (i) income and franchise
        taxes
        of the United States of America or any political subdivision or taxing authority
        thereof or therein, (ii) taxes on the overall net income or overall gross
        receipts of Lender imposed as a result of a present or former connection
        between
        Lender and the jurisdiction of any Governmental Authority and (iii) any
        withholding taxes imposed by the United States of America, any state,
        commonwealth, protectorate territory or any political subdivision or taxing
        authority thereof or therein, in the event that Lender or any successor and/or
        assign of Lender, or the Person treated, for United States federal income
        tax
        purposes, as the owner of the assets of Lender or of any successor and/or
        assign
        of Lender if such Lender or such successor or assign of Lender is a disregarded
        entity for United States federal income tax purposes, is not organized under
        the
        laws of the United States of America or a state thereof and fails to establish
        an exemption from such withholding taxes (all such non-excluded taxes, levies,
        imposts, duties, charges, fees, deductions, withholdings and liabilities,
        collectively, "Applicable Taxes").  If Borrowers
        shall be required by law to deduct any Applicable Taxes from or in respect
        of
        any sum payable hereunder to Lender, the following shall apply: (i) Borrowers
        shall make all such required deductions and shall pay the full amount deducted
        to the relevant taxing authority or other authority in accordance with
        applicable law and (ii) the sum payable to Lender shall be increased in an
        amount determined by Lender in its sole discretion, as may be necessary so
        that
        after making all required deductions (including deductions applicable to
        additional sums payable under this Section 1.7), Lender receives an amount
        equal
        to the sum Lender would have received had no such deductions been
        made.  Payments made pursuant to this Section 1.7 shall be made within
        ten (10) Business Days after Lender makes written demand therefore.

       

      1.8           Increased
        Costs of Maintaining Interest.  Borrower shall pay to Lender all
        Funding Losses incurred from time to time by Lender upon
        demand.  Lender shall deliver to Borrower a statement for any such
        sums to which Lender is entitled to receive pursuant to this Section 1.8,
        which
        statement shall be binding and conclusive absent manifest
        error.  Payment of Funding Losses hereunder shall be in addition to
        any obligation to pay any other fee in circumstances where such fee(s) would
        be
        due and owing under the Loan Documents.  For purposes hereof,
“Funding Losses” shall mean the reduction of any amounts
        received or receivable from Borrower, in either case, due to the introduction
        of, or any change in, law or applicable regulation or treaty (including the
        administration or interpretation thereof), whether or not having the force
        of
        law, or due to the compliance by Lender with any directive, whether or not
        having the force of law, or request from any central bank or domestic or
        foreign
        governmental authority.

       

      
        
          
          

        

        
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      1.9           Acceleration.  Notwithstanding
        anything to the contrary contained herein, if Borrower is prohibited by law
        from
        paying any amount due to Lender under Section 1.7 or Section 1.8 hereof,
        Lender
        may elect to declare the unpaid principal balance of the Loan, together with
        all
        unpaid interest accrued thereon and any other amounts due hereunder, due
        and
        payable within one hundred twenty (120) days of Lender’s written notice to
        Borrower and no exit or other prepayment fee shall be due in such
        event.  Lender’s delay or failure in accelerating the Loan upon the
        discovery or occurrence of an event under Section 1.7 or Section 1.8 shall
        not
        be deemed a waiver or estoppel against the exercise of such right.

       

      

      Section
        2.                Note
        Payments and Prepayment Rights.

       

      2.1           Note
        Payments and Payment Dates.  Commencing on the 1st day
        of October,
        2007, and continuing on the first (1st) day of each successive month thereafter,
        provided that, if the first (1st) day of any month is not a Business Day,
        such
        payment shall be due and payable on the immediately preceding Business Day
        (each
        being a “Payment Date”), through and including the Payment Date
        immediately prior to the Maturity Date, Borrower shall make
        twenty-three (23) consecutive monthly payments of interest only at the Note
        Rate
        (determined as of the immediately preceding Note Rate Payment Adjustment
        Date)
        based upon the principal outstanding during the Interest Accrual Period in
        which
        the applicable Payment Date occurs, and any other amounts due under the Loan
        Documents.

       

      2.2           Prepayments.  Borrower
        has the right to prepay all or any part of the Loan prior to the Maturity
        Date
        except as otherwise provided below.  Borrower may only prepay the Loan
        in whole or in part (provided each such partial prepayment is in an amount
        not
        less than the sum of $100,000.00, unless such prepayment is the final principal
        due under this Note or related to an “Allocated Loan Amount” (as such term is
        defined in the Loan Agreement) on any date after the Closing Date so long
        as
        each of the following conditions are satisfied:

       

      
        	
                 

              	
                (A)

              	
                Borrower
                  provides written notice to Lender of its intent to prepay not more
                  than
                  sixty (60) days and not less than thirty (30) days prior to the
                  intended
                  prepayment date.

              

      

       

      
        	
                 

              	
                (B)

              	
                Borrower
                  pays with such prepayment all accrued and unpaid interest and all
                  other
                  outstanding amounts then due and unpaid under the Loan Agreement
                  and the
                  other Loan Documents.

              

      

       

      
        	
                 

              	
                (C)

              	
                Borrower
                  pays with such prepayment all costs and expenses incurred by Lender
                  in
                  connection with such prepayment and any other costs and expenses
                  due and
                  payable by Borrower under the Loan
                  Documents.

              

      

       

      
        
          
          

        

        
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                (D)

              	
                No
                  Event of Default exists as of the date Borrower delivers notice
                  of intent
                  to prepay and as of the date such prepayment is
                  made.

              

      

       

      2.3           Payment
        Debit Account.  During the term of the Loan, Borrower shall
        establish and maintain a deposit account (the “Payment Debit Account”) with a
        bank or financial institution acceptable to Lender and authorize such bank
        or
        financial institution to permit Lender to debit the Payment Debit Account
        from
        time to time without limitation and without further notice, consent or
        instructions from Borrower. In the absence of an Event of Default, Lender
        shall
        make transfers from the Payment Debit Account only for payment of principal,
        interest and deposits to reserves and escrows due from Borrower on a Payment
        Date under the Note, the Loan Agreement or any of the other Loan Documents.
        Borrower solely will be responsible for maintaining funds in the Payment
        Debit
        Account which are sufficient to pay the aggregate amounts due under the Loan
        Documents on each Payment Date. If sufficient funds are not available in
        the
        Payment Debit Account to make the full payment when due, Lender shall not
        be
        required to notify Borrower or demand that Borrower pay the deficiency prior
        to
        declaring an Event of Default. Debits made by Lender from the Payment Debit
        Account for less than the full monthly payment amount will not release Borrower
        from Borrower's obligations to pay the full amount due nor be deemed a waiver
        of
        Lender's right to collect the full payment amount or to declare an Event
        of
        Default.  Debits made by Lender from the Payment Debit Account
        following the occurrence of any Event of Default under the Loan Documents
        will
        not be deemed a waiver of that default by Lender or otherwise prejudice,
        in any
        manner, Lender's rights or remedies with respect thereto. Lender will have
        the
        right, upon reasonable prior notice to Borrower, to discontinue debiting
        payments from the Payment Debit Account for the purposes set forth herein
        and,
        if at any time such debiting has been discontinued, to reinstate the requirement
        that Borrower maintain a Payment Debit Account in accordance with the terms of
        this Note.  Borrower will not be permitted to close, or permit the
        Payment Debit Account to be closed, without Lender's prior written consent
        unless the Loan has been satisfied in full.  To the extent there are
        any inconsistencies between this Section 2.3 and any lockbox, deposit account
        or
        other cash management agreement executed by Borrower in connection with the
        Loan, the terms of such lockbox, deposit account or other cash management
        agreement, as applicable, shall govern and control.

       

      Section
        3.               Application
        of Payments.  Payments made by Borrower on account hereof shall be
        applied, first, toward any Late Fees (defined in Section 8.3 below) or other
        fees and charges due hereunder, second, toward payment of any interest due
        at
        the Default Rate, third, toward payment of any interest due at the then
        applicable Note Rate set forth in Section 1.4 above, and fourth, toward payment
        of principal.  Notwithstanding the foregoing, if any advances made by
        Lender under the terms of any instruments securing this Note have not been
        repaid, any payments made may, at the option of Lender, be applied, first,
        to
        repay such advances and interest thereon, with the balance, if any, applied
        as
        set forth in the preceding sentence.

       

      Section
        4.               Maturity
        Date.  Anything in this Note to the contrary notwithstanding
        (excluding Section 4.1 below), the entire unpaid balance of the principal
        amount
        hereof and all interest accrued thereon through the end of the current Interest
        Accrual Period and including interest accruing at the Default Rate, to and
        including the Maturity Date (as defined below) together with all fees, costs
        and
        amounts due and payable under the Loan Documents shall, unless sooner paid,
        and
        except to the extent that payment thereof is sooner accelerated, be and become
        due and payable on September 1, 2009 (the “Maturity Date”);
        provided that if the first (1st) day of that month is not a Business Day,
        such
        payment shall be due and payable on the immediately preceding Business
        Day.

       

      
        
          
          

        

        
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      4.1           Extension
        of Maturity Date.  Upon Borrower’s written request, the Maturity
        Date of this Note may be extended to September 1, 2010 (the “Extended Maturity
        Date”), upon satisfaction of the conditions set forth herein, and in such event,
        all references to the Maturity Date in this Note and the other Loan Documents
        shall be deemed to mean the Extended Maturity Date.  Lender shall
        grant the extension, provided that as of August 15, 2009 (a) no Default (as
        defined below) or Event of Default has occurred and is continuing, (b) the
        Management Agreement is in full force and effect, and (c) the Debt Service
        Coverage Ratio (as defined in the Loan Agreement) is at least 1.0 to
        1.0.  If the Debt Service Coverage Ratio is less than 1.0 to 1.0,
        Borrower, in order to extend the Maturity Date, shall be required to make
        a
        principal payment on this Note in an amount that would cause the Debt Service
        Coverage Ratio to be met.  For purposes of this Note, “Default” shall
        mean the occurrence or existence of any event which, but for the giving of
        notice or expiration of time or both, would constitute an Event of
        Default.  If the Maturity Date is extended as provided herein, the
        entire unpaid principal balance hereof and all interest accrued thereon
        (including interest accruing at the Default Rate), and all Late Fees shall,
        unless sooner paid, and except to the extent that payment thereof is sooner
        accelerated, be and become due and payable on the Extended Maturity
        Date.  If the Maturity Date is extended until the Extended Maturity
        Date, interest shall continue to be paid monthly at the Note Rate, commencing
        on
        the Maturity Date through August 1, 2010, and no payments of principal shall
        be
        due and payable until the Extended Maturity Date except to the extent payment
        thereof is sooner accelerated.

      

      Section
        5.                Intentionally
        Deleted.

       

      Section
        6.               Delivery
        of Payments.  All payments due to Lender under the Loan Documents
        are to be paid in lawful tender of the United States of America, in immediately
        available funds, directly to Lender at Lender’s office located at 116 Welsh
        Road, P.O. Box 809, Horsham, Pennsylvania 19044, Attn: Servicing - Accounting
        Manager, or at such other place as Lender may designate to Borrower in writing
        from time to time.  All amounts due under the Loan Documents shall be
        paid without setoff, counterclaim or any other deduction
        whatsoever.  No payment due under this Note or any of the other Loan
        Documents shall be deemed paid to Lender until received by Lender at its
        designated office on a Business Day prior to 2:00 p.m. Eastern Standard Time.
        Any payment received after the time established by the preceding sentence
        shall
        be deemed to have been paid on the immediately following Business
        Day.  Each payment that is paid to Lender within ten (10) days prior
        to the date on which such payment is due, and prior to its scheduled Payment
        Date, shall not be deemed a prepayment and shall be deemed to have been received
        on the Payment Date solely for the purpose of calculating interest
        due.  If any payment received by Lender is deemed by a court of
        competent jurisdiction to be a voidable preference or fraudulent conveyance
        under any bankruptcy, insolvency or other debtor relief law, and is required
        to
        be returned by Lender, then the obligation to make such payment shall be
        reinstated, notwithstanding that the Note may have been marked satisfied
        and
        returned to Borrower or otherwise canceled, and such payment shall be
        immediately due and payable upon demand.

       

      
        
          
          

        

        
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      Section
        7.                Security.

       

      The
        debt
        evidenced by this Note is to be secured by, among other things, (a) eight
        (8) separate mortgages and deeds of trusts (collectively, the
“Mortgage”) by each Borrower, for the benefit of Lender, and
        (b) a Payment and Performance Guaranty Agreement of
        even date herewith (the“Guaranty Agreement”), given by Emeritus
        Corporation (the “Guarantor”), for the benefit of
        Lender.

       

      Section
        8.                Default.

       

      8.1           Events
        of Default.  Anything in this Note to the contrary
        notwithstanding, on the occurrence of any of the following events (each of
        which
        is referred to herein, together with each of the Events of Default defined
        and
        described in the Loan Agreement and the Mortgage as an “Event of
        Default”), Lender may, in the exercise of its sole and absolute
        discretion, accelerate the debt evidenced by this Note, in which event the
        entire outstanding principal balance and all interest and fees accrued thereon
        shall immediately be and become due and payable without further
        notice:

       

      8.1.1                 Failure
        to Pay or Perform.  If (a) any payment of principal and interest
        is not paid in full on or before the Payment Date on which such payment is
        due,
        (b) if unpaid principal, accrued but unpaid interest and all other amounts
        outstanding under the Loan Documents are not paid in full on or before the
        Maturity Date or (c) there exists an uncured default under any of the Loan
        Documents which has been executed by Borrower and/or Guarantor and/or Manager,
        and such default is not cured within the grace or cure period, if any, provided
        in any of such Loan Documents.

       

      8.1.2                 Bankruptcy.

       

      (a)           If
        Borrower or Guarantor or Manager  (i) applies for or
        consents to the appointment of a receiver, trustee or liquidator of Borrower
        or
        Guarantor or Manager, as the case may be, or of all or a substantial part
        of its
        assets, (ii) files a voluntary petition in bankruptcy, or admits in writing
        its
        inability to pay its debts as they come due, (iii) makes an assignment for
        the
        benefit of creditors, (iv) files a petition or an answer seeking a
        reorganization or an arrangement with creditors or seeking to take advantage
        of
        any insolvency law, (v) performs any other act of bankruptcy, or (vi) files
        an
        answer admitting the material allegations of a petition filed against Borrower
        or Guarantor or Manager in any bankruptcy, reorganization
        or insolvency proceeding; or

       

      (b)           if
        (i) an order, judgment or decree is entered by any court of competent
        jurisdiction adjudicating Borrower or Guarantor or Manager a bankrupt or
        an
        insolvent, or approving a receiver, trustee or liquidator of Borrower or
        Guarantor or Manager or of all or a substantial part of its assets, or (ii)
        there otherwise commences with respect to Borrower or Guarantor or Manager
        or
        any of its assets any proceeding under any bankruptcy, reorganization,
        arrangement, insolvency, readjustment, receivership or like law or statute,
        and
        if such order, judgment, decree or proceeding continues unstayed for any
        period
        of sixty (60) consecutive days after the expiration of any stay
        thereof.

       

      
        
          
          

        

        
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        8.1.3                 Judgments.  If
        any judgment for the payment of money in excess of $250,000.00 hereafter
        awarded
        against Borrower or Guarantor or Manager by any court of competent jurisdiction
        remains unsatisfied or otherwise in force and effect for a period of thirty
        (30)
        days after the date of such award.

       

      8.2           No
        Impairment of Rights.  Nothing in this Section shall be deemed in
        any way to alter or impair any right which Lender has under this Note or
        the
        Mortgage, or any other Loan Documents, or at law or in equity, to accelerate
        such debt on the occurrence of any other Event of Default provided herein
        or
        therein, whether or not relating to this Note.

       

      8.3           Late
        Fees.  Without limiting the generality of the foregoing provisions
        of this Section, if any payment due on a Payment Date is not received in
        full on
        or before the Payment Date, other than the payment of the outstanding principal
        payment of the Loan due on the Maturity Date, Borrower shall pay to Lender,
        immediately and without demand, a late payment charge, for each month during
        which such payment delinquency exists, equal to five percent (5%) of such
        amount
        (“Late Fees”) to defray the expenses incurred by Lender in
        handling and processing such delinquent payment and to compensate Lender
        for the
        loss of use of such delinquent payment.

       

      Section
        9.               Costs
        of Enforcement.  Borrower shall pay to Lender on demand the amount
        of any and all expenses incurred by Lender (a) in enforcing its rights hereunder
        or under the Mortgage and/or the Loan Documents, (b) as the result of the
        occurrence of an Event of Default by Borrower in performing its obligations
        under this Note, including but not limited to the expense of collecting any
        amount owed hereunder, and of any and all attorneys’ fees incurred by Lender in
        connection with such default, whether suit be brought or not, and (c) in
        protecting the security for the Loan and Borrower’s obligations under the Loan
        Documents.  Such expenses shall be added to the principal amount
        hereof, shall be secured by the Mortgage and shall accrue interest at the
        Default Rate.

       

      Section
        10.             Borrower’s
        Waiver of Certain Rights.  Borrower and any endorser, guarantor or
        surety hereby waives the exercise of any and all exemption rights which it
        holds
        at law or in equity with respect to the debt evidenced by this Note, and
        of any
        and all rights which it holds at law or in equity to require any valuation,
        appraisal or marshalling, or to have or receive any presentment, protest,
        demand
        and notice of dishonor, protest, demand and nonpayment as a condition to
        Lender’s exercise of any of its rights under this Note or the Loan
        Documents.

       

      Section
        11.             Extensions.  The
        Maturity Date and/or any other date by which any payment is required to be
        made
        hereunder may be extended by Lender, in writing, from time to time in the
        exercise of its sole discretion, without in any way altering or impairing
        Borrower’s or Guarantor’s liability hereunder.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      Section
        12.              General.

       

      12.1           Applicable
        Law.  This Note shall be given effect and construed by application
        of the laws of the State of Illinois (without regard to the principles thereof
        governing conflicts of laws), and any action or proceeding arising hereunder,
        and each of Lender and Borrower submits (and waives all rights to object)
        to
        non-exclusive personal jurisdiction in the State of Illinois, for the
        enforcement of any and all obligations under the Loan Documents except that
        if
        any such action or proceeding arises under the Constitution, laws or treaties
        of
        the United States of America, or if there is a diversity of citizenship between
        the parties thereto, so that it is to be brought in a United States District
        Court, it shall be brought in Cook County, Illinois, in the United States
        District Court for the Northern District of Illinois or any successor federal
        court having original jurisdiction.

       

      12.2           Headings.  The
        headings of the Sections, subsections, paragraphs and subparagraphs hereof
        are
        provided herein for and only for convenience of reference, and shall not
        be
        considered in construing their contents.

       

      12.3           Construction.  As
        used herein, (a) the term “person” means a natural person, a
        trustee, a corporation, a limited liability company, a partnership and any
        other
        form of legal entity, and (b) all references made (i) in the neuter, masculine
        or feminine gender shall be deemed to have been made in all such genders,
        (ii)
        in the singular or plural number shall be deemed to have been made,
        respectively, in the plural or singular number as well, and (iii) to any
        Section, subsection, paragraph or subparagraph shall, unless therein expressly
        indicated to the contrary, be deemed to have been made to such Section,
        subsection, paragraph or subparagraph of this Note.

       

      12.4           Severability.  No
        determination by any court, governmental body or otherwise that any provision
        of
        this Note or any amendment hereof is invalid or unenforceable in any instance
        shall affect the validity or enforceability of (a) any other such provision
        or
        (b) such provision in any circumstance not controlled by such
        determination.  Each such provision shall be valid and enforceable to
        the fullest extent allowed by, and shall be construed wherever possible as
        being
        consistent with, applicable law.

       

      12.5           No
        Waiver.  Lender shall not be deemed to have waived the exercise of
        any right which it holds hereunder unless such waiver is made expressly and
        in
        writing.  No delay or omission by Lender in exercising any such right
        (and no allowance by Lender to Borrower of an opportunity to cure a default
        in
        performing its obligations hereunder) shall be deemed a waiver of its future
        exercise.  No such waiver made as to any instance involving the
        exercise of any such right shall be deemed a waiver as to any other such
        instance, or any other such right.  Further, acceptance by Lender of
        all or any portion of any sum payable under, or partial performance of any
        covenant of, this Note, the Mortgage or any of the other Loan Documents,
        whether
        before, on, or after the due date of such payment or performance, shall not
        be a
        waiver of Lender’s right either to require prompt and full payment and
        performance when due of all other sums payable or obligations due thereunder
        or
        hereunder or to exercise any of Lender’s rights and remedies hereunder or
        thereunder.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      12.6           Waiver
        of Jury Trial; Service of Process; Court Costs.  BORROWER
        HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BORROWER
        AND
        LENDER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY
        PERTAINING TO, THIS NOTE AND/OR ANY OF THE OTHER LOAN DOCUMENTS.  IT
        IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
        JURY
        OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
        CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.  THIS WAIVER
        IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER, UPON CONSULTATION
        WITH
        COUNSEL OF BORROWER’S CHOICE, AND BORROWER HEREBY REPRESENTS THAT NO
        REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
        THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
        EFFECT.  BORROWER FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN
        REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER
        BY
        INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY
        INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS
        HAD THE
        OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.  BORROWER HEREBY
        IRREVOCABLY DESIGNATES ERIC MENDELSOHN, AND HIS/HER SUCCESSORS IN OFFICE,
        AS THE
        TRUE AND LAWFUL ATTORNEY OF BORROWER FOR THE PURPOSE OF RECEIVING SERVICE
        OF ALL
        LEGAL NOTICES AND PROCESS ISSUED BY ANY COURT IN THE STATE OF WASHINGTON
        AS WELL
        AS SERVICE OF ALL PLEADINGS AND OTHER DOCUMENTS RELATED TO ANY LEGAL PROCEEDING
        OR ACTION ARISING OUT OF THIS NOTE. BORROWER AGREES THAT SERVICE UPON SAID
        ERIC
        MENDELSOHN SHALL BE VALID REGARDLESS OF BORROWER’S WHEREABOUTS AT THE TIME OF
        SUCH SERVICE AND REGARDLESS OF WHETHER BORROWER RECEIVES A COPY OF SUCH SERVICE,
        PROVIDED THAT LENDER SHALL HAVE MAILED A COPY TO BORROWER IN ACCORDANCE WITH
        THE
        NOTICE PROVISIONS HEREIN.  BORROWER AGREES TO PAY ALL COURT COSTS AND
        REASONABLE ATTORNEY’S FEES INCURRED BY LENDER IN CONNECTION WITH ENFORCING ANY
        PROVISION OF THIS NOTE.  NOTWITHSTANDING THE FOREGOING, LENDER AGREES
        TO USE REASONABLE EFFORTS TO PROVIDE BORROWER WITH NOTICE OF THE FILING OF
        ANY
        LAWSUIT BY LENDER AGAINST BORROWER.

       

      12.7           Offset.  Upon
        the occurrence of an Event of Default, Lender may set-off against any principal
        and interest owing hereunder, any and all credits, money, stocks, bonds or
        other
        security or property of any nature whatsoever on deposit with, or held by,
        or in
        the possession of, Lender, to the credit of or for the account of Borrower,
        without notice to or consent of Borrower or Guarantor.

       

      12.8           Non-Exclusivity
        of Rights and Remedies.  None of the rights and remedies herein
        conferred upon or reserved to Lender is intended to be exclusive of any other
        right or remedy contained herein or in any of the other Loan Documents and
        each
        and every such right and remedy shall be cumulative and concurrent, and may
        be
        enforced separately, successively or together, and may be exercised from
        time to
        time as often as may be deemed necessary or desirable by Lender.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      12.9           Incorporation
        by Reference.  All of the agreements, conditions, covenants and
        provisions contained in each of the Loan Documents are hereby made a part
        of
        this Note to the same extent and with the same force and effect as if they
        were
        fully set forth herein.  Borrower covenants and agrees to keep and
        perform, or cause to be kept and performed, all such agreements, conditions,
        covenants and provisions strictly in accordance with their terms.

       

      12.10         Joint
        and Several Liability.  If Borrower consists of more than one
        person and/or entity, each such person and/or entity agrees that its liability
        hereunder is joint and several.

       

      12.11         Business
        Purpose.  Borrower represents and warrants that the Loan evidenced
        by this Note is being obtained solely for the purpose of acquiring or carrying
        on a business, professional or commercial activity and is not for personal,
        agricultural, family or household purposes.

       

      12.12         Interest
        Limitation.  Notwithstanding anything to the contrary contained
        herein or in the Mortgage or in any other of the Loan Documents, the effective
        rate of interest on the obligation evidenced by this Note shall not exceed
        the
        lawful maximum rate of interest permitted to be paid.  Without
        limiting the generality of the foregoing, in the event that the interest
        charged
        hereunder results in an effective rate of interest higher than that lawfully
        permitted to be paid, then such charges shall be reduced by the sum sufficient
        to result in an effective rate of interest permitted and any amount which
        would
        exceed the highest lawful rate already received and held by Lender shall
        be
        applied to a reduction of principal and not to the payment of
        interest.  Borrower agrees that for the purpose of determining highest
        rate permitted by law, any non-principal payment (including, without limitation,
        Late Fees and other fees) shall be deemed, to the extent permitted by law,
        to be
        an expense, fee or premium rather than interest.

       

      12.13         Modification.  This
        Note may be modified, amended, discharged or waived only by an agreement
        in
        writing signed by the party against whom enforcement of such modification,
        amendment, discharge or waiver is sought.

       

      12.14         Time
        of the Essence.  Time is strictly of the essence of this
        Note.

       

      12.15         Negotiable
        Instrument.  Borrower agrees that this Note shall be deemed a
        negotiable instrument, even though this Note may not otherwise qualify, under
        applicable law, absent this paragraph, as a negotiable instrument.

       

      12.16         Interest
        Rate after Judgment.  If judgment is entered against Borrower on
        this Note, the amount of the judgment entered (which may include principal,
        interest, fees, Late Fees and costs) shall bear interest at the Default Rate,
        to
        be determined on the date of the entry of the judgment.

       

      12.17         Relationship.  Borrower
        and Lender intend that the relationship between them shall be solely that
        of
        creditor and debtor.  Nothing contained in this Note or in any of the
        other Loan Documents shall be deemed or construed to create a partnership,
        tenancy-in-common, joint tenancy, joint venture or co-ownership by or between
        Borrower and Lender.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      12.18         Waiver
        of Automatic Stay.  BORROWER HEREBY AGREES THAT,
        IN CONSIDERATION OF LENDER’S AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT
        THE FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN,
        IN
        THE EVENT THAT  BORROWER SHALL (A) FILE WITH ANY BANKRUPTCY COURT OF
        COMPETENT JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER ANY SECTION
        OR
        CHAPTER OF TITLE 11 OF THE UNITED STATES CODE, AS AMENDED (THE
“BANKRUPTCY CODE”), OR SIMILAR LAW OR
        STATUTE; (B) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY
        CODE OR SIMILAR LAW OR STATUTE; (C) FILE OR BE THE SUBJECT OF ANY PETITION
        SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
        DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE
        ACT
        OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS; (D)
        HAVE
        SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE,
        RECEIVER, CONSERVATOR, OR LIQUIDATOR; OR (E) BE THE SUBJECT OF AN ORDER,
        JUDGMENT OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING
        A
        PETITION FILED AGAINST ANY BORROWER FOR ANY REORGANIZATION, ARRANGEMENT,
        COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER
        ANY
        PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY
        OR RELIEF FOR DEBTORS, THEN, TO THE EXTENT PERMITTED BY APPLICABLE LAW AND
        SUBJECT TO COURT APPROVAL, LENDER SHALL THEREUPON BE ENTITLED, AND BORROWER
        HEREBY IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND AGREES TO STIPULATE
        TO, RELIEF FROM ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED BY SECTION
        362 OF
        THE BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE (INCLUDING, WITHOUT LIMITATION,
        RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION 1121 OF THE BANKRUPTCY
        CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES
        OTHERWISE AVAILABLE TO LENDER AS PROVIDED IN THE LOAN DOCUMENTS, AND AS
        OTHERWISE PROVIDED BY LAW, AND BORROWER HEREBY IRREVOCABLY WAIVES ITS RIGHTS
        TO
        OBJECT TO SUCH RELIEF.

       

      12.19        
         “Business Day”.  Any reference to the term Business Day
        in this Note shall mean any day other than a Saturday, a Sunday, or days
        when
        Federal Banks located in the State of New York or Commonwealth of Pennsylvania
        are closed for a legal holiday or by government directive. When used with
        respect to the Note Rate Adjustment Date, “Business Day” shall mean a day upon
        which United States dollar deposits may be dealt in on the London and New
        York
        City interbank markets and commercial banks and foreign exchange markets
        are
        open in London and New York City.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      12.20         Successors
        and Assigns Bound. The obligations set forth in this Note shall be binding
        upon each Borrower and its successors and assigns.

       

      IN
        WITNESS WHEREOF, each Borrower has duly executed and delivered this Note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.

      
 

      [REMAINDER
        OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

       

      (SIGNATURE
        PAGES ARE ATTACHED)

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.

       

      
        	 	
                BORROWER:

              	 
	 	 	 
	 	 	
                EMERICHIP
                  STOCKTON  LLC,

              	 
	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                EMERITUS
                  CORPORATION,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.

       

      
        	 	
                BORROWER:  

              	 
	 	 	 
	 	 	
                EMERICHIP
                  DOVER  LLC,

              	 
	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                EMERITUS
                  CORPORATION,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.

       

      
        	 	
                BORROWER:  

              	 
	 	 	 
	 	 	
                EMERICHIP
                  NEW PORT RICHEY  LLC,

              	 
	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                EMERITUS
                  CORPORATION,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      In
        Witness Whereof, each Borrower has duly executed and delivered this note,
        or
        caused it to be duly executed and delivered on its behalf by its duly authorized
        representatives, on the day and year first above written.

       

      
        	 	
                BORROWER:  

              	 
	 	 	 
	 	 	
                EMERICHIP
                  VENICE  LLC,

              	 
	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                EMERITUS
                  CORPORATION,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                 /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

         

      

      
        	 	
                BORROWER:  

              	 
	 	 	 	 	 
	 	 	
                EMERICHIP
                  ALTAMONTE  LLC,

              	 
	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                EMERITUS
                  CORPORATION,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      

      
        	
                 

              	BORROWER: 	 
	 	 	 	 	 
	 	 	
                EMERICHIP
                  DALLAS  LP,

              	 
	 	 	
                a
                  Delaware limited partnership

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                Emerichip
                  Texas LLC,,

              	 
	 	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	
                its
                  General Partner

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                ESC
                  GP II Inc.,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	
                 

              	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	 	
                BORROWER: 

              	 
	 	 	 
	 	 	
                EMERICHIP
                  EL PASO  LP,

              	 
	 	 	
                a
                  Delaware limited partnership

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                Emerichip
                  Texas LLC,,

              	 
	 	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	
                its
                  General Partner

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                ESC
                  GP II Inc.,

              	 
	 	 	 	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	BORROWER: 	 
	 	 	 	 	 
	 	 	
                EMERICHIP
                  CAMBRIA  LP,

              	 
	 	 	
                a
                  Delaware limited partnership

              	 
	 	 	 	 	 
	 	 	
                By:

              	
                Emerichip
                  Texas LLC,,

              	 
	 	 	 	
                a
                  Delaware limited liability company

              	 
	 	 	 	
                its
                  General Partner

              	 
	 	 	 	 	 
	 	 	 	
                ESC
                  GP II Inc.,

              	 
	 	 	
                By:

              	
                a
                  Washington corporation

              	 
	 	 	 	
                its
                  Sole Member

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                By:

              	
                /s/
                  Eric Mendelsohn

              	 
	 	 	 	
                Eric
                  Mendelsohn,

              	 
	 	 	 	
                Director
                  of Real Estate and Legal Affairs

              	 

      

       

      
21ex10_6713.htm

    
      
        

      

    

    Exhibit
      10.67.13

    

    Prepared
      by, and after recording

    return
      to:

    

    David
      J.
      McPherson, Esquire

    Troutman
      Sanders LLP

    P.O.
      Box
      1122

    Richmond,
      Virginia  23218-1122

    

    

    

    
 

    MULTIFAMILY
      MORTGAGE,

    ASSIGNMENT
      OF RENTS

    AND
      SECURITY AGREEMENT

    (NEW
      JERSEY)

    

    THIS
      INSTRUMENT IS FOR USE

    ONLY
      FOR MULTIFAMILY PROPERTIES

    CONTAINING
      MORE THAN 6 RESIDENTIAL UNITS

    

     

    
 

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    TABLE
      OF CONTENTS

    

    
      	 	 	
              PAGE

            
	 	 	 
	
              1.

            	
              DEFINITIONS

            	
              1

            
	
               

            	 	 
	
              2.

            	
              UNIFORM
                COMMERCIAL CODE SECURITY AGREEMENT

            	
              5

            
	 	 	 
	
              3.

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

            	
              6

            
	 	 	 
	
              4.

            	
              ASSIGNMENT
                OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

            	
              8

            
	 	 	 
	
              5.

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

            	
              10

            
	 	 	 
	
              6.

            	
              EXCULPATION

            	
              10

            
	 	 	 
	
              7.

            	
              DEPOSITS
                FOR TAXES, INSURANCE AND OTHER CHARGES.

            	
              10

            
	 	 	 
	
              8.

            	
              COLLATERAL
                AGREEMENTS

            	
              11

            
	 	 	 
	
              9.

            	
              APPLICATION
                OF PAYMENTS

            	
              11

            
	 	 	 
	
              10.

            	
              COMPLIANCE
                WITH LAWS

            	
              11

            
	 	 	 
	
              11.

            	
              USE
                OF PROPERTY

            	
              11

            
	 	 	 
	
              12.

            	
              PROTECTION
                OF LENDER'S SECURITY.

            	
              12

            
	 	 	 
	
              13.

            	
              INSPECTION.

            	
              12

            
	 	 	 
	
              14.

            	
              BOOKS
                AND RECORDS; FINANCIAL REPORTING.

            	
              12

            
	 	 	 
	
              15.

            	
              TAXES;
                OPERATING EXPENSES.

            	
              14

            
	 	 	 
	
              16.

            	
              LIENS;
                ENCUMBRANCES

            	
              14

            
	 	 	 
	
              17.

            	
              PRESERVATION,
                MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY

            	
              15

            
	 	 	 
	
              18.

            	
              ENVIRONMENTAL
                HAZARDS.

            	
              15

            
	 	 	 
	
              19.

            	
              PROPERTY
                AND LIABILITY INSURANCE.

            	
              20

            
	 	 	 
	
              20.

            	
              CONDEMNATION.

            	
              21

            
	 	 	 
	
              21.

            	
              TRANSFERS
                OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.

            	
              22

            

    

    
      

      
        	
                FANNIE
                  MAE MULTIFAMILY SECURITY INSTRUMENT -

              	
                Form
                  4031

              	
                11/01

              
	
                NEW
                  JERSEY

              	 	 
	 	 	
                Ó
                  1997-2001
                  Fannie Mae

              

      

       

    

    
      
        
        

      

      
        Page
          i

        
          

        

      

      
        
        

      

       

    

    
      	
              22.

            	
              EVENTS
                OF DEFAULT

            	
              25

            
	
               

            	 	 
	
              23.

            	
              REMEDIES
                CUMULATIVE

            	
              26

            
	 	 	 
	
              24.

            	
              FORBEARANCE

            	
              26

            
	 	 	 
	
              25.

            	
              LOAN
                CHARGES

            	
              26

            
	 	 	 
	
              26.

            	
              WAIVER
                OF STATUTE OF LIMITATIONS

            	
              27

            
	 	 	 
	
              27.

            	
              WAIVER
                OF MARSHALLING

            	
              27

            
	 	 	 
	
              28.

            	
              FURTHER
                ASSURANCES

            	
              27

            
	 	 	 
	
              29.

            	
              ESTOPPEL
                CERTIFICATE

            	
              27

            
	 	 	 
	
              30.

            	
              GOVERNING
                LAW; CONSENT TO JURISDICTION AND VENUE.

            	
              27

            
	 	 	 
	
              31.

            	
              NOTICE.

            	
              28

            
	 	 	 
	
              32.

            	
              SALE
                OF NOTE; CHANGE IN SERVICER

            	
              28

            
	 	 	 
	
              33.

            	
              SINGLE
                ASSET BORROWER

            	
              28

            
	 	 	 
	
              34.

            	
              SUCCESSORS
                AND ASSIGNS BOUND

            	
              28

            
	 	 	 
	
              35.

            	
              JOINT
                AND SEVERAL LIABILITY.

            	
              28

            
	 	 	 
	
              36.

            	
              RELATIONSHIP
                OF PARTIES; NO THIRD PARTY BENEFICIARY.

            	
              29

            
	 	 	 
	
              37.

            	
              SEVERABILITY;
                AMENDMENTS

            	
              29

            
	 	 	 
	
              38.

            	
              CONSTRUCTION

            	
              29

            
	 	 	 
	
              39.

            	
              LOAN
                SERVICING

            	
              29

            
	 	 	 
	
              40.

            	
              DISCLOSURE
                OF INFORMATION

            	
              29

            
	 	 	 
	
              41.

            	
              NO
                CHANGE IN FACTS OR CIRCUMSTANCES.

            	
              29

            
	 	 	 
	
              42.

            	
              SUBROGATION

            	
              30

            
	 	 	 
	
              43.

            	
              ACCELERATION;
                REMEDIES.

            	
              30

            
	 	 	 
	
              44.

            	
              RELEASE

            	
              30

            
	 	 	 
	
              45.

            	
              NO
                CLAIM OF CREDIT FOR TAXES

            	
              30

            
	 	 	 
	
              46.

            	
              WAIVER
                OF TRIAL BY JURY

            	
              30

            

    

    
      
        

        
          	
                  FANNIE
                    MAE MULTIFAMILY SECURITY INSTRUMENT -

                	
                  Form
                    4031

                	
                  11/01

                
	
                  NEW
                    JERSEY

                	 	 
	 	 	
                  Ó
                    1997-2001
                    Fannie Mae

                

        

        

          
            
              
              

            

            
              Page
                ii

              
                

              

            

            
              
              

            

          

        

      

    

     

    Laurel
      Lakes Estates

    

    MULTIFAMILY
      MORTGAGE,

    ASSIGNMENT
      OF RENTS

    AND
      SECURITY AGREEMENT

    

    

    THIS
      MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”) is dated as of the 15th day of August, 2007,
      between EMERICHIP VOORHEES LLC, a limited liability company
      organized and existing under the laws of Delaware, whose address is c/o Emeritus
      Corporation, 3131 Elliott Avenue, Suite 500, Seattle, Washington 98121, as
      mortgagor (“Borrower”), and CAPMARK BANK, an
      industrial bank organized and existing under the laws of Utah, whose address
      is
      6955 Union Park Center, Suite 330, Midvale, Utah 84047,
      Attn:  President, with a copy to Capmark Finance Inc., 116 Welsh Road,
      Horsham, Pennsylvania 19044, Attn:  Servicing - Executive Vice
      President, as mortgagee (“Lender”).

    

    Borrower
      is indebted to Lender in the principal amount of $6,975,000.00, as evidenced
      by
      Borrower’s Multifamily Note payable to Lender, dated as of the date of this
      Instrument, and maturing on September 1, 2017.

    

    TO
      SECURE
      TO LENDER the repayment of the Indebtedness, 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 mortgages,
      warrants, grants, conveys and assigns to Lender the Mortgaged Property,
      including the Land located in the County of Camden, State of New Jersey and
      described in Exhibit A attached to this Instrument.

    

    Borrower
      warrants and represents that Borrower is lawfully seized of the Mortgaged
      Property and has the right, power and authority to mortgage, grant, convey
      and
      assign the Mortgaged Property, and that the Mortgaged Property is
      unencumbered.  Borrower covenants that Borrower will warrant and
      defend generally the title to 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.

    
      

      
        	
                FANNIE
                  MAE MULTIFAMILY SECURITY INSTRUMENT -

              	
                Form
                  4031

              	
                11/01

              
	
                NEW
                  JERSEY

              	 	 
	 	 	
                Ó
                  1997-2001
                  Fannie Mae

              

      

      

        
          
            
            

          

          
            Page
              1

            
              

            

          

          
            
            

          

        

      

       

    

    (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).

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          2

        
          

        

      

      
        
        

      

    

    (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;

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          3

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          4

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          5

        
          

        

      

      
        
        

      

    

    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 on or after the date of Lender’s
      demand for Rents, Lender may give, and Borrower hereby irrevocably authorizes
      Lender to give, notice to all tenants of the Mortgaged Property instructing
      them
      to pay all Rents to Lender, no tenant shall be obligated to inquire further
      as
      to the occurrence or continuance of an Event of Default, and no tenant shall
      be
      obligated to pay to Borrower any amounts which are actually paid to Lender
      in
      response to such a notice.  Any such notice by Lender shall be
      delivered to each tenant personally, by mail or by delivering such demand to
      each rental unit.  Borrower shall not interfere with and shall
      cooperate with Lender's collection of such Rents.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          6

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          7

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          8

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

    (f)           Borrower
      shall not lease any portion of the Mortgaged Property for non-residential use
      except with the prior written consent of Lender and Lender's prior written
      approval of the Lease agreement.  Borrower shall not modify the terms
      of, or extend or terminate, any Lease for non-residential use (including any
      Lease in existence on the date of this Instrument) without the prior written
      consent of Lender.  Borrower shall, without request by Lender, deliver
      an executed copy of each non-residential Lease to Lender promptly after such
      Lease is signed.   All non-residential Leases, including renewals
      or extensions of existing Leases, shall specifically provide that (1) such
      Leases are subordinate to the lien of this Instrument (unless waived in writing
      by Lender); (2) the tenant shall attorn to Lender and any purchaser at a
      foreclosure sale, such attornment to be self-executing and effective upon
      acquisition of title to the Mortgaged Property by any purchaser at a foreclosure
      sale or 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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          9

        
          

        

      

      
        
        

      

    

    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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          10

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          11

        
          

        

      

      
        
        

      

    

    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;

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          12

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          13

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          14

        
          

        

      

      
        
        

      

    

    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;

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          15

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (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;

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          16

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (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.

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          17

        
          

        

      

      
        
        

      

    

    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:

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          18

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (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.

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          19

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          20

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          21

        
          

        

      

      
        
        

      

    

    (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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          22

        
          

        

      

      
        
        

      

    

    (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;

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          23

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (5)

            	
              in
                the case of a Transfer of all or any part of the Mortgaged Property,
                or
                direct or indirect ownership interests in Borrower or Key Principal
                (if an
                entity), if transferor or any other person has obligations under
                any Loan
                Document, the execution by the transferee or one or more individuals
                or
                entities acceptable to Lender of an assumption agreement (including,
                if
                applicable, an 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;

            

    

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          24

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (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;

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          25

        
          

        

      

      
        
        

      

    

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

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          26

        
          

        

      

      
        
        

      

    

    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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          27

        
          

        

      

      
        
        

      

    

    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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          28

        
          

        

      

      
        
        

      

    

    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.

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          29

        
          

        

      

      
        
        

      

    

    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 foreclose this
      Instrument by judicial proceeding and may invoke any other remedies permitted
      by
      New Jersey law or provided in this Instrument or in any other Loan
      Document.  Lender shall be entitled to collect all costs and expenses
      incurred in pursuing such remedies, including attorneys’ fees permitted by Rules
      of Court, costs of documentary evidence, abstracts and title
      reports.

    

    44.           RELEASE.  Upon
      payment of the Indebtedness, Lender shall cancel this
      Instrument.  Borrower shall pay Lender’s reasonable costs incurred in
      canceling this Instrument.

    

    45.           NO
      CLAIM OF CREDIT FOR TAXES.  Borrower will not make or claim
      credit on or deduction from the principal or interest on the sums secured by
      this Instrument by reason of any municipal or governmental taxes, assessments
      or
      charges assessed upon the Mortgaged Property, or claim any deduction from the
      taxable value of the Mortgaged Property by reason of this
      Instrument.

    

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

    

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

    

    
      	
               

            	
              x

            	 	
              Exhibit
                A

            	
              Description
                of the Land (required)

            
	 	 	 	 	 
	 	
              x

            	 	
              Exhibit
                B

            	
              Modifications
                to Instrument

            

    

    

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

     

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          30

        
          

        

      

      
        
        

      

    

     

    
      	 	
              EMERICHIP
                VOORHEES LLC,  

            
	 	
              a
                Delaware limited liability company  

            
	 	 	 	 
	 	
              By:

            	
              Emeritus
                Corporation, 

            
	 	 	
              a
                Washington corporation, its sole member 

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	
              By:/s/
                Eric Mendelsohn

            
	 	 	 	
              Eric
                Mendelsohn

            
	 	 	 	
              Director
                of Real Estate and Legal Affairs

            

    

    

    

    

    

    

    STATE
      OF
      _Illinois___, __Cook__ County ss:

    

    On
      this
      _14th day of August, 2007, before me, the undersigned officer, personally
      appeared Eric Mendelsohn, who, I am satisfied, is the individual named in the
      foregoing instrument as the Director of Real Estate and Legal Affairs of
      Emeritus Corporation, a Washington corporation, sole member of Emerichip
      Voorhees LLC, a Delaware limited liability company and, on behalf of such
      limited liability company, did acknowledge that he signed, sealed and delivered
      the foregoing instrument as his voluntary act and deed and as the voluntary
      act
      and deed of said limited liability company, for the purposes therein
      contained.

    

    

    

    
      	 	
              /s/
                Daniel Johnson

            
	 	
              Notary
                Public

            

    

    

    My
      commission expires:  03-11-09

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    

      
        
          
          

        

        
          Page
            31

          
            

          

        

        
          
          

        

      

    

     

    KEY
      PRINCIPAL

    

     

    Key
      Principal

    

    
      	
              Name:

            	
              Emeritus
                Corporation

            

    

    

    
      	
              Address:

            	
              3131
                Elliott Avenue, Suite 500

            

    

    
      	
               

            	
              Seattle,
                Washington 98121

            

    

     

     

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    

      
        
          
          

        

        
          Page
            32

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A

    

    [DESCRIPTION
      OF THE LAND]

    

     

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          A-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    MODIFICATIONS
      TO INSTRUMENT

    

    

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

    

    1.           The
      second sentence of the fourth paragraph on page 1 is amended by deleting the
      word “generally” and replacing it with “specially”.

    

    
      	
              2.

            	
              Section
                1(z) is amended in its entirety to read as
                follows:

            

    

    

    
      	
               

            	
              “(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, other than the issuance of stock of Key Principal which is
                sold or
                intended to be sold on a public market; (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
                (other
                than a merger related to Key Principal in which Key Principal is
                the
                surviving entity), 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.”

            

    

    

    
      	
              3.

            	
              The
                first sentence of Section 4(f) is amended in its entirety to read
                as
                follows:

            

    

    

    “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; provided, however, that Lender’s prior written
      consent and prior written approval shall not be required with respect to
      commercial leases for hair salons, physical therapy spaces, or other leases
      covering floor space not exceeding 3,000 square feet, provided that the lessee
      and its business and non-residential use of a portion of the Mortgaged Property
      are consistent with similarly situated senior housing facilities.”

    

    
      	
              4.

            	
              Section
                7 entitled “Deposits for Taxes, Insurance and Other Charges”, subsection
                (a) provision (1) is deleted in its entirety and amended to read
                as
                follows:

            

    

    

    
      	
               

            	
              “(1)

            	
              any
                water and sewer charges which, if not paid, may result in a lien
                on all or
                any part of the Mortgaged Property, provided that such deposits for
                water
                and sewer charges shall not be required as long as water and sewer
                charges
                are paid when due and prior to any lien attaching to the Mortgaged
                Property and the Lender is provided evidence satisfactory to it of
                such
                payment within fifteen (15) days of such payment and provided further
                that
                no Event of Default has occurred under this
                Instrument,”

            

    

     

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          B-1

        
          

        

      

      
        
        

      

    

    
      	
              5.

            	
              Section
                7 of the Instrument is hereby modified to add the following new subsection
                7(f):

            

    

    

    
      	
               

            	
              “(f)

            	
              Notwithstanding
                the foregoing provisions of this Section 7, Lender hereby conditionally
                waives the requirement of such Imposition Deposits for insurance
                premiums
                pursuant to Section 7(a)(2) and 7(a)(3) above; provided,
                that:

            

    

    

    
      	
               

            	
              (i)

            	
              Borrower
                pays all insurance premiums and costs when due and prior to any
                delinquency and Borrower provides Lender with proof of such (in the
                form
                of a paid invoice) no later than fifteen (15) days after such
                payment.  Further, Lender shall have the right to examine
                Borrower's records relating to the payment of insurance and other
                expenses
                of the Property upon reasonable notice from
                Lender;

            

    

    

    
      	
               

            	
              (ii)

            	
              The
                Lender’s annual property inspections show that the 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 new insurance policy complies with all requirements of the Loan
                Documents, and the Lender is named as an additional
                insured;

            

    

    

    
      	
               

            	
              (iv)

            	
              In
                the event 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;

            

    

    

    
      	
               

            	
              (v)

            	
              If
                a Transfer of the Property occurs, Imposition Deposits will automatically
                and   immediately be reinstated;
                and

            

    

    

    
      	
               

            	
              (vi)

            	
              The
                Lender, in its sole discretion, retains the right to reinstate monthly
                Imposition Deposits at any time.  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.”

            

    

    

    
      	
              6.

            	
              Section
                14(b)(4) is modified to add at the end thereof the
                following:

            

    

    

    “provided,
      however, that Borrower shall have no obligation to identify the owners of
      interests in Key Principal.”

    

    
      	
              7.

            	
              The
                second line of Section 18 entitled “Environmental Hazards”, subsection (e)
                is modified by deleting the colon at the end thereof and inserting
                the
                following:

            

    

    

      “(or
        in
        any written reports delivered to or obtained by Lender prior to the date
        hereof):”

       

    

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          B-2

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              Section
                18 entitled “Environmental Hazards”, subsection (k) is modified by
                deleting the last sentence thereof and inserting in lieu thereof
                the
                following:

            

    

    

    “However,
      any Indemnitee may, if it determines that counsel selected by Borrower is not
      adequately defending such Indemnitee, elect to defend any claim or legal or
      administrative proceeding at Borrower’s expense.”

    

    
      	
              9.

            	
              Section
                18 entitled “Environmental Hazards”, subsection (m) is modified by adding
                after the words “who are” and before the words, “general partners” , the
                words “members of or”.

            

    

    

    
      	
              10.

            	
              Section
                18 entitled “Environmental Hazards”, subsection (o) is modified by adding
                after the words, “under this Section 18 applies, Lender may” and before
                the words “employ its own legal counsel” the words, “if Lender determines
                that counsel and consultants retained by Borrower are inadequately
                defending Lender”.

            

    

    

    
      	
              11.

            	
              Section
                32 is deleted in its entirety and replaced with the
                following:

            

    

    

    
      	
            	
              “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 to any person or entity
                (each a
                “Lender Transferee”) 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.  Notwithstanding anything to the contrary contained in
                the Note, this Instrument or any other Loan Documents, in the event
                that
                (i) a Lender Transferee (or, if such Lender Transferee is a disregarded
                entity for United States federal income tax purposes, the person
                or entity
                treated, for United States federal income tax purposes, as the owner
                of
                the assets of such Lender Transferee) is not organized under the
                laws of
                the United States or a state thereof and (ii) such Lender Transferee
                fails
                to establish to the reasonable satisfaction of Borrower that payments
                made
                to such Lender Transferee under the Note, this Instrument and any
                other
                Loan Documents are exempt from United States withholding taxes, Borrower
                shall not be required to “gross-up” payments made to such Lender
                Transferee for United States withholding taxes withheld by
                Borrower.  Any amounts withheld shall be remitted to the
                applicable taxing authority and treated, for purposes of the Note,
                this
                Instrument and any other Loan Documents, as if they were paid to
                such
                Lender Transferee.”

            

    

     

    
      	
              FANNIE
                MAE MULTIFAMILY SECURITY INSTRUMENT -

            	
              Form
                4031

            	
              11/01

            
	
              NEW
                JERSEY

            	 	 
	 	 	
              Ó
                1997-2001
                Fannie Mae

            

    

    
      
        
        

      

      
        Page
          B-3

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    MODIFICATIONS
      TO INSTRUMENT

    (Seniors
      Housing)

    

    

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

    

    1.            
      Section 1 of the Instrument is hereby amended to add the following paragraphs
      at
      the end thereof:

    

    "(aa)    "Accounts"
      means all money, funds, investment property, accounts, general intangibles,
      deposit accounts, chattel paper, documents, instruments, judgments, claims,
      settlements of claims, causes of action, refunds, rebates, reimbursements,
      reserves, deposits, subsidies, proceeds, products, rents and profits, now or
      hereafter arising, received or receivable, from or on account of the Borrower's
      management and operation of the Mortgaged Property as a Seniors Housing
      Facility."

    

    "(bb)    "Contract(s)"
      means any contract or other agreement for the provision of goods or services
      at
      or otherwise in connection with the operation, use or management of the
      Mortgaged Property, including cash deposited to secure performance by parties
      of
      their obligations."

    

    "(cc)    "Inventory"
      means all right, title and interest of Borrower in and to inventory of every
      type and description, now owned and hereafter acquired, including, without
      limitation, raw materials, work in process, finished goods, goods returned
      or
      repossessed or stopped in transit, goods used for demonstration, promotion,
      marketing or similar purposes, property in, on or with which any of the
      foregoing may be stored or maintained, all materials and supplies usable or
      used
      or consumed at the Mortgaged Property, and all documents and documents of title
      relating to any of the foregoing, together with all present and future parts,
      additions, accessories, attachments, accessions, replacements, replacement
      parts
      and substitutions therefore or thereto in any form whatsoever."

    

    "(dd)    "License(s)"
      means any operating licenses, certificates of occupancy, health department
      licenses, food service licenses, certificates of need, business licenses,
      permits, registrations, certificates, authorizations, approvals, and similar
      documents required by applicable laws and regulations for the operation of
      the
      Mortgaged Property as a Seniors Housing Facility, including replacements and
      additions thereto."

    

    "(ee)    "Operating
      Lease" means any master lease, operating agreement, operating lease or similar
      document, preapproved by Lender, under which control of the occupancy, use,
      operation, maintenance and administration of the Mortgaged Property as a Seniors
      Housing Facility has been granted to any individual or entity other than the
      Borrower."

    

    
      	
              Seniors
                Housing Modifications to Instrument

            	
              Form
                4075

            	 
	 	
              05-05

            	
              ©
                2000-2005 Fannie Mae

            

    

    

      
        
          
          

        

        
          Page
            B-4

          
            

          

        

        
          
          

        

      

    "(ff)    "Operator"
      means any qualified and licensed (if so required by the applicable laws of
      the
      Property Jurisdiction) individual or entity obligated under the terms of an
      Operating Lease with the Borrower."

    

    "(gg)    "Seniors
      Housing Facility" means a residential housing facility which qualifies as
      "housing for older persons" under the Fair Housing Amendments Act of 1988 and
      the Housing for Older Persons Act of 1995 comprised of assisted living
      units.”

    

    "(hh)    "Third
      Party
      Payments" means all payments and the rights to receive such payments from
      Medicaid programs or similar federal, state or local programs, boards, bureaus
      or agencies, and from residents, private insurers or others."

    

    2.            
      Section 1(g) of the Instrument is hereby amended to add the following sentence
      at the end thereof:

    

    "The
      term
      "Hazardous Materials" shall also include any medical
      products or devices, including, but not limited to, those materials defined
      as
      "medical waste" or "biological waste" under relevant statutes or regulations
      pertaining to any Hazardous Materials Law."

    

    3.            
      Section 1(o) of the Instrument is hereby amended to add the following sentence
      at the end thereof:

    

    "The
      term
      "Leases" shall also include any residency, occupancy, admission and care
      agreements pertaining to residents of the Mortgaged Property and any Operating
      Lease."

    

    
      	
               

            	
              4.

            	
              Section
                1(s) of the Instrument is hereby
                amended:

            

    

    

    
      	
               

            	
              A)

            	
              to
                revise subsection (14) to read as
                follows:

            

    

    

    “(14)  
      all resident and tenant security deposits, entrance fees, application fees,
      processing fees, community fees and any other amounts or fees deposited by
      any
      resident or tenant upon execution of a Lease which have not been forfeited
      by
      the resident or tenant; and”

    

    and

    

    
      	
               

            	
              B)

            	
              to
                add the following subsections (16), (17), (18) and (19) at the end
                thereof

            

    

    

    "(16)  
      all payments due, or received, from residents, second party charges added to
      base rental income, base and/or additional meal sales, commercial operations
      located on the Mortgaged Property or provided as a service to the residents
      of
      the Mortgaged Property, rental from guest suites, seasonal lease charges,
      furniture leases, and laundry services, and any and all other services provided
      to residents in connection with the Mortgaged Property, and any and all other
      personal property on the Mortgaged Property, excluding personal property
      belonging to residents of the Mortgaged Property (other than Personalty
      belonging to Borrower);"

    

    
      	
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    "(17)  
      subject to applicable law and regulations, all Licenses and Contracts relating
      to the operation and authority to operate the Mortgaged Property as a Seniors
      Housing Facility;"

    

    "(18)  
      all Third Party Payments arising from the operation of the Mortgaged Property
      as
      a Seniors Housing Facility, utility deposits, unearned premiums, accrued,
      accruing or to accrue under insurance policies now or hereafter obtained by
      the
      Borrower and all proceeds of any conversion of the Mortgaged Property or any
      part thereof including, without limitation, proceeds of hazard, property, flood
      and title insurance and all awards and compensation for the taking by eminent
      domain, condemnation or otherwise, of all or any part of the Mortgaged Property
      or any easement therein;" and

    

    "(19)  
      all of Borrower's Accounts and Inventory."

    

    5.            
      Section 1(v) of the Instrument is hereby amended to add the following sentence
      at the end thereof:

    

    "The
      term
      "Personalty" shall also include all personal property currently owned or
      acquired by Borrower after the date hereof used in connection with the ownership
      and operation of the Mortgaged Property as a Seniors Housing Facility, all
      kitchen or restaurant supplies and facilities, dining room supplies and
      facilities, medical supplies and facilities, leasehold improvements, or related
      furniture and equipment, together with all present and future parts, additions,
      accessories, replacements, attachments, accessions, replacement parts and
      substitutions therefor, and the proceeds thereof (cash and non-cash including
      insurance proceeds) and any other equipment, supplies or furniture owned by
      Borrower and leased to any third party service provider or any Operator under
      any Operating Lease, use, occupancy, or lease agreements, as well as all
      Licenses, to the extent permitted by applicable law and regulations, including
      replacements and additions thereto."

    

    6.            
      Section 1(x) of the Instrument is hereby amended to provide as
      follows:

    

    "Rents"
      means all rents (whether from residential or non-residential space), revenues
      and other income of the Land or the Improvements, including rent paid under
      any
      Operating Lease, 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,
      healthcare, and other services provided at the Mortgaged Property, whether
      now
      due, past due, or to become due, security deposits, entrance fees, application
      fees, processing fees, community fees and any other amounts or fees forfeited
      by
      any resident or tenant, together with and including all proceeds from any
      private insurance for residents to cover rental charges and charges for services
      at or in connection with the Mortgaged Property, and the right to Third Party
      Payments due for the rents or services of residents at the Mortgaged
      Property.  Each of the foregoing shall be considered "Rents" for the
      purposes of the actions and rights set forth in Section 3 of this
      Instrument.

    

    7.            
      Section 3(b) of the Instrument is hereby amended to add the following sentence
      at the end thereof:

    

    
      	
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    "After
      an
      Event of Default, Lender is further authorized to give notice to all Third
      Party
      Payment payors (other than governmental entities) at Lender's option,
      instructing them to pay all Third Party Payments which would be otherwise paid
      to Borrower to Lender, to the extent permitted by law.  In the case of
      Third Party Payments from Third Party Payment payors which are governmental
      entities, including Medicaid, Lender and Borrower have executed a Depositary
      Agreement of even date herewith which establishes special procedures for the
      receipt and disposition of the Third Party Payments."

    

    8.  
                Section 3(c) of the
      Instrument is hereby amended to add the following sentence at the end
      thereof:

    

    "In
      order
      to induce Lender to lend funds hereunder, Borrower (together with any Operator
      or manager of the Mortgaged Property) hereby agrees upon the occurrence of
      an
      Event of Default and at the option of Lender, that it shall continue to provide
      all necessary services required under any Operating Lease or applicable
      licensing or regulatory requirements and shall fully cooperate with Lender
      and
      any receiver as may be appointed by a court, in performing these services and
      agrees to arrange for an orderly transition to a replacement operator, manager
      or provider of the necessary services, and to execute promptly all applications,
      assignments, consents and documents requested by Lender to facilitate such
      transition."

    

    9.
    The
      first
      sentence in Section 4(b) of the Instrument is hereby amended to add the
      following at the end thereof:

    

    ",
      with
      the exception of any Operating Lease."

    

    10.           The
      last sentence in Section 4(e) of the Instrument is hereby amended to state
      as
      follows:

    

    "If
      customary in the applicable market, residential Leases with a month-to-month
      term or with terms of less than six months shall be permitted with Lender's
      prior written consent."

     

    11.
                The first sentence
      in Section 4(f) of the Instrument is hereby amended to add the following at
      the
      end thereof:

    

    "with
      the
      exception of any Operating Lease which has previously been approved by
      Lender."

    

    
      	
               

            	
              12.

            	
              Section
                4 of the Instrument is hereby amended to add the following as Section
                4(h):

            

    

    

    "Any
      Operating Lease is and shall be subject and subordinate in all respects to
      the
      liens, terms, covenants and conditions of the Instrument and the other Loan
      Documents, and to all renewals, modifications, consolidations, replacements
      and
      extensions thereof, and to all advances heretofore made or which may hereafter
      be made pursuant to the Instrument (including all sums advanced for the purposes
      of (x) protecting or further securing the lien of the Instrument, curing
      defaults by Borrower under the Loan Documents or for any other purposes
      expressly permitted by the Instrument or (y) constructing, renovating,
      repairing, furnishing, fixturing or equipping the Mortgaged
      Property."

    

    
      	
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    13.           Section
      11 of the Instrument is hereby amended to add the following sentences at the
      end
      thereof:

    

    “Borrower
      further covenants and agrees that it shall not permit more than 20% of its
      effective gross income to be derived from units relying on Medicaid
      payments.  If by reason of applicable law or regulation more than 20%
      of effective gross income becomes derived from units relying on Medicaid
      payments, the Borrower shall diligently and expeditiously take all reasonable
      steps necessary to bring the Mortgaged Property into compliance with the
      preceding sentence to the extent permissible by applicable law or
      regulation.  Borrower further covenants and agrees that it shall limit
      the use and occupancy of the Mortgaged Property to residents that meet the
      standards for independent living or assisted living, and that it shall not
      accept residents that require skilled nursing care or permit residents requiring
      skilled nursing care to remain at the Mortgaged Property as a routine
      matter.”

    

    14.           Section
      12(a) of the Instrument is hereby amended to add the following at the end
      thereof:

    

    "and,
      (5)
      payments for any required licensing fees, permits, or other expenses related
      to
      the operation of the Mortgaged Property as a Seniors Housing Facility by or
      on
      behalf of the Lender, any fines or penalties that may be assessed against the
      Mortgaged Property, any costs incurred to bring the Mortgaged Property into
      full
      compliance with applicable codes and regulatory requirements, and any fees
      or
      costs related to Lender's employment of any operator or service provider for
      the
      Mortgaged Property."

    

    15.           Section
      14(b) of the Instrument is hereby deleted in its entirety and replaced with
      the
      following:

    

    "(b)           Subject
      to federal, state and local laws and regulations applicable to resident and
      tenant privacy, including but not limited to the Health Insurance Portability
      and Accountability Act (“HIPAA”) (collectively the “Privacy Laws”), Borrower
      shall furnish to Lender all of the following:"

    

    
      	
               

            	
              "(1)

            	
              within
                30 days after the end of each fiscal quarter, a statement of income
                and
                expenses for Borrower's or any Operator's operation of the Mortgaged
                Property for that quarter, a statement of changes in financial position
                of
                Borrower relating to the Mortgaged Property for that quarter and
                a balance
                sheet showing all assets and liabilities of Borrower relating to
                the
                Mortgaged Property as of the end of that
                quarter;"

            

    

    

    
      	
               

            	
              “(2)

            	
              within
                90 days after the end of each twelve consecutive month fiscal year,
                a
                statement of income and expenses for Borrower’s or any Operator’s
                operation of the Mortgaged Property for that fiscal year, prepared
                in
                accordance with generally accepted accounting principles (“GAAP”), a
                statement of changes in financial position of Borrower relating to
                the
                Mortgaged Property for that fiscal year, and a balance sheet showing
                all
                assets and liabilities of Borrower relating to the Mortgaged Property
                as
                of the end of that fiscal year;”

            

    

    

    
      	
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              “(3)

            	
              within
                30 days after the end of each quarter of Borrower, and at any other
                time
                upon Lender's request, a rent schedule for the Mortgaged Property
                showing
                the name of each resident and tenant, and for each resident and tenant,
                the space occupied, the lease expiration date, the rent payable for
                the
                current month, the date through which rent has been paid, any income
                attributable to additional resident services, and any related information
                requested by Lender;"

            

    

    

    
      	
               

            	
              "(4)

            	
              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;"

            

    

    

    
      	
               

            	
              "(5)

            	
              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;"

            

    

    

    
      	
               

            	
              "(6)

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

            

    

    

    
      	
               

            	
              "(7)

            	
              if
                required by Lender, a statement of income and expense for the Mortgaged
                Property for the prior month or
                quarter;"

            

    

    

    
      	
               

            	
              "(8)

            	
              "within
                10 days of Borrower's receipt, copies of all inspection reports,
surveys,
                reviews, and certifications prepared by, for, or on behalf of any
                licensing or regulatory authority relating to the Mortgaged Property
                and
                any legal actions, orders, notices, or reports relating to the Mortgaged
                Property issued by the applicable regulatory or licensing
                authorities;"

            

    

    

    
      	
               

            	
              "(9)

            	
              upon
                the request of Lender, copies of all reports relating to the services
                and
                operations of the Mortgaged Property, including, if applicable, Medicaid
                cost reports and records relating to account balances due to or from
                Medicaid or any private insurer;
                and"

            

    

    

    
      	
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              “(10)

            	
              within
                10 days of submission by Borrower, copies of all incident reports
                submitted to any liability insurance carrier or any elderly affairs,
                regulatory or licensing authority.”

            

    

    

    16.           Section
      17(a)(5) is hereby amended to state the following:

    

    "shall
      provide for professional management of the Mortgaged Property as a Seniors
      Housing Facility either by Borrower, an Operator under an Operating Lease
      approved by Lender in writing, or a management company engaged either by the
      Borrower or any Operator under a Contract approved by Lender in
      writing."

    

    17.           Section
      17(a) of the Instrument is hereby amended to add the following sentence at
      the
      end thereof:

    

    "Borrower
      further covenants and agrees that it shall maintain and operate the Mortgaged
      Property as a Seniors Housing Facility at all times in accordance with the
      standards required by any applicable Licenses and as required by any regulatory
      authority, that it shall maintain in good standing all Licenses, and that it
      shall cause to renew and extend all such required Licenses, and shall not fail
      to take any action necessary to keep all such Licenses in good standing and
      full
      force and effect.  Borrower will immediately provide Lender with any
      notice or order of a violation which may otherwise have an adverse impact on
      the
      Mortgaged Property, its operations or its compliance with licensing and
      regulatory requirements."

    

    18.           Section
      17 of the Instrument is hereby amended to add the following as subsection
      (c):

    

    "Borrower
      has entered into the Contracts previously identified to Lender for the provision
      of goods or services, at or otherwise in connection with the operation, use
      or
      management of the Mortgaged Property.  Borrower may in the future
      enter into Contracts for the provision of additional goods or services at or
      otherwise in connection with the operation, use or management of the Mortgaged
      Property.  Until Lender gives notice to Borrower of Lender's exercise
      of its rights under this Instrument, Borrower shall have all rights, power
      and
      authority granted to Borrower under any Contract (except as otherwise limited
      by
      this subsection or any other provision of this Instrument), including the right,
      power and authority to modify the terms of any Contract or extend or terminate
      any Contract, with the exception of any Operating Lease.  Upon the
      occurrence of an Event of Default and at the option of Lender, the permission
      given to Borrower pursuant to the preceding sentence to exercise all rights,
      power and authority under Contracts shall terminate.  Upon Lender's
      delivery of notice to Borrower of an Event of Default, Lender shall immediately
      have all rights, powers and authority granted to Borrower under any Contract,
      including the right, power and authority to modify the terms of, extend or
      terminate any such Contract.  Borrower hereby represents and warrants
      and agrees with Lender that:  (1) the Contracts are assignable and no
      previous assignment of Borrower's interest in the Contracts has been made;
      (2)
      the Contracts are in full force and effect in accordance with their respective
      terms and there are no defaults thereunder; (3) Borrower shall fully perform
      all
      of its obligations under the Contracts, and Borrower agrees not to amend,
      modify, assign, sell, pledge, transfer, mortgage or otherwise encumber its
      interests in any of the Contracts so long as this Instrument is in effect,
      or
      consent to any transfer, assignment or other disposition thereof without the
      written approval of Lender; and (4) each Contract entered into by Borrower
      subsequent to the date hereof, the average annual consideration of which,
      directly or indirectly, is at least $20,000, shall provide:  (i) that
      it shall be terminable for cause; and (ii) that it shall be terminable, at
      Lender's option, upon the occurrence of an Event of Default.

    

    
      	
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    19.           Section
      18(b) of the Instrument is hereby amended to add the following sentence at
      the
      end thereof:

    

    "Prohibited
      Activities and Conditions also shall not include the safe and lawful use and
      storage of medical products and devices customarily used in the operation of
      a
      Seniors Housing Facility."

    

    20.           Section
      19(c) is hereby amended to provide as follows:

    

    "Borrower
      shall maintain or cause any Operator to maintain at all times commercial
      professional liability and general liability insurance, workers' compensation
      insurance, and such other insurance as Lender may require from time to
      time.”

    

    21.           Section
      21(a) of the Instrument is hereby amended to add the following Sections (8)
      and
      (9) at the end thereof:

    

    "(8)    
      a
      Transfer or change in the holder of the Licenses authorizing the Mortgaged
      Property to operate as a Seniors Housing Facility; and"

    

    "(9)    
      a Transfer of the Borrower's or any Operator's respective interest(s) in any
      Operating Lease."

    

    22.           Section
      22 of the Instrument is hereby amended to add the following as Sections 22
      (g),
      (h), (i) and (j):

    

    "(g)    
      any failure by Borrower, Operator or any manager (as applicable) to comply
      with
      the use and licensing requirements set forth in Sections 10 and
      11”;

    

    "(h)    
      any loss by Borrower, Operator or any manager (as applicable) of any License
      or
      other legal authority necessary to operate the Mortgaged Property as a Seniors
      Housing Facility, or any failure by Borrower, Operator or any manager (as
      applicable) to comply strictly with any consent order or decree or to correct,
      within the time deadlines set by any federal, state or local licensing agency,
      any deficiency where such failure results, or under applicable laws and
      regulations, is reasonably likely to result, in an action by such agency with
      respect to the Mortgaged Property that may have a material adverse effect on
      the
      income and operations of the Mortgaged Property or Borrower's interest in the
      Mortgaged Property, including, without limitation, a termination, revocation
      or
      suspension of any applicable Licenses, necessary for the operation of the
      Mortgaged Property as a Seniors Housing Facility";

    

    "(i)    
      if, without the consent of Lender, Borrower, Operator or any manager (as
      applicable):

    

    
      	
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            B-11

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              “(i)

            	
              ceases
                to operate the Mortgaged Property as a Seniors Housing
                Facility;”

            

    

    

    
      	
               

            	
              “(ii)

            	
              ceases
                to provide such kitchens, separate bathrooms, and areas for eating,
                sitting and sleeping in each independent living or assisted living
                unit or
                at a minimum, central bathing facilities for Alzheimer’s/dementia care, as
                are provided as of the date of this
                Instrument;”

            

    

    

    
      	
               

            	
              “(iii)

            	
              ceases
                to provide other facilities and services normally associated with
                independent living or assisted living units, including, without
                limitation, (A) central dining services providing up to three meals
                per
                day, (B) periodic housekeeping, (C) laundry services, (D) customary
                transportation services, and (E) social
                activities;”

            

    

    

    
      	
               

            	
              “(iv)

            	
              provides
                or contracts for skilled nursing care for any of the
                units;”

            

    

    

    
      	
               

            	
              “(v)

            	
              leases
                or holds available for lease to commercial tenants non-residential
                space
                (i.e., space other than the units, dining areas, activity rooms,
                lobby,
                parlors, kitchen, mailroom, marketing/management offices) exceeding
                ten
                percent (10%) of the net rental area;
                or”

            

    

    

    
      	
               

            	
              “(vi)

            	
              takes
                any action or permits to exist any condition that causes the Mortgaged
                Property to be no longer classified as housing for older persons
                pursuant
                to the Fair Housing Amendments Act of 1988 and the Housing for Older
                Persons Act of 1995”; and

            

    

    

    “(j)    
      a default under any Operating Lease or under the Subordination, Assignment
      and
      Security Agreement executed by Borrower, Operator and Lender in connection
      with
      this Loan which continues beyond any applicable cure period, or the termination
      of any Operating Lease without Lender's prior written approval."

    

    23.           The
      former Sections 22(g), (h) and (i) are hereby amended to be Sections 22 (k),
      (l)
      and (m), respectively and are amended to read as follows:

    

    "(k)    
      any failure by Borrower to perform any of its obligations under this Instrument
      (other than those specified in Sections 22(a) through (j)), 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;"

    

    
      	
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    "(l)    
      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"

    

    "(m)    
      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."

    

    24.           Section
      43 of the Instrument is hereby amended to add the following sentences at the
      end
      thereof:

    

    "In
      addition to the remedies set forth herein and elsewhere in this Instrument,
      upon
      an Event of Default Lender shall be entitled to mandate the use of a lockbox
      bank account or other depositary account, to be maintained under the control
      and
      supervision of Lender, for all income of the Mortgaged Property, including,
      but
      not limited to, Rents, service charges, insurance payments and Third Party
      Payments.  Lender may, upon an Event of Default, cause the removal of
      Borrower, Operator or any manager (as applicable) from any Mortgaged Property
      operations.  Until such time as Lender has located a replacement
      operator, Borrower, the acting Operator or manager shall continue to provide
      all
      required services to maintain the Mortgaged Property in full compliance with
      all
      licensing and regulatory requirements as a Seniors Housing
      Facility.  Borrower acknowledges that its failure to perform or to
      cause the performance of this service shall constitute a form of waste of the
      Mortgaged Property, causing irreparable harm to Lender and the Mortgaged
      Property, and shall constitute sufficient cause for the appointment of a
      receiver."

    

    25.           The
      following new Section is added to the Instrument after the last numbered Section
      and there are no Sections appearing between the last numbered Section and the
      numbered Section appearing below:

    

    "55.    
      BORROWER'S REPRESENTATIONS AND
      WARRANTIES.  In addition to any other representations and
      warranties contained in this Instrument, Borrower hereby represents and warrants
      to Lender as follows:"

    

    “(a)    
      The Mortgaged Property is duly licensed as an assisted living residence and
      is
      in all respects otherwise legally authorized to operate the Mortgaged Property
      as a Seniors Housing Facility, under the applicable laws of the Property
      Jurisdiction; "

    

    "(b)    
      Borrower and the Mortgaged Property (and the operation thereof) are in
      compliance in all material respects with the applicable provisions of all laws,
      statutes, regulations, ordinances, orders, standards, restrictions and rules
      of
      any federal, state or local government or quasi-government body, agency, board
      or authority having jurisdiction over the operation of the Mortgaged Property,
      including, without limitation: (i) health care and fire safety codes; (ii)
      design and construction requirements, (iii) laws regulating the handling and
      disposal of medical or biological waste; (iv) the applicable provisions of
      Seniors Housing Facility laws, rules, regulations and published interpretations
      thereof to which the Borrower or the Mortgaged Property is subject; (v) privacy,
      security and billing standards such as those set forth in HIPAA, and (vi) all
      criteria established to classify the Mortgaged Property as housing for older
      persons under the Fair Housing Amendments Act of 1988 and the Housing for Older
      Persons Act of 1995;"

    

    
      	
              Seniors
                Housing Modifications to Instrument

            	
              Form
                4075

            	 
	 	
              05-05

            	
              ©
                2000-2005 Fannie Mae

            

    

    

      
        
          
          

        

        
          Page
            B-13

          
            

          

        

        
          
          

        

      

    

     

    "(c)  
      If required, Borrower has a current provider agreement under any and all
      applicable federal, state and local laws for reimbursement: (a) to a Seniors
      Housing Facility; or (b) for other type of care provided at such
      facility.  There is no decision not to renew any provider agreement
      related to the Mortgaged Property, nor is there any action pending or threatened
      to impose alternative, interim or final sanctions with respect to the Mortgaged
      Property;"

    

    "(d)  
      Borrower and the Mortgaged Property are not subject to any proceeding, suit
      or
      investigation by any federal, state or local government or quasi-government
      body, agency, board authority or any other administrative or investigative
      body
      which may result in the imposition of a fine or an alternative, interim or
      final
      sanction, or which would have a material adverse effect on Borrower or the
      operation of the Mortgaged Property, or which would result in the appointment
      of
      a receiver or manager or would result in the revocation, transfer, surrender,
      suspension or other impairment of the Licenses for the Mortgaged Property to
      operate as a Seniors Housing Facility;"

    

    "(e)  
      Upon Lender's request and subject to Privacy Laws, copies of resident care
      agreements and resident occupancy agreements shall be provided to
      Lender.  All resident records at the Mortgaged Property are true and
      correct in all material respects;"

    

    "(f)  
      Neither the execution and delivery of the Note, the Instrument or the Loan
      Documents, Borrower's performance thereunder, nor the recordation of the
      Instrument will adversely affect the Licenses necessary for the operation of
      the
      Mortgaged Property as a Seniors Housing Facility in the Property
      Jurisdiction;"

    

    "(g)  
      Borrower is not a participant in any federal program whereby any federal, state
      or local, government or quasi-governmental body, agency, board or other
      authority may have the right to recover funds by reason of the advance of
      federal funds.  Borrower has received no notice, and is not aware of
      any violation of applicable antitrust laws of any federal, state or local,
      government or quasi-government body, agency, board or other authority;
      and,"

    

    "(h)  
      Except as otherwise specifically disclosed to the Lender in writing, in the
      event any existing Operating Lease or management agreement is terminated or
      Lender acquires the Mortgaged Property through foreclosure or otherwise, neither
      Borrower, Lender, any subsequent operator or manager, nor any subsequent
      purchaser (through foreclosure or otherwise) must obtain a certificate of need
      from any applicable state health care regulatory authority or agency (other
      than
      giving such notice required under the applicable state law or regulation) prior
      to applying for any applicable License necessary for the operation of the
      Mortgaged Property as a Seniors Housing Facility, provided that no service
      or
      unit complement is changed."

    

    26.           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.

    

    
      	
              Seniors
                Housing Modifications to Instrument

            	
              Form
                4075

            	 
	 	
              05-05

            	
              ©
                2000-2005 Fannie Mae

            

    

    

      
        
          
          

        

        
          Page
            B-14

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      B

    

    MODIFICATIONS
      TO INSTRUMENT

    (Cross-Default
      and Cross Collateralization)

    

    

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

    

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

    

    "56.     
      CROSS-DEFAULT AND CROSS COLLATERALIZATION.

    

    (a)           The
      entity that owns a Controlling Interest in Borrower also owns a Controlling
      Interest in the owner of each of the multifamily properties described on Exhibit
      C to this Instrument (each, excluding Borrower, an
“Owner”).  All of the properties described on Exhibit
      C (to include the Mortgaged Property) are referred to herein individually and
      collectively as the “Owner’s Projects”.  Lender has
      extended a loan to each Owner, each loan being secured by a Multifamily Mortgage
      or Deed of Trust, Assignment of Rents and Security Agreement (a
      "Security Instrument") against one of the other Owner's
      Projects.

    

    (b)           Borrower
      acknowledges that Lender is unwilling to extend the loan evidenced by the Note
      (the “Loan”) unless all of the Owner's Projects will be treated
      as a single project through the imposition of cross-collateralization,
      cross-default and release provisions, as set forth below.

    

    (c)           Borrower
      hereby agrees and consents that as additional security to Lender, each of the
      Owner's Projects shall be subject to the lien of Lender's Security Instrument
      for each of the other of the Owner's Projects, and that each of the respective
      Owner's Projects shall collateralize the other Owner's Projects as
      follows:  all Mortgaged Property (as defined in the respective
      Security Instrument) for each of the Owner's Projects shall be considered part
      of the "Mortgaged Property" under this Instrument, and shall be collateral
      under
      this Instrument and the Loan Documents.

    

    (d)           Borrower
      hereby agrees and consents that upon the occurrence and continuance of an Event
      of Default under the Security Instrument securing one of the Owner's Projects,
      then an Event of Default shall exist under this Instrument with respect to
      the
      Mortgaged Property and the other Owner's Projects.  No notice shall be
      required to be given to Borrower in connection with such Event of Default;
      provided, however, notice of such Event of Default shall be given to the Owner
      of such Owner’s Project, to the extent required under the Security Instrument
      securing such Owner’s Project.  In the event of an Event of Default
      under the Security Instrument with respect to any one of the Owner’s Projects,
      Lender shall exercise and perfect any and all rights in and under the Loan
      Documents with regard to any or all of the other Owner’s Projects, including,
      but not limited to, an acceleration of one or all of the Notes and the sale
      of
      one or all of the Owner’s Projects in accordance with the terms of the
      respective Security Instrument.  No notice, except as may be required
      by the respective Security Instrument, shall be required to be given to Borrower
      in connection with Lender's exercise of any and all of its rights after an
      Event
      of Default has occurred.

    

    
      	
              Cross-Default
                and Cross-Collateralization

            	
              Form
                4068

            	
              11/01

            
	
                 Modifications
                to Instrument (Multi-Project/Multi-Note)

            	 	 
	 	 	
              ©
                1997-2001 Fannie Mae

            

    

    

      
        
          
          

        

        
          Page
            B-15

          
            

          

        

        
          
          

        

      

    (e)           Borrower
      may request that Lender make a determination whether any of the Owner's Projects
      may be released from the cross-default and cross-collateral provisions of this
      Section if (i) an Owner proposes to pay off an individual loan held by Lender
      and secured by one of the Owner's Projects, or (ii) an Owner proposes to sell
      one of the Owner's Projects and have the Owner's loan on that project assumed
      by
      a buyer acceptable to Lender.  Upon such request from Borrower, Lender
      shall consent to the release the Owner's Project from the cross-default and
      cross-collateral provisions of this Section, provided:

    

    (1)           The
      remaining loans to Borrower and Owners secured by the remaining Owner's Projects
      that are not requested to be released have, in the aggregate, a minimum overall
      1.30:1 debt service coverage, based on the remaining Owner's Projects'
      collective Net Operating Income for the 12 months of operation immediately
      prior
      to Borrower's request for such release (provided, however, that in calculating
      such debt service coverage, Lender shall utilize, with respect to the Owner’s
      Project known as Green Meadows at Allentown, an amortization factor equal to
      the
      remaining term of the ground lease encumbering Green Meadows of Allentown on
      the
      date of such calculation, as opposed to a 30-year amortization factor, which
      will be used with respect to the other Owner’s Projects); and

    

    (2)           If
      the Owner's loan is to be assumed by a buyer acceptable to and approved by
      Lender, the assumed loan must also have a minimum 1.45:1 debt service coverage,
      based on that project's Net Operating Income for the 12 months of operation
      immediately prior to Borrower's request for such release.

    

    For
      purposes of (1) and (2) of this paragraph (e), "Net Operating Income" is defined
      as:

    

    (i)  
                the lesser of the
      actual rents collected for the 12 month period (net of any concession) or 95%
      of
      the gross potential rental income for the 12 month period;
plus

    

    (ii)
                 the actual
      laundry income (coin operated machines), cable and alarm fees, application
      fees,
      late fees and forfeited deposits for the 12 month period;
less

    

    (iii)           the
      greater of the actual operating expenses for the 12 month period (including
      the
      required Replacement Reserves funding for the period) or the operating expenses
      used by Lender in its final underwriting (including Replacement Reserves),
      increased at the rate of 3% per annum.

    

    (f)           Notwithstanding
      any provision of this Section to the contrary, Borrower shall not be permitted
      to request a release of any of the Owner's Projects from the cross-default
      and
      cross-collateral provisions of this Section if, at the time of such request,
      a
      default or Event of Default under any of the loans held by Lender on any of
      the
      Owner's Projects.  No release of any of the Owner's Projects from the
      cross-default and cross-collateral provisions of this Section shall be permitted
      by Lender unless Borrower has paid, or pays immediately prior to such release,
      all costs and expenses of Lender incurred in connection with its processing
      of
      the requested release, including, without limitation, all title endorsement
      premiums, recording fees, inspection fees, and attorney fees."

    

    57.           EXHIBIT
      C.  Exhibit C is attached to this Instrument.

     

    
      	
              Cross-Default
                and Cross-Collateralization

            	
              Form
                4068

            	
              11/01

            
	
                 Modifications
                to Instrument (Multi-Project/Multi-Note)

            	 	 
	 	 	
              ©
                1997-2001 Fannie Mae

            

    

    
      
        
        

      

      
        Page
          B-16

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    Additional
      Multifamily Properties

    

    

    

    
      	
              1.

            	
              Emerald
                Hills

            

    

    11550
      Education Street

    Auburn,
      California 95602

    

    
      	
              2.

            	
              Summerville
                at Victorian Court

            

    

    1031
      N.
      Euclid Avenue

    Ontario,
      California 91762

    

    
      	
              3.

            	
              Villa
                Del Ray

            

    

    1351
      E.
      Washington Avenue

    Escondido,
      California 92027

    

    
      	
              4.

            	
              La
                Casa Grande

            

    

    6400
      Trouble Creek Road

    New
      Port
      Richey, Florida 34653

    

    
      	
              5.

            	
              River
                Oaks

            

    

    925
      South
      River Road

    Englewood,
      Florida 34223

    

    
      	
              6.

            	
              Summerville
                at Lakeland

            

    

    2111
      Lakeland Hills Boulevard

    Lakeland,
      Florida 33805

    

    
      	
              7.

            	
              Summerville
                at Ocala East

            

    

    1601
      SE
      24th Road

    Ocala,
      Florida 34471

    

    
      	
              8.

            	
              Summerville
                at Ocala West

            

    

    9070
      SW
      80th Avenue

    Ocala,
      Florida 34481

    

    
      	
              9.

            	
              Juniper
                Meadows

            

    

    2975
      Juniper Drive

    Lewiston,
      Idaho 83501

     

     

    
      	
              Cross-Default
                and Cross-Collateralization

            	
              Form
                4068

            	
              11/01

            
	
                 Modifications
                to Instrument (Multi-Project/Multi-Note)

            	 	 
	 	 	
              ©
                1997-2001 Fannie Mae

            

    

    
      
        
        

      

      
        Page
          C-1

        
          

        

      

      
        
        

      

    

    
      	
              10.

            	
              Summer
                Wind

            

    

    5955
      Castle Drive

    Boise,
      Idaho 83703

    

    
      	
              11.

            	
              Silver
                Pines

            

    

    136
      36th
      Avenue Southwest

    Cedar
      Rapids, Iowa 52404

    

    
      	
              12.

            	
              Kingsley
                Place at Alexandria

            

    

    351
      Windermere Boulevard

    Alexandria,
      Louisiana 71303

    

    
      	
              13.

            	
              Kingsley
                Place at Lafayette

            

    

    215
      West
      Farrel Road

    Lafayette,
      Louisiana 70508

    

    
      	
              14.

            	
              Kingsley
                Place at Lake Charles

            

    

    2420
      Country Club Road

    Lake
      Charles, Louisiana 70605

    

    
      	
              15.

            	
              Lodge
                at Eddy Pond

            

    

    669
      Washington Street

    Auburn,
      Massachusetts 01501

    

    
      	
              16.

            	
              Loyalton
                of Biloxi

            

    

    2120
      Enterprise Drive

    Biloxi,
      Mississippi 39531

    

    
      	
              17.

            	
              Spring
                Meadows

            

    

    3175
      Graf
      Street

    Bozeman,
      Montana 59715

    

    
      	
              18.

            	
              Laurel
                Lakes Estates

            

    

    207
      Laurel Road

    Voorhees,
      New Jersey 08043

    

    
      	
              19.

            	
              Green
                Meadows at Painted Post

            

    

    120
      Creekside Drive

    Painted
      Post, New York 14870

    

    
      	
              20.

            	
              Heritage
                Lodge

            

    

    2500
      Heritage Circle

    Hendersonville,
      North Carolina 28791

     

     

    
      	
              Cross-Default
                and Cross-Collateralization

            	
              Form
                4068

            	
              11/01

            
	
                 Modifications
                to Instrument (Multi-Project/Multi-Note)

            	 	 
	 	 	
              ©
                1997-2001 Fannie Mae

            

    

    
      
        
        

      

      
        Page
          C-2

        
          

        

      

      
        
        

      

    

    
      	
              21.

            	
              Pine
                Park

            

    

    2601
      Chimney Rock Road

    Hendersonville,
      North Carolina 28792

    

    
      	
              22.

            	
              Green
                Meadows at Allentown

            

    

    1545
      Greenleaf Street

    Allentown,
      Pennsylvania 18102

    

    
      	
              23.

            	
              Green
                Meadows at Latrobe

            

    

    500
      Brouwers Drive

    Latrobe,
      Pennsylvania 15650

    

    
      	
              24.

            	
              Summerville
                at Terrace Estates

            

    

    2131
      Walters Drive

    Morristown,
      Tennessee  37814

    

    
      	
              25.

            	
              Hamilton
                House

            

    

    5331
      Hamilton Wolfe Road

    San
      Antonio, Texas 78229

    

    
      	
              26.

            	
              Redwood
                Springs

            

    

    1401
      Wonder World Drive

    San
      Marcos, Texas 78666

    

    
      	
              27.

            	
              Sherwood
                Place

            

    

    3939
      East
      52nd Street

    Odessa,
      Texas 79762

    

    
      	
              28.

            	
              Courtyard
                at the Willows

            

    

    4610
      6th
      Street Place SE

    Puyallup,
      Washington 98374

    

    
      	
              29.

            	
              Renton
                Villa

            

    

    771
      SW
      Victoria Street

    Renton,
      Washington 98057

    

    
      

      
        	
                Cross-Default
                  and Cross-Collateralization

              	
                Form
                  4068

              	
                11/01

              
	
                   Modifications
                  to Instrument (Multi-Project/Multi-Note)

              	 	 
	 	 	
                ©
                  1997-2001 Fannie Mae

              

      

    

     

     

    Page
      C-3

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