Document:

exv4w2

 

Exhibit 4.2

Unless this Security is presented by an authorized representative of The Depository Trust
Company, a New York corporation (“DTC”), 55 Water Street, New York, New York, to the Company (as
defined below) or its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.

This Security is a Global Security within the meaning set forth in the Indenture hereinafter
referred to and is registered in the name of DTC or a nominee of DTC. This Security is
exchangeable for Securities registered in the name of a person other than DTC or its nominee only
in the limited circumstances described in the Indenture, and may not be transferred except as a
whole by DTC to a nominee of DTC or another nominee of DTC or by DTC or its nominee to a successor
Depository or its nominee.

	 	 	 	 	 	 	 	 	 
	Registered No. 001	 	 	 	PRINCIPAL AMOUNT	 	 
	CUSIP No.: 202218 AH 6	 	 	 	$150,000,000.00
(subject to revision as set forth below)	 	 

COMMERCIAL NET LEASE REALTY, INC.

6.15% NOTE DUE 2015

          COMMERCIAL NET LEASE REALTY, INC., a corporation duly organized and existing under the laws of
the State of Maryland (herein referred to as the “Company” which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of ONE HUNDRED FIFTY
MILLION AND 00/100THS DOLLARS ($150,000,000.00), as may be revised by the Schedule of Increases or
Decreases in Global Security attached hereto, on December 15, 2015 and to pay interest on the
outstanding principal amount thereon from November 17, 2005, or from the immediately preceding
Interest Payment Date to which interest has been paid or duly provided for, semi-annually in
arrears on June 15 and December 15 in each year, commencing December 15, 2005, at the rate of 6.15%
per annum, until the entire principal hereof is paid or made available for payment. The interest
so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided
in the Indenture, be paid to the Person in whose name this Security is registered at the close of
business on the Regular Record Date for such interest which shall be the June 1 or December 1
(whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable
to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this
Security is registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of the
Securities not more than 15 days and not less than 10 days prior to such Special Record Date,

-1-

 

or may be paid at any time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture. Payment of the principal of and
interest on this Security will be made at the office or agency maintained for that purpose in the
City of Charlotte, North Carolina, or elsewhere as provided in the Indenture, in such coin or
currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company payments of
principal and interest on the 6.15% Notes (other than payments of principal and interest due at
Maturity) may be made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer to an account of the Person
entitled thereto located within the United States, provided, that such Person owns 6.15% Notes in
an aggregate principal amount of at least $1,000,000 and such Person makes a written request
therefor for the appropriate Interest Payment Date.

          Securities of this series are one of a duly authorized issue of securities of the Company
(herein called the “Securities”), issued and to be issued in one or more series under an Indenture,
dated as of March 25, 1998 (as so supplemented, herein called the “Indenture”), between the Company
and Wachovia Bank, National Association, as successor trustee to First Union National Bank (herein
called the “Trustee,” which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto, including, the Sixth Supplemental Indenture
thereto, dated November 17, 2005 between the Company and the Trustee, reference is hereby made for
a statement of the respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon which the
Securities are authenticated and delivered. This Security is one of the series designated in the
first page thereof, initially limited in aggregate principal amount to $150,000,000,
provided, that the Company may, without the consent of the Holders of the Outstanding 6.15%
Notes, “reopen” this series of Securities so as to increase the aggregate principal amount of 6.15%
Notes Outstanding in compliance with the procedures set forth in the Indenture, including Sections
3.1 and 3.3 thereof, so long as any such additional notes have the same tenor and terms (including,
without limitation, rights to receive accrued and unpaid interest) as the 6.15% Notes then
Outstanding.

          Securities of this series may be redeemed at any time at the option of the Company, in whole
or in part, upon notice of not more than 60 nor less than 30 days prior to the Redemption Date, at
a redemption price equal to the sum of (i) the principal amount of the Securities being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.

          The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the related defaults and
Events of Default applicable to the Company, in each case, upon compliance by the Company with
certain conditions set forth in the Indenture, which provisions apply to this Security.

-2-

 

          If an Event of Default with respect to the Securities shall occur and be continuing, the
principal of the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.

          As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given written notice to the Trustee of a continuing Event of Default with respect
to the Securities, the Holders of not less than 25% in principal amount of the Securities of this
series at the time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.

          The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series of Securities then Outstanding affected thereby. The
Indenture also contains provisions permitting the Holders of specified percentages in principal
amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences. Any such consent
or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon
all future Holders of this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.

          No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and Make-Whole Amount, if any) and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.

          As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any Place of Payment where
the principal of (and Make-Whole Amount, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated transferee or
transferees.

-3-

 

          The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.

          This 6.15% Note is a Global Security. As provided in and subject to the provisions of the
Indenture, definitive Securities shall be issued to all owners of beneficial interests in a Global
Security in exchange for such interests if: (1) the depositary with respect to the 6.15% Notes
(which shall initially be DTC) notifies the Company that it is unwilling or unable to continue as
depositary for such Global Security or the depositary ceases to be a clearing agency registered
under the Exchange Act, at a time when the depositary is required to be so registered in order to
act as depositary, and in each case a successor depositary is not appointed by the Company within
90 days of such notice; (2) an Event of Default has occurred and is continuing and the Security
Registrar has received a request from the depositary or (3) the Company executes and delivers to
the Trustee and Security Registrar an Officers’ Certificate stating that such Global Security shall
be so exchangeable. In connection with the exchange of an entire Global Security for definitive
Securities pursuant to this paragraph, such Global Security shall be deemed to be surrendered to
the Trustee for cancellation, and the Company shall execute and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the depositary in exchange for its beneficial
interest in such Global Security, an equal aggregate principal amount of definitive Securities of
authorized denominations.

          No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

          Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

          No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in this Security, or because of any indebtedness evidenced hereby or thereby, shall be had against
any promoter, as such, or against any past, present or future shareholder, officer or director, as
such, of the Company or of any successor, either directly or through the Company or any successor,
under any rule of law, statute or constitutional provision or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and
released by the acceptance of this Security by the Holder thereof and as part of the consideration
for the issue of the Securities of this series.

          All capitalized terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

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          THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

          Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused “CUSIP” numbers to be printed on the Securities of this series
as a convenience to the Holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.

          Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.

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IN WITNESS WHEREOF, COMMERCIAL NET LEASE REALTY, INC. has caused this instrument to be duly
executed under its corporate seal.

Dated: November 17, 2005

	 	 	 	 	 
	 	COMMERCIAL NET LEASE REALTY, INC.

 	 
	[SEAL] 	By:  	 	 
	 	 	Kevin B. Habicht	 
	 	 	Executive Vice President, 
Chief
Financial Officer,
Assistant Secretary and Treasurer	 
	 

	 	 	 
	Attest:

	 	 
	 
	 	 
	Secretary

	 	 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION:

          This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,	 	 
	 	 	 as Trustee	 	 
	 
	 	 	 	 	 	 
	Dated: November 17, 2005

	 	     By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	Authorized Signatory

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ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned hereby

Sells, assigns and transfers unto

PLEASE INSERT SOCIAL

SECURITY OR OTHER IDENTIFYING

NUMBER OF ASSIGNEE

			
	 
	 

 

(Please Print or Typewrite Name and Address including
Zip Code of Assignee)

 

the within Security of Commercial Net Lease Realty, Inc. and hereby does irrevocably constitute and
appoint

 

Attorney to transfer said Security on the books of the
within-named Company with full power of substitution in the premises.

 

			
	Dated:                                         
	 	 

	 
	 	 

NOTICE: The signature to this assignment must correspond with the name as it appears on the first
page of the within Security in every particular, without alteration or enlargement or any change
whatever.

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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

	 	 	 
	 	 	Amount of	 	 	Amount of	 	 	 	 	 	 
	 	 	Decrease in	 	 	Increase in	 	 	Principal Amount of	 	 	Signature of
	 	 	Principal Amount	 	 	Principal Amount	 	 	this Global Security	 	 	Authorized Officer
	 	 	of this Global	 	 	of this Global	 	 	Following Such	 	 	of Trustee or
	Date	 	Security	 	 	Security	 	 	Increase or Decrease	 	 	Custodian

-8-exv10wxgy

 

Exhibit
10g
 

LOAN AGREEMENT

THIS LOAN
AGREEMENT, made this 16th day of April 2003, by BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset Management,
Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to herein as
“Borrower”),
in favor of DOMINIUM DEVELOPMENT & ACQUISITION,
LLC, a Minnesota limited
liability company, having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN
55447 (referred to herein as “Lender”).

WITNESSETH

     A. Borrower is the sole limited partner of BLANCHARD SENIORS
APARTMENTS, BUNKIE SENIORS APARTMENTS, COTTONWOOD SENIORS
APARTMENTS, LOCKPROT SENIORS APARTMENTS (AKA DONALDSONVILLE
SENIORS) and MANY SENIORS APARTMENTS, each a Louisiana limited partnership (the
“Partnerships”) and each of which own a twenty-four (24) unit apartment complex, except for
Lockport Senior Apartments (aka Donaldsonville Seniors) and Many Seniors Apartments which
each own a thirty-two (32) unit apartment complex, all for low
to moderate income families located in Blanchard, Bunkie, Cottonport, Donaldsonville and Many, Louisiana, respectively
(the “Apartment Projects”). The Apartment Projects have each been financed through permanent
mortgages from Rural Development Services (formerly the Farmers Home Administration), U.S.
Department of Agriculture (“RD”) which mortgages had an approximate principal balance as of
12/31/2001 of $700,638, $675,659, $684,416, $845,704 and $950,434, respectively (the “RD
Mortgages”) and HOME funds and AHP Grants. RD 2000 Development Company, LLC and
Community Support Programs, Inc. are the sole general partners of BLANCHARD SENIORS
APARTMENTS. RD 2000 Development Company, LLC and Caleb Community Development
Corporation are the sole general partners of BUNKIE SENIORS APARTMENTS. RD 2000
Development Company, LLC and Caleb Community Development Corporation are the sole
general partners of COTTONWOOD SENIORS APARTMENTS. RD 2000 Development
Company, LLC and Quad-Area Community Action Agency, Inc. are the sole general partners of
LOCKPROT SENIORS APARTMENTS (AKA DONALDSONVILLE SENIORS). RD 2000
Development Company, LLC and Caleb Community Development Corporation are the sole
general, partners of and MANY SENIORS APARTMENTS.

     B. Lender and Borrower are negotiating for the purchase by Lender of all of Borrower’s
limited partnership interests in similar partnerships and apartment complexes
(the “Principal Transaction”). As part of the Principal Transaction, Lender has agreed to advance up to $
162,465 as a down payment on the purchase price (“Down Payment”). As the Down Payment will be fully
refundable to Lender in the event the Principal Transaction does not close, Lender and Borrower have
agreed to treat said Down Payment as a loan (“Loan”) and secure it’s repayment partially with a security
interest in Borrower’s limited partnership interests in the Partnerships (“Borrower’s Partnership
Interests”).

     C. To evidence the Loan, Borrower has executed and delivered to Lender a Promissory
Note of even date herewith, in the initial principal amount of $116,130 (the “Note”) which
represents the first advance on the Loan, and Borrower will execute and deliver to Lender a Promissory Note
in the amount of any additional advances under the Loan, if, as and when made.

 

 

     D. To secure the Loan, Borrower has executed and delivered to Lender a Security
Agreement of even date herewith, granting to Lender a security interest in the Borrower’s
Partnership Interests in the Partnerships (the “Security Agreement”), together with a Financing
Statement perfecting such security interests (the “Financing Statement”).

     NOW, THEREFORE, in consideration of the mutual agreements, covenants, and promises herein
contained and for other good and value consideration, receipt of which is hereby acknowledged each
party to the other, Borrower and Lender agree as follows:

     1. Representations and Warranties of
Borrower. Borrower represents and warrants
to Lender as follows:

          (a) There are no actions, suits or proceedings pending involving the Borrower, or to
the best knowledge of Borrower, threatened against or affecting Borrower, the Apartment
Projects, the Partnerships, the Partnership Interests, or the validity or enforceability of this Agreement,
the Note, the Security Agreement, the Guaranty or the priority thereof, at law or in equity, or before or by
any governmental authority. To Borrower’s knowledge, it is not in default with respect to any
order, writ, injunction, decree, or demand of any court.

          (b) Borrower has no knowledge that the consummation of the transaction hereby
contemplated and the performance of this Agreement, the Note, the Security Agreement or the
Guaranty by the Guarantor will result in any breach of, or constitute a default under, any deed to
secure debt, mortgage, deed of trust, indenture, security agreement, lease, bank loan or credit agreement,
corporate charter, bylaws, partnership agreement, covenants or use restrictions applicable to the
Apartment Projects, the Partnership Interests, or other instruments to which the Partnership is a party or by
which the Apartment Projects may be bound or affected, specifically including (but not limited to) the
RD Mortgages, except that Borrower was required to and has obtained the written approval of the
General Partner of the Partnerships to the Security Agreement pursuant to the Partnership Agreements.

          (c) There arc no liens against the Borrower’s Partnership Interests and the Lender will
have a first priority lien interest in Borrower’s Partnership Interests.

     2. Covenants
and Agreements of Borrower. Borrower covenants and agrees with Lender as
follows:

          (a) Borrower acknowledges and agrees that Lender will disburse the advances to be
made hereunder to the Borrower to be used solely for the Borrower’s purposes.

          (b) Borrower will not convey or encumber, or cause or permit the Borrower’s
Partnership Interests in the Partnerships to be conveyed or encumbered further in any way
without the prior written consent of Lender, in its sole discretion.

     3.
Disbursement of the Loan. Upon the execution of this Agreement, Lender
will pay the first advance of the Loan funds in the amount of $116,130 to the Borrower. Borrower will
execute a second note for the amount of the second installment of the Loan ($46,335) on May 30, 2003 if
the Principal Transaction has not closed and if the Lender otherwise has not given written notice
of its decision not to proceed with the Principal Transaction.

     4. Payment. In accordance with the provisions of the Note, the Loan term shall mature
and all advanced principal and accrued interest shall be payable on the first to occur of (i) the
Closing on the

 

 

Principal Transaction or (ii) 360 days from the date of the first advance.

     5. Events of Default. At the option of Lender, the occurrence of any one of the
following events shall constitute an Event of Default under this Agreement:

          (a) Borrower fails to make any payment due under the Note within thirty (30) days
after the date such payment becomes due.

          (b) Borrower fails to comply with any covenant, condition, or agreement, other than
the failure to make any payment when due, under this Agreement, the Note, the Security
Agreement or the Guaranty and to cure such default after receipt of thirty (30) days prior written notice
from Lender.

          (c) Either the Borrower, Guarantor, the General Partner, or the Partnership makes an
assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated,
insolvent or bankrupt, petitions or applies to any tribunal for any receiver of or trustee for it or any substantial
part of its property, commences any proceeding relating to Borrower, Guarantor, the General
Partner, the
Partnership, or the Apartment Project under any reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or there is commenced against Borrower, Guarantor, the General Partner, or the Partnership any such, act
or proceeding which remains undismissed for a period of sixty (60) days, or either Borrower,
Guarantor, the General Partner, or the Partnership by any act indicates its consent to, approval of, or
acquiescence in any such proceeding or the appointment of any receiver of or trustee for it or any substantial
part of its
property, or suffers any such receivership or trusteeship to continue undischarged for a
period of sixty
(60) days.

	 	 	6. Remedies. I. Upon the occurrence of an Event of Default in connection with
subsections
2(b), 5(a) or 5(c) with respect to Borrower or Guarantor, above, Lender may, at its option, do all
or any of the following:

          (a)
 Declare all sums evidenced by the Note to be immediately due
and payable.

          (b) Pursue all remedies granted under the Note, the Guaranty or the Security
Agreement or any combination thereof for default, and the remedies granted under all laws and
statutes. All such remedies are deemed cumulative and may be exercised concurrently. The failure to
exercise any remedy shall not constitute a waiver thereof, nor shall use of any remedy prevent the
subsequent or concurrent resort to the same or any other remedy.

          (c) In lieu of the remedies provided in subsection “(b)’’ hereof, elect to take in full
payment for the Loan (i) three of the limited partner interest, in its sole discretion, that
are Collateral, if Lender has loaned only the first installment or (ii) all of the Collateral, if Lender has
loaned both the first installment and the second installment.

               II. Upon the occurrence of an Event of Default, except in connection with
subsections 2(b), 5(a) or 5(c) with respect to Borrower or Guarantor, above, Lender shall
substitute one or more Apartment Complexes in Borrower’s portfolio, other than one of those few
indicated as “SOLD” on the spreadsheets previously provided to Lender, of approximate equal size
and value for any of the Apartment Complexes with respect to which an Event of Default has
occurred.

 

 

     7. Provided the first and second installments of the loan are funded in accordance
herewith, Borrower will not sell any further interests in its Operating Partnerships (other than
completing those few indicated as “SOLD” on the spreadsheets previously provided to Lender) prior to July 31, 2003
unless a closing on the Principal Transaction has taken place by then, in which event the terms and
conditions of the Principal Transaction as closed shall govern the sales of any further interests in
Borrower’s Operating
Partnerships.

     8. Termination. This Agreement shall terminate upon satisfaction in full of the
indebtedness evidenced by the Note.

     9. Miscellaneous.

          (a) All notices,
requests or other communications required hereunder must be in
writing and must be mailed by registered or certified mail, return receipt requested, or
delivered to the parties in person, at the addresses first above written. Each party may change its address by
notifying the other party in the manner set forth above. All such notices, requests or other communications
shall be effective when deposited in the mails or delivered in person as aforesaid.

          (b) This Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective heirs, personal representatives, successors, and permitted assigns.

          (c) This
Agreement contains the entire understanding and agreement of the parties
with respect to the subject matter hereof. This Agreement has been entered into after full
investigation, and neither party has relied upon any statements made by any person that are not set forth
herein; accordingly, this Agreement shall not be construed more strictly against either party. This
Agreement may not be modified, amended, or cancelled, nor shall any
provision thereof be waived, except in
a writing signed by Borrower and Lender.

          (d) The
section headings of this Agreement are for reference and are not part of or a
guide to the interpretation of this Agreement. Any singular word or term herein shall be read
as in the plural whenever the sense of this Agreement may require it.

          (e) This Agreement may be executed in one or more counterparts, each of which shall constitute a complete agreement and all of which taken together shall constitute a
single agreement.

          (f) THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE
INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION
OF LENDER, THIS LOAN AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS
IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS AN ACTION
IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS LOAN AGREEMENT, LENDER AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF
SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

 

 

AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED
HEREIN, LENDER AND BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH
SAID LOAN, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF EITHER PARTY.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their
names, the date and year first above written.

	 	 	 
	 

	“BORROWER:”
	 

	BAYFIELD LOW INCOME
	 

	HOUSING LIMITED PARTNERSHIP, 
	 

	a Delaware limited partnership,
	 

	 By: Megan Asset Management, Inc.,
	 

	 General Partner
	 

	/s/ Paul J.Maddock
	 

	 
	 

	Paul J.Maddock,President
	 
	 
	 

	“LENDER:”
	 

	DOMINIUM DEVELOPMENT &
	 

	ACQUISITION, LLC, a Minnesota
	 

	limited liability company
	 
	 
	 

	By: 	 /s/ [ILLEGIBLE]
	 

	 	 
	 

	Print Name:

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF NORTH DAKOTA

	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF BURLEIGH

	)	 	 	 	 	 

     On
this the 10th day of June, 2003 before me, the undersigned, a notary public of
said state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me known, who
being by me duly sworn, did depose and say that he has an address of 1424 West Century Avenue,
#102, Bismarck, North Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name thereto on
behalf of said corporation for the purposes therein contained.

     IN WITNESS WHEREOF,
I have hereunto set my hand and affixed my seal
the day and year first above written.

	 	 	 	 	 
	(SEAL)

	 	/s/ Sandra Levorsen

	 	 
	 

	 	 	 	 
	SANDRA LEVORSEN
Notary Public
	 	NOTARY PUBLIC
My commission 	 	 
	State of North Dakota
My Commission Expires Mar, 23, 2009
	 	expires:	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	)	 	 	 	 	 

     On this the 11th day of June, 2003 before me,
 the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Jon Segner, who
is personally known to me to be or who produced [ILLEGIBLE]
Driver’s [ILLEGIBLE] as identification
evidencing he is the individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as the Chief Financial
Officer of Dominium Development & Acquisition, LLC on behalf of said company and for the purposes
therein contained.

     IN WITNESS WHEREOF, I have hereunto set
 my hand and affixed my seal the day and year first
above written.

(SEAL)

	 	 	 	 	 
	 

	 	/s/ Michelle M. Miller
	 
	 

	 	 	 	 
	MICHELLE
M. MILLER
NOTARY PUBLIC — MINNESOTA
	 	NOTARY PUBLIC
My commission	 	 
	My
Commission Expires Jan. 31, 2005
	 	 expires: 1/31/05	 	 

 

 

April 2, 2003

Bayfield Low Income Housing Limited Partnership

c/o Megan Asset Management, Inc.

1424 W. Century Avenue, Suite 102

Bismarck, ND 58503

Re: Bridge Loan Commitment

Gentlemen:

We are pleased to provide this commitment for a loan (the “Loan”) in the principal amount up to
$162,465, to Bayfield Low Income Housing Limited Partnership (the “Partnership”). This letter shall
be deemed the commitment (“Commitment”) to make the Loan by Dominium Development & Acquisition
(“DDA”), subject to the terms and conditions set forth below. This loan commitment shall expire on April
11, 2005, if net accepted by then, and is subject to the terms and conditions set forth below. This
loan commitment is made in consideration of a sale proposal presented by the Partnership to DDA
(the “Proposal”) and to allow DDA additional time in which to consider the proposal.

This loan
is to be secured by a first priority lien position in the limited partner interests that
the Partnership owns in each of the partnerships that own, respectively, the following projects
that are located in Louisiana (the “Collateral”):

	 	1.	 	Blanchard Apartments;
	 
	 	2.	 	Bunkie Apartments;
	 
	 	3.	 	Cottonwood Seniors Apartments;
	 
	 	4.	 	Donaldsonville Seniors; and
	 
	 	5.	 	Many Seniors Apartments.

The Terms and Conditions are as follows:

	 	(a)	 	The principal loan amount shall not exceed $162,465.
	 
	 	(b)	 	The loan shall be funded in two installments;

i.
$116,130 upon completion of DDA’s due diligence on the Collateral, but in no event later than April 15, 2003, except as the due diligence review period may
be extended pursuant to Paragraph (e); and

[ILLEGIBLE]

2355 Polaris Lane North Suite 100 Minneapolis, MN 55407-4853 Phone 763/354-3500 Fax 763/354-5519

[ILLEGIBLE]

2

 

	 	ii.	 	$46,335 on May 30, 2003 if a closing on the underlying transaction
contained in the Proposal (the “Closing”) has not taken place by then.

	(c)	 	The Loan shall mature and all funded principal and accrued interest shall be
payable on the first to occur of (i) the Closing or
(ii) 360 days from the date of the
first installment.
	 
	(d)	 	The Interest Rate shall be five percent (5%). Interest shall accrue and shall be
paid with the principal maturity.
	 
	(e)	 	Collateral for the Loan shall be the Collateral, as described above. DDA shall be
entitled to request materials relative to the Collateral to allow it to determine the
sufficiency of the collateral (the “Due Diligence Materials”). Upon receipt of the
initially requested Due Diligence Materials, which request DDA will submit in
writing within five (5) days following DDA’s receipt of your executed
Commitment, DDA will have ten (10) days within which to review to its sole
satisfaction the Due Diligence Materials to determine (i) the sufficiency of the
Collateral or (ii) to select one or more projects of comparable size that it deems
are sufficient to equal a total of five projects within the Collateral. If, based on
the initial Due Diligence Materials, there are additional Due Diligence Materials
that DDA wants to request, it may submit a written request for the additional Due Diligence
Materials, and this sentence will apply to any additional Due Diligence Materials received as a
result of the request. The ten- (10-) day review period will be
suspended for the period during which there is an outstanding request
for additional Due Diligence Materials. If DDA determines
(i) during the ten- (10-)
day review period, as it may be extended, that it does not want either to make the
Loan or to proceed with the Proposal, it will give written notice to the Partnership,
and neither party will have any further obligations pursuant to this Commitment,
or (ii) after loaning the first installment but prior to loaning the second
installment, that it does not want to proceed with the Proposal, it will give written notice
to the Partnership, and DDA will not be obligated to loan the second
installment. If DDA neither gives during the due diligence review period its
written notice of the acceptance of the Collateral or of its decision not to make the
Loan or not to proceed with the Proposal, the Collateral will be deemed sufficient.
	 
	(f)	 	The Guarantor of the Loan shall be Megan Asset Management Inc.
	 
	(g)	 	The Loan and the pledge of the Collateral will be documented by documents that are
actually acceptable to the Partnership and DDA, and drafts will be provided
by DDA within five (5) business days following DDA’s receipt of the
Partnership’s executed Commitment.
	 
	(h)	 	From the date of the funding of the first installment, and
provided the second loan
installment is funded in accordance herewith, the partnership will
not sell any further interest in its Operating Partnership (other
than completing those few indicated as “SOLD” on the
spreadsheet previously

2355
Polaris Lane North Suite 100 Minneapolis, MN
[ILLEGIBLE] Phone 612/354-550 Fax 612/354-5650

[ILLEGIBLE]

3

 

provided to DDA) prior to June 30 PGM 2005 unless the Closing has taken place
by then

	 	(i)	 	At DDA’s sole option, if it does not proceed with the
Closing it may elect to take in full payment for the Loan (i) three
of the limited partner interest, in DDA’s disorction, that are
Collateral if DDA has loaned only the first installment or (ii) all
of the Collateral if DDA has loaned both the first installment and
the second installment.

This Commitment may not be modified, transferred or assigned without the prior written consent of
DDA and the partnership.

If this
Commitment is acceptable, please execute two (2) copies of this Commitment and return one
(1) copy within two (2) days of the date of this Commitment to:

Jon
Segner

Dominium Acquisition, LLC

2355 Polaris Lane North, Suite 100

Minnepolis, MN 55447-4853

We appreciate the opportunity to be of service to you. If you have any questions regarding this
Commitment, please contact the undersigned.

	 	 	 
	 

	Sincerely, 
	 

	Dominium Acquisition, LLC
	 
	 	 
	 

	By: 	/s/[ILLEGIBLE]
	 

	 	 
	 

	Title: Member

The
undersigned accepts the foregoing Commitment as of this
4th day of April, 2003.

	 	 	 
	 

	Bayfield Low Income Housing Limited Partnership 
	 
	 	 
	 

	By: Megan Asset
Management, Inc.
	 

	       Its General Partner
	 
	 	 
	 

	By:	/s/ Paul J. Maddock
	 

	 	 
	 

	 	Paul J. Maddock
	 

	 	Title: President
	 

	 	 

2355
Polaris Lane North Suite 100 Minneapolis, MN 55447 Phone  612/354-5500 Fax 612/354-5650

[ILLEGIBLE]

4

 

A
Professional Association

3000 Dain Rauscher Plaza

60 South Sixth Street

Minneapolis, Minnesota 55402

Telephone: (612) 347-0700

Fax: (612) 347-0600

FACSIMILE COVER LETTER

	 	 	 	 	 	 	 	 	 
	CC TO:

	 	Mr. Paul J. Maddock
	 	FACSIMILE NO.:
	 	[701] 223-5672
	 	 
	PHONE:

	 	[701] 223-2923	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SENT TO:

	 	Mr. Gary Maddock
	 	 	 	[913] 685-9025
	 	 
	PHONE:

	 	[913] 685-9000	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CC TO:

	 	Mr. Jon Segner
	 	FACSIMILE NO.:
	 	[763] 354-5650
	 	 
	PHONE:

	 	[763] 354-5620	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SENT BY:

	 	Paul W. Markwardt
	 	FILE NO.:
	 	3997-157	 	 
	 
	DATE:

	 	June 4, 2003	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	MESSAGE:	 	Gary, as a follow-up to your e-mail from yesterday, please find attached a
copy of the Loan Commitment. I have circled on the signature page paragraph
(i), which is the paragraph to which I was referring in my comments. If you
have any questions, please call me. Regards.

ORIGINAL
WILL: Not Be Sent

NOTICE-CONFIDENTIAL INFORMATION

The information to this fax communication is privileged and strictly confidential. It is intended
solely for the use of the individual or entity named above. If the reader of this message is not
the intended recipient or the employee or agent responsible to deliver it to the intended
recipient, any dissemination, distribution, copying or other use of the information contained in
this communication is strictly prohibited. If you have received this communication in error,
please first notify the sender immediately at the above telephone number of your erroneous receipt
and then return this fax communication at once to the sender at the above address either via
United States Postal Service or by the method of delivery specified
by the sender.

This communication consists of 4 pages, including this cover letter. If all pages are not
received, please contact Linda R. Quimby (612) 347-0663.

 

CORPORATE GUARANTY

     THIS CORPORATE GUARANTY, dated as of April 16, 2003 (the “Guaranty”), is made and given
by MEGAN ASSET MANAGEMENT, INC., a Delaware corporation, whose mailing address is 1424 W. Century
Avenue, #102, Bismarck, North Dakota 58503 (the “Guarantor”), in favor of DOMINIUM DEVELOPMENT &
ACQUISITION, LLC, a Minnesota limited liability company, whose mailing address is 2355 Polaris
Lane North, Suite 100, Minneapolis, Minnesota 55447 (“Lender”).

RECITALS

     A. Lender has agreed to lend to Bayfield Low Income Housing Limited Partnership,
a Delaware limited partnership (“Borrower”), the sum of up
to $162,465.00 (the “Loan”), which
Loan is evidenced by one or more Promissory Note(s) in an aggregate amount equal to the
amount(s) that Lender loans (individually or collectively, the “Note”), and is secured by a
Security Agreement of even date herewith (the “Security Agreement”), and is the subject of a
Loan Agreement of even date herewith between Borrower and Lender (the “Loan Agreement”);
the Note, the Security Agreement, and the Loan Agreement are sometimes hereinafter
collectively referred to as the “Loan Documents,” Any capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreement.

     B. It is a condition precedent to the obligation of Lender to make the Loan to
Borrower that this Guaranty be executed and delivered by Guarantor.

     NOW, THEREFORE, in consideration of the recitals, the truth and correctness of which are
hereby confirmed by Guarantor, of the making of the Loan, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby
covenants and agrees with Lender as follows:

     Section 1. The Guaranty. Guarantor hereby absolutely, irrevocably and unconditionally
guarantees to Lender the following (collectively referred to herein as the “Obligations”): (i) the
collection of payment (whether at a stated maturity date or earlier by reason of acceleration) of
all indebtedness (principal, interest and other), liabilities and monetary obligations of Borrower
to Lender of every kind, nature and description under the Loan Documents; and (ii) all
representations and warranties made by Borrower in the Loan Documents being true, correct and
complete.

     Section 2. Continuing Guaranty. This Guaranty is an absolute,
irrevocable, unconditional, complete and continuing guaranty of collection of payment. The obligations of
Guarantor hereunder shall not be released by any action which might, but for this provision of this
Guaranty, be deemed a legal or equitable discharge of a surety or guarantor, other than irrevocable
payment and performance in full of the Obligations. No notice of any renewal or extension of the
Obligations need be given to Guarantor. Guarantor hereby waives (a) diligence, demand for payment,
presentment, protest, notice of demand, of protest, of dishonor or of nonpayment; (b) notices of
advances of Loan proceeds; (c) all other notices and demands of any kind and description relating
to the Obligations; and (d)all defenses of Borrower pertaining to the Obligations, except for the
defense of discharge by irrevocable payment and performance.

 

 

The Obligations of Guarantor hereunder are irrevocable. The acceptance of this Guaranty by
Lender is not intended to and does not release any liability previously existing of any guarantor
or surety of any indebtedness of Borrower to Lender.

     Section 3. Other Transactions. Lender is authorized (a) to exchange any collateral or
security which may be placed with it by Borrower, or to deliver any such collateral or security
directly to Borrower For collection and remittance or for credit, or to collect the same in any
manner without notice to Guarantor; and (b) to amend, extend or supplement the Loan Documents, to
waive compliance by Borrower with the terms thereof without affecting the liabilities of Guarantor
hereunder and to settle or compromise any of the Obligations without notice to or consent of
Guarantor. No invalidity, irregularity or unenforceability of all or any part of the Obligations
or of any security therefor or other recourse with respect thereto shall affect, impair or be a
defense to this Guaranty. The liabilities of Guarantor shall not be affected by any delay on the
part of Lender to realize upon any of the obligations of Borrower to Lender, or upon any
collateral or security for any of the Obligations, nor by the taking by Lender of (or its failure
to take) any other guaranty or guaranties to secure the Obligations, nor by the taking by Lender
of (or its failure to take or its failure to perfect its security interest in or other lien on)
collateral or security of any kind. No act or omission of Lender, whether or not such action or
failure to act varies or increases the risk, or affects the rights or remedies, of Guarantor,
shall affect or impair the obligations of Guarantor hereunder. This Guaranty is in effect and
binding without reference to whether this Guaranty is signed by any other person. Possession of
this Guaranty by Lender shall be conclusive evidence of due delivery hereof by Guarantor and
acceptance hereof by Lender. This Guaranty shall continue in full force and effect,
notwithstanding (a) any extension of time to Borrower and/or (b) the making of any other loans by
Lender to Borrower.

     Section 4. Actions Not Required. Guarantor hereby waives any and all right to cause a
marshalling of the assets of Borrower or any other action by any court or other governmental body
with respect thereto. Time is of the essence with respect to Guarantor’s obligations under this
Guaranty. If any remedy or right hereby granted shall be found to be unenforceable, such
unenforceability shall not limit or prevent enforcement of any other remedy or right hereby
granted.

     Section 5. No Subrogation. Unless and until the Obligations have irrevocably been paid
in full, and notwithstanding any payment or payments made by Guarantor hereunder, Guarantor
irrevocably waives all rights of subrogation to any of the rights of Lender against Borrower or any
other person liable for payment of any of the Obligations or any collateral security or guaranty or
right of offset held by Lender for the payment or performance of the Obligations, and Guarantor
irrevocably waives all legal and equitable rights to seek any recourse to or contribution, recovery
or reimbursement from, or subrogation against, Borrower or any other person liable for payment or
performance of any of the Obligations in respect of payments or performance made by Guarantor
hereunder.

     Section 6. Application of Payments. Any and all payments made by Guarantor or by any
other person, and/or the proceeds of any or all collateral or security for any of the Obligations,
may be applied by Lender on such items of the Obligations as Lender may elect.

-2-

 

     Section 7. Recovery of Payment. If any payment received by Lender and applied to the
Obligations is subsequently set aside, recovered, rescinded or required to be returned or repaid
for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of
Borrower or any other obliger), the Obligations to which such payment was applied shall for the
purposes of this Guaranty be deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such Obligations as fully as if such
application had never been made. No payment shall be deemed to be irrevocable for the purpose of
this Guaranty if it remains subject to any possible such set aside, recovery, recission, return or
repayment for any reason.

     Section 8. Security Interest and Set-offs. Guarantor hereby grants Lender a security
interest in all sums due from Lender to Guarantor in the possession of or in transit to Lender,
now existing or hereafter arising or coming due (including without limitation repurchase
agreements and securities in transit), and such amounts and all proceeds thereof may at all times
be held and treated as collateral security hereunder (the “Additional Collateral”). To the extent
the Obligations are due and payable and unpaid, and at any time thereafter, Lender shall have all
the rights and remedies of a secured party as against the Additional Collateral, and Lender may
apply or set-off all or any of such Additional Collateral against the Obligations as Lender deems
appropriate, and/or refuse to honor orders to pay or withdraw the Additional Collateral or sums
represented thereby, all at Lender’s sole and absolute discretion.

     Section 9. Representations and Warranties of Guarantor. Guarantor hereby represents
and warrants to, and covenants with, Lender that:

     A. Borrower’s Financial Condition. Guarantor is familiar with the financial
condition of Borrower and with all other facts and circumstances which a diligent
inquiry
would reveal and which would bear upon the risk of nonpayment or nonperformance of
the Obligations, and Guarantor has executed and delivered this Guaranty based on
Guarantor’s own judgment and not in reliance upon any statement or representation of
Lender. Lender shall have no obligation to provide Guarantor with any advice or
information whatsoever or to inform Guarantor at any time of Lender’s actions,
evaluations or conclusions on the financial condition of or any other matter concerning
Borrower.

     B.
Organization, Standing, Etc. Guarantor is a Delaware corporation duly
incorporated and validly organized, existing and in good standing under the laws of the
jurisdiction of its organization, and, if different and if required, the
jurisdiction(s) in
which Borrower conducts business, and has all requisite power and authority to carry on
its business as now conducted, to enter into this Guaranty and to perform its
obligations
hereunder. This Guaranty has been duly authorized by all necessary action and when
executed and delivered will be the legal and binding obligation of Guarantor,
enforceable
against Guarantor in accordance with its terms. The execution, delivery and performance
of this Guaranty will not violate Guarantor’s organizational documents or any law,
statute, ordinance, code, or governmental rule or regulation applicable to Guarantor,
and will not violate or cause a default under, or permit acceleration of, any agreement to
which Guarantor is a party or by which it or any of its properties or
assets is bound.

-3-

 

     C. Litigation. There are no actions, suits or proceedings pending or, to
the knowledge of Guarantor, threatened against or affecting Guarantor
which, if determined adversely to Guarantor, would have a material adverse effect on the condition of
Guarantor or on the ability of Guarantor to perform its obligations under this
Guaranty. Guarantor is not in violation of any law, statute, ordinance, code or governmental rule
or regulation applicable to Guarantor where such violation could reasonably be expected to
impose a material liability on Guarantor; no unsatisfied judgments have been entered
against Guarantor; and no unsatisfied liens have been filed against Guarantor.

     D. Taxes. Guarantor has filed all federal, state and local tax returns required
to be filed and, has paid or made provision for the payment of all taxes due and
payable pursuant to such returns and pursuant to any assessments made against it or its
property (other than taxes, fees or charges the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which adequate
reserves have been provided on the books of Guarantor).

     Section 10. Remedies. All remedies afforded to Lender by this Guaranty are separate
and cumulative remedies, and no one of such remedies, whether or not exercised by Lender, shall
limit any of the other remedies available to Lender hereunder, under the Loan Documents, at law in
equity by statute or otherwise, and shall in no way limit or prejudice any other remedy which
Lender may have. Mere delay or failure to act shall not preclude the exercise or enforcement of
any such rights and remedies available to Lender.

     Section 11. Bankruptcy of Borrower. The liabilities and obligations of Guarantor
under this Guaranty shall not be impaired or affected by the institution by or against Borrower or
any other person of any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or any other similar proceedings for relief under any bankruptcy law or similar law
for the relief of debtors. Any discharge of any of the Obligations pursuant to any such bankruptcy
or similar law or other law shall not dimmish, discharge or otherwise affect in any way the
obligations of Guarantor under this Guaranty, and upon the institution of any of the above
actions, such obligations shall be enforceable against Guarantor.

     Section 12. Costs and Expenses. Guarantor shall pay or reimburse Lender on demand for
all out-of-pocket expenses (including in each case all fees and expenses of counsel) incurred by
Lender arising out of or in connection with, the enforcement of this Guaranty against Guarantor
or arising out of or in connection with any failure of Guarantor to perform fully and timely the
obligations of Guarantor hereunder.

     Section 13. Waivers and Amendments. This Guaranty can be waived, modified, amended,
terminated or discharged only explicitly in a writing signed by Lender. A waiver so signed shall
be effective only in the specific instance and for the specific purpose given.

     Section 14. Transfer of Assets. Guarantor agrees not to transfer any material portion
of its assets without, fair and adequate consideration or as otherwise agreed to in writing by
Lender.

-4-

 

     Section 15. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder will be sufficiently given if in writing and delivered
in person, sent by United States certified mail, return receipt requested, postage prepaid, sent
by overnight mail by a nationally recognized courier service or sent by fax (provided that a copy
of such fax is also sent to such party on the same business day) by certified mail or by an
overnight courier service to the party being given such notice at the appropriate address or fax
number set forth on page 1 hereof, or to such other address or fax number as any party may give to
the others in writing at least ten (10) days prior to the effective date of said change of address
or fax number. Notices delivered in person shall be effective upon receipt; notices delivered by
mail shall be effective three (3) business days after being deposited in the United States mail;
notices delivered by overnight mail shall be effective on the business day following delivery to
the courier, and notices sent by fax shall be effective on the business day of the transmission
provided the transmitting party receives a fax machine confirmation of receipt and has mailed or
sent a copy of the fax to the other party as provided above.

     Section 16.
Guarantor Acknowledgements. Guarantor acknowledges that (a) Guarantor
will benefit by and from the making of the Loan by Lender to Borrower; (b) Guarantor has received
legal and adequate consideration for the execution of this Guaranty and has executed and delivered
this Guaranty to Lender in good faith in exchange for reasonably equivalent value; (c) Guarantor
is not presently insolvent and will not be rendered insolvent by virtue of the execution and
delivery of this Guaranty; (d) Guarantor has not executed or delivered this Guaranty with actual
intent to hinder, delay or defraud Guarantor’s creditors; (e) Lender has agreed to make the Loan
in reliance upon this Guaranty; (f) Guarantor’s independent counsel has advised Guarantor in the
negotiation, execution and delivery of this Guaranty; (g) Lender has no fiduciary relationship to
Guarantor, their relationship being solely that of debtor and creditor; (h) no joint venture
exists between Guarantor and Lender; and (i) Guarantor has received a true and correct copy of
each Loan Document.

     Section 17. Successors and Assigns. This Guaranty shall (a) remain in full force and
effect until irrevocable payment and performance in full of the Obligations, and the expiration of
the obligation, if any, of Lender to make advances to Borrower under the Loan Agreement, (b) be
binding upon Guarantor and the heirs, representatives, successors and assigns of Guarantor, and
(c) inure to the benefit of, and be enforceable by, Lender and its successors, transferees and
assigns.

     Section 18.
GOVERNING LAW; JURISDICTION; VENUE. THIS GUARANTY, THE RIGHTS OF THE
PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS GUARANTY MAY BE ENFORCED IN ANY UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA;
GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE
EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR

-5-

 

INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY, LENDER AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR
IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

     Section 19. Severability. Whenever possible, each provision of this Guaranty and any
other statement, instrument or transaction contemplated hereby or relating hereto, shall be
interpreted in such manner as to be effective and valid under applicable law, but, if any
provision of this Guaranty or any other statement, instrument or transaction contemplated hereby
or relating hereto shall be held to be prohibited or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Guaranty or any other
statement, instrument or transaction contemplated hereby or relating hereto.

     Section 20. WAIVER OF JURY TRIAL. GUARANTOR AND LENDER HEREBY JOINTLY AND SEVERALLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY,
THE OBLIGATIONS HEREUNDER OR ANY COLLATERAL SECURING THE OBLIGATIONS, GUARANTOR AND LENDER EACH
REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

     Section 21 General. All representations and warranties contained in this Guaranty, or
in any other agreement between Guarantor and Lender, shall survive the execution, delivery and
performance of this Guaranty and the creation, payment and performance of the Obligations. Captions
in this Guaranty are for reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Guaranty.

     IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.

	 	 	 	 	 
	 	GUARANTOR;

MEGAN ASSET MANAGEMENT, INC.

 	 
	 	By:  	/s/
Paul J. Maddock
 	 
	 	 	Paul J. Maddock, President 	 
	 	 	 	 
	 

-6-

 

SECURITY AGREEMENT

THIS SECURITY AGREEMENT made this 16th day of April 2003, by BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset
Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to herein as
“Debtor”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability
company, having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).

     Debtor hereby agrees as follows:

     1. Security Interest. Debtor constitutes the sole limited partner of BLANCHARD
SENIORS
APARTMENTS, BUNKIE SENIORS APARTMENTS, COTTONWOOD SENIORS APARTMENTS, LOCKPORT SENIORS APARTMENTS
(AKA DONALDSONVILLE SENIORS) and MANY SENIORS APARTMENTS, each a Louisiana limited partnership (the
“Partnerships”). Lender is a Minnesota limited liability company. In consideration of and as an
inducement for an extension of credit by Lender to Debtor for the purpose of funding certain
requirements of the Debtor, Debtor hereby gives Lender a continuing and unconditional security
interest (the “Security Interest”) in Debtor’s interest as a limited partner in the Partnerships
and in all additions, replacements, substitutions, increases and profits, and in all proceeds and
products thereof in any form to which Debtor is entitled (collectively referred to herein as the
“Collateral”). The Collateral shall include, without limitation, Debtor’s entitlement to, if any,
all distributions of Cash Flow, distributions of proceeds resulting from a Refinancing,
distributions of proceeds resulting from a Major Capital Event, liquidating distributions,
distributions in kind, upon a default all profits and losses from the Partnership to Debtor, and
all returns of capital, all as defined or described in, and in accordance with the provisions of
(i) that certain Amended and Restated Agreement and Certificate of Limited Partnership of BLANCHARD
SENIORS APARTMENTS, executed as of the 1st day of November, 1987 and filed in the Office
of the Secretary of State of Louisiana on the 4th day of January, 1988 and that Amendment to the
Amended and Restated Agreement and Certificate of Limited Partnership of BLANCHARD SENIORS
APARTMENTS, executed as of the
1st day of July, 1990, (ii) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of BUNKIE SENIORS APARTMENTS, executed as
of the 1st day of November, 1987 and filed in the Office of the Secretary of State of
Louisiana on the 4th day of January, 1988 and that Amendment to the Amended and Restated
Agreement and Certificate of Limited Partnership of BUNKIE SENIORS APARTMENTS, executed as of the
1st day
of July, 1990, (iii) that certain Amended and Restated Agreement and Certificate
of Limited Partnership of COTTONWOOD SENIORS APARTMENTS, executed as
of the 1st day of
August, 1988 and filed in the Office of the Secretary of State of Louisiana on the 13th day of
December, 1988 and that Amendment to the Amended and Restated Agreement and Certificate of Limited
Partnership of COTTONWOOD SENIORS APARTMENTS, executed as of the 1st day of July, 1990,
(iv) that certain Amended and Restated Agreement and Certificate of Limited Partnership of
LOCKPORT SENIORS APARTMENTS, executed as of the 1st day of June, 1988 and filed in the Office of
the Secretary of State of Louisiana on the 16th day of November, 1989 and that Amendment
to the Amended, and Restated Agreement and Certificate of Limited Partnership of LOCKPORT SENIORS
APARTMENTS, executed as of the lst day of July, 1990, and (v) that certain Amended and
Restated Agreement and Certificate of Limited Partnership of MANY SENIORS APARTMENTS, executed as
of the 1st day of August, 1988 and filed in the Office of the Secretary of State of
Louisiana on the 24th day of February, 1989 and that Amendment to the Amended and
Restated Agreement and Certificate of Limited Partnership of MANY SENIORS APARTMENTS, executed as
of the 1st day of July, 1990 (each as

 

 

hereinbefore and hereinafter amended or restated).

     2. Indebtedness Secured. This Agreement and the Security Interests created hereby
secure
the payment of that certain Promissory Note of even date herewith executed and delivered by Debtor
in favor of Lender, in the original principal amount of One Hundred Sixteen Thousand One Hundred
Thirty and No/100 Dollars ($116,130 — the “Note” or sometimes herein the “Indebtedness”) and any
further Promissory Notes executed and delivered by Debtor in favor of Lender in the amount of any
additional advances under the Loan, if, as and when made.

     3. Warranties of Debtor. Debtor represents and warrants, and for so long as this
Agreement
continues in force, it shall be deemed continuously to represent and warrant, that: (i) each
item constituting the Collateral is genuine and in all respects what it purports to be; (ii) Debtor
is the owner of the Collateral free of all security interests or other encumbrances, except the Security
Interests; and (iii)
Debtor is authorized to enter into this Security Agreement under the Partnership Agreements,
subject to the approval of the General Partner, which approval Debtor has obtained in writing.

     4.
Covenants of Debtor. So long as this Agreement has not been terminated as provided
hereinafter, Debtor covenants and agrees as follows:

          (a) Debtor will defend the Collateral against the claims of all other persons,
including without limitation, setoffs, claims, counter-claims, and defenses against
either Debtor or Lender; will keep the Collateral free from all security interests or other encumbrances,
except this
Security Interest; and will not assign, deliver, sell, transfer, lease, or otherwise
dispose of any of the
Collateral or any interest therein without the prior written consent of Lender, in its
sole discretion.

          (b) Debtor
will notify Lender promptly in writing of any change in Debtor’s address.

          (c) Debtor will not, without Lender’s written consent, in its sole discretion, make or
agree to make any alteration, modification, or cancellation of, substitution for, or credit,
adjustment or
allowance on, any of the Collateral.

          (d) Debtor will execute and deliver to Lender such financing statements and other
documents and take such other actions and provide such further reasonable assurances as Lender
may deem advisable to perfect the Security Interests created by this Agreement.

          (e) Debtor will pay all taxes, assessments, and other charges of every nature which
may be levied or assessed against the Collateral and will deliver to Lender, on demand, such
reasonable
certificates or other evidence satisfactory to Lender attesting thereto.

     5. Verification of Collateral. Lender shall have the right to verify the Collateral in
any
manner and through any medium which Lender may reasonably consider appropriate, and Debtor
shall furnish such assistance and information and perform such acts as Lender may reasonably require
in connection therewith.

     6. Default. At the option of Lender, the occurrence of any of the following events shall
constitute an Event of Default under this Agreement following the failure to cure within
thirty (30) days
after written notice by Lender to Borrower:

          (a) Nonpayment when due, whether by acceleration or otherwise, after any

 

 

applicable grace period, of the principal of or interest on any Indebtedness, time being of the
essence.

          (b) Failure by Debtor to perform any obligations under this Agreement.

          (c) Acceptance by Debtor of any payment or distribution of income or assets from
the Partnership in violation of Paragraph 7 (e) hereof.

          (d) The filing by or against Debtor, Guarantor, General Partner, or the Partnership of
a petition in bankruptcy or for reorganization under any bankruptcy,
reorganisation,
compromise,
arrangement, insolvency, readjustment of debt, dissolution, liquidation, or similar law of any
jurisdiction.

          (e) The making of a general assignment by Debtor, Guarantor, General Partner, or
the Partnership for the benefit of creditors; the appointment of or taking possession by a
receiver, trustee,
custodian or similar official for Debtor, Guarantor, General Partner, or the Partnership or
for any of their
assets; or the institution, by or against Debtor, Guarantor, General Partner, or the
Partnership of any kind
of insolvency proceedings, or any proceeding for the dissolution or liquidation of the
Partnership.

          (f) Any material falsity in any certificate, statement, representation, warranty, or
audit at any time furnished by or on behalf of the Partnership, Debtor, or any endorser or
guarantor or any
other party liable for payment of all or part of the Indebtedness, pursuant to or in
connection with this
Agreement or otherwise, to Lender, including warranties in this Agreement, and any failure to
disclose
any substantial contingent or liquidated liabilities or any material adverse change in facts
disclosed by any
certificate, statement, representation, warranty or audit furnished
to Lender.

          (g) Any attachment or levy against the Collateral, or any other occurrence which
inhibits Lender’s free access to the Collateral.

     7. Rights of Lender.

          (a) Lender may, at its option, declare all or any part of the Indebtedness to be
immediately due upon giving thirty (30) days written notice to Debtor upon the occurrence of
any Event
of Default.

          (b) Upon the occurrence of any Event of Default, Lender’s rights with respect to the
Collateral shall be those of a secured party under the Uniform Commercial Code and any other
applicable
law in effect from time to time.

          (c) Debtor agrees that any notice by Lender of the sale or disposition of the
Collateral or any other intended action hereunder, whether required by the Uniform Commercial
Code or
otherwise, shall constitute reasonable notice to Debtor if the notice is mailed by regular or
certified mail,
postage prepaid, at least fourteen (14) days before the action, to the Debtor’s address as
above first
written, or to any other address which Debtor has specified in writing to Lender as the
address at which
notices shall be given to Debtor.

          (d) Upon Debtor’s failure to perform any of its duties hereunder, Lender may, but
shall not be obligated to, perform any such duties, and Debtor shall forthwith upon demand
reimburse
Lender for any expenses incurred by Lender in so doing. Debtor shall pay all costs and
expenses incurred
by Lender in enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness
whether or not suit is brought and whether incurred In connection with collection, trial,
appeal,
bankruptcy, post-judgment collection, or otherwise; and shall be liable for any deficiencies
in the event

 

 

the proceeds of disposition of the Collateral do not satisfy the Indebtedness in full.

          (e) Whether or not an Event of Default has occurred, Debtor authorizes Lender to receive
all income from the instruments constituting the Collateral to which Debtor may be entitled
until this
Agreement has been terminated, in accordance with the terms of the Note. Debtor will not
demand or
receive any income from the instruments constituting Collateral until the Indebtedness has
been paid in
full, and if Debtor receives any such income, Debtor will pay it to
Lender within five (5)
days of its
receipt thereof without demand. Lender may apply the net cash receipts of such income to
payment of any
of the Indebtedness, but Lender shall account for and pay over to Debtor any income remaining
after full
payment of the Indebtedness.

          (f) Whether or not an Event of Default has occurred, Debtor authorizes Lender to
receive any increase in any instruments constituting Collateral and any distribution upon the
dissolution
and liquidation of the Partnership, and to surrender such partnership interests or any part
thereof in
exchange therefor, and to hold the receipt from any such distribution or increase as part of
the Collateral;
provided, however, that Lender need not collect interest on or principal of any Collateral or
give any
notice of nonpayment with respect to such principal or interest. If Debtor receives any such
increase,
profits or distribution, Debtor will deliver such receipts promptly to Lender, to be held by
Lender as
provided in this paragraph.

          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law (including, without limitation,
compliance with RD regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments, require that such prospective
bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers
to persons who will represent and agree that they are purchasing for their own account or investment and
not with a view to the distribution or resale of such Collateral, or in order to obtain any required
approval of the sale or of the purchase by any governmental regulatory authority or official); and Debtor further
agrees that such compliance shall not result in such sale being considered or deemed not to have been made
in a commercially reasonable manner, nor shall Lender be liable or accountable to Debtor for any
discount allowed by reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction. Debtor further agrees that any sales by Lender shall not be considered to be
other than “public sales” within the meaning of
Section 9-504 of the Uniform Commercial Code because such sales
or solicitations are structured to comply with such limitations or restrictions, the intent of
the parties being that any public sale be subject to such limitations and restrictions.

          (h) Upon the occurrence of any Event of Default, Lender may exercise any rights that
Debtor has as a limited partner with respect to the Collateral.

          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER,
THIS SECURITY AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT

 

 

PROPER OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY
FROM THE RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their names, the date and year first above written.

	 	 	 
	 

	 	“DEBTOR”
	 

	 	BAYFIELD LOW INCOME
	 

	 	HOUSING LIMITED PARTNERSHIP,
	 

	 	a Delaware limited partnership,
	 

	 	By: Megan Asset Management, Inc.,
	 

	 	General Partner
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Paul J. Maddock, President
	 
	 	 
	 

	 	“LENDER:” 
	 

	 	DOMINIUM DEVELOPMENT &
	 

	 	ACQUISITION, LLC, a Minnesota
	 

	 	limited liability company
	 
	 	 
	 

	 	By:
	 

	 	 

	 
	 	 
	 

	 	Print Name:

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF NORTH DAKOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss	 	 
	COUNTY OF BURLEIGH

	 	 	)	 	 	 	 	 

     On
this the
                    
day of June, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me known, who being by
me duly sworn, did depose and say that he has an address of 1424 West Century Avenue, #102,
Bismarck, North Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name thereto on
behalf of said corporation for the purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year first
above written.

	 	 	 	 	 
	 	 	 	 	 
	(SEAL)

	 	 

NOTARY PUBLIC
	 	 
	 

	 	My commission expires:	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On
this the _____ day of June, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally
appeared                                         
who is personally known to me to be or who produced
                                        
as identification
evidencing he is the individual who executed and delivered the foregoing instrument, and he
duly acknowledged to me that he executed and delivered the same in his capacity as the
                                        
of Dominium Development & Acquisition, LLC on behalf of said
company and for the purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year first
above written.

	 	 	 	 	 
	(SEAL)

	 	 	 	 
	 

	 	 	 	 
	 

	 	NOTARY PUBLIC	 	 
	 

	 	My commission expires:	 	 

 

 

SUBSEQUENT LOAN AGREEMENT

THIS LOAN AGREEMENT, made this 19 day of September 2003, by BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset Management,
Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to
herein as “Borrower”), in
favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability company, having an
office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447 (referred to herein as
“Lender”).

WITNESSETH

     A. Borrower is the sole limited partner of COUSHATTA SENIORS
APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, which owns a twenty-four (24) unit apartment complex, SOUTHERN APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM, which owns a twenty-six (26) unit apartment complex,
OAKDALE SENIOR APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM,
which owns a twenty-six (26) unit apartment complex, each a Louisiana limited partnership and
JOAQUIN APARTMENTS, LTD. and PECANWOOD APARTMENTS III, LTD., each of
which own a thirty-two (32) unit apartment complex and each of which are Texas limited
partnership (the “Partnerships”) located in Coushatta, Iota and Oakdale, Louisiana and
Joaquin and Whitehouse, Texas, respectively (the “Apartment Projects”) all for low to moderate income
families. The Apartment Projects have each been financed through permanent mortgages from
Rural Development Services (formerly the Farmers Home Administration), U.S. Department of
Agriculture (“RD”) which mortgages had an approximate principal balance as of 12/31/2001 of
$713,450, $585,471, $757,651, $740,941 and $701,164, respectively (the “RD Mortgages”) and
HOME funds and AHP Grants. RD 2000 Development Company, LLC and Pine Belt Multi
Purpose Community Action Agency Inc. are the sole general partners of COUSHATTA
SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM. RD 2000
Development Company, LLC and “Assist Agency” (a Self Sufficiency Improvement Support
Team), Inc. are the sole general partners of SOUTHERN APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM. RD 2000 Development Company, LLC and Caleb
Community Development Corporation are the sole general partners of OAKDALE SENIOR
APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM. Calhoun Builders and
RD 2000 Development Company, LLC are the sole general partners of JOAQUIN
APARTMENTS, LTD. Calhoun Builders and RD 2000 Development Company, LLC are the
sole general partners of PECANWOOD APARTMENTS III, LTD.

     B. The Lender and an affiliate of Borrower have entered into that certain Purchase
Agreement dated September 19, 2003 (the “Purchase Agreement”) pursuant to which an affiliate
of Lender has agreed to purchase a certain percentage of Borrower’s limited partnership
interests in similar partnerships (the “Principal
Transaction”). Capitalized terms used and not defined
herein have the respective meanings as provided for in the Purchase Agreement. As part of the
Principal Transaction, Lender has advanced up to $162,465 as a down payment on the purchase
price (“Down Payment”). As the Down Payment will be fully refundable to Lender in the event
the Principal Transaction does not close, Lender and Borrower have agreed to treat said Down
Payment as a loan (“Loan”) and secure it’s repayment partially with a security interest in

 

 

Borrower’s limited partnership interests in certain Partnerships (“Borrower’s Partnership
Interests”).

     C. Accordingly, pursuant to a loan commitment dated April 2, 2003 and Loan
Agreement dated April 16, 2003, amended by that First Amendment to Loan Agreement dated as
of July 1, 2003 (as amended the “Loan Agreement”), Dominium Guarantor loaned Seller
$162,465 evidenced by two promissory notes, one dated April 16 and another dated July 18,
2003 (the “Promissory Notes”) and secured with a security interest in five of Borrower’s
Operating Partnership Interests pursuant to a security agreement dated April 16, 2003 (the
“Security Agreement”) to cover its operating cash flow needs in consideration of Borrower’s
agreement not to sell further interests in its Operating Partnerships
prior to July 31, 2003.

     D. In further consideration
 of Borrower’s agreement not to sell additional interests in
its 123 Operating Partnerships prior to the Closing contemplate by the execution of the
Purchase Agreement, Lender hereby agrees to make further loans to
Borrower in the following amounts:
$120,000 on the execution of this Subsequent Loan Agreement and $60,000 on the tenth
(10th)
day of each of October and November, 2003, with time being of the essence (each a Subsequent
Loan and collectively “Subsequent Loans”). Each Subsequent Loan shall be evidenced by a
promissory note in the form of the Promissory Note and secured by an interest in one or more
of Borrower’s Operating Partnership interests, pursuant to a security agreement in the form of
the Security Agreement. The security for the First Subsequent Loan in the amount of $120,000
shall be secured by a pledge of the Borrower’s interest in the Partnerships. The Borrowers shall
secure each additional installment of a Subsequent Loan with an interest in one or more
Borrower’s Operating Partnership Interests with a value equal to the principal amount of such
installment as determined by the purchase price attributable to such
Operating Partnerships’
purchase price as set forth on Exhibit A to the Purchase Agreement.

     E. To evidence, and upon the funding of, each Subsequent Loan, Borrower will
execute and deliver to Lender a Promissory Note, in the principal
amount of $120,000, $60,000
and $60,000, respectively (each a “Subsequent Loan Note”) to represent each such Subsequent
Loan.

     F. To secure each Subsequent Loan, Borrower will execute and deliver to Lender a
Security Agreement, granting to Lender a security interest in the Borrower’s Partnership
Interests in the Partnerships of a value equal to the amount of each Subsequent Loan as
determined by the purchase price attributed to such Operating Partnership Interests on
Exhibit A
to the Proposed Purchase Agreement (the “Subsequent Loan
Security Agreement”).

     NOW, THEREFORE, in consideration of the mutual agreements, covenants, and promises herein
contained and for other good and value consideration, receipt of which is hereby acknowledged each
party to the other, Borrower and Lender agree as follows:

     1. Representations
and Warranties of Borrower. Borrower represents and warrants
to Lender as follows:

          (a) There
are no actions, suits or proceedings pending involving the Borrower, or to the best
knowledge of Borrower, threatened against or affecting Borrower, the Apartment Projects, the
Partnerships, the Partnership Interests, or the validity or enforceability of

 

 

this Agreement, the Subsequent Loan Note, the Subsequent Loan Security Agreement, the
Subsequent Loan Guaranty or the priority thereof, at law or in equity, or before or by any
governmental authority. To Borrower’s knowledge, it is not in default with respect to any order,
writ, injunction, decree, or demand of any court.

          (b) Borrower has no knowledge that the consummation of the transaction
hereby contemplated and the performance of this Agreement, the Subsequent Loan Note, the
Subsequent Loan Security Agreement or the Subsequent Loan Guaranty by the Guarantor will
result in any breach of, or constitute a default under, any deed to secure debt, mortgage,
deed of trust, indenture, security agreement, lease, bank loan or credit agreement, corporate charter,
bylaws, partnership agreement, covenants or use restrictions applicable to the Apartment
Projects, the Partnership Interests, or other instruments to which the Partnership is a party
or by which the Apartment Projects may be bound or affected, specifically including (but not limited
to) the RD Mortgages, except that Borrower was required to and will obtain the written
approval of the General Partner of the Partnerships to the Subsequent Loan Security Agreement pursuant
to the Partnership Agreements.

          (c) There are no liens against the Borrower’s Partnership Interests and the Lender
will have a first priority lien interest in Borrower’s Partnership Interests.

     2. Covenants
and Agreements of Borrower. Borrower covenants and agrees with
Lender as follows:

          (a) Borrower acknowledges and agrees that Lender will disburse the advances
to be made hereunder to the Borrower to be used solely for the Borrower’s purposes.

          (b) Borrower will not convey or encumber, or cause or permit the Borrower’s
Partnership Interests in the Partnerships to be conveyed or encumbered further in any way
without the prior written consent of Lender, in its sole discretion.

     3. Disbursement
of the Loan. Upon the execution of this Agreement, Lender will
make the first Subsequent Loan in the amount of $120,000 to the Borrower. Borrower will
execute a promissory note for the amount of each such Subsequent Loan.

     4. Payment. In accordance with the provisions of each Subsequent Loan Note, each
Subsequent Loan term shall mature and principal and accrued interest shall be payable as
follows: (i) if the Closing on the Principal Transaction occurs, the Down Payment and the
Subsequent Loans, including interest thereon, shall be credited against the Purchase Price for
the Partnership Interests subject to the Closing in the manner
provided for in Section 1.2 and
Article 5 of the Purchase Agreement. If the Buyer fails to give Seller Buyer’s Approval Notice or if
Buyer terminates the Purchase Agreement as provided in Article 7.5 thereof, principal plus
accrued interest on the Subsequent Loans subject to the provisions below of this paragraph 4
shall be payable in full on December 31, 2004.

     At Lender’s sole option which it must elect on or before April 12, 2004, if it does not
proceed with the Principal Transaction, it may elect to take in full payment for the balance of
principal and interest of any Subsequent Loan then outstanding (the “Outstanding Balance”) the

 

 

Borrower’s Partnership Interests provided as security for the Subsequent Loan equal in value to the
then Outstanding Balance.

     5. Events
of Default. At the option of Lender, the occurrence of any one of the
following events shall constitute an Event of Default under this Agreement:

          (a) Borrower fails to make any payment due under the Subsequent Loan
Notes within thirty (30) days after the date such payment becomes due.

          (b) Borrower fails to comply with any covenant, condition, or agreement,
other than the failure to make any payment when due, under this Agreement, the Subsequent
Loan Notes, the Subsequent Loan Security Agreement or the Subsequent Loan Guaranty and to
cure such default after receipt of thirty (30) days prior
written notice from Lender.

          (c) Either the Borrower, Guarantor, the General Partner, or the Partnership
makes an assignment for the benefit of creditors, files a petition in bankruptcy, is
adjudicated
insolvent or bankrupt, petitions or applies to any tribunal for any receiver of or trustee for
it or any substantial part of its property, commences any proceeding relating to Borrower,
Guarantor, the General Partner, the Partnership, or the Apartment Project under any reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or there is commenced against Borrower, Guarantor, the
General Partner, or the Partnership any such act or proceeding which remains undismissed for a
period of sixty (60) days, or either Borrower, Guarantor, the General Partner, or the
Partnership by any act indicates its consent to, approval of, or acquiescence in any such proceeding or
the appointment of any receiver of or trustee for it or any substantial part of its property, or
suffers any such receivership or trusteeship to continue undischarged for a period of sixty (60) days.

     6. Remedies. I. Upon the occurrence of an Event of Default in connection with
subsections 2(b), 5 (a) or 5(c) with respect to Borrower or Guarantor, above, Lender may, at
its option, do all or any of the following;

          (a) Declare all sums evidenced by the Subsequent Loan Notes to be
immediately due and payable.

          (b) Pursue all remedies granted under the Subsequent Loan Notes, the
Subsequent Loan Guaranty or the Subsequent Loan Security Agreement or any combination
thereof for default, and the remedies granted under all laws and statutes. All such remedies
are deemed cumulative and may be exercised concurrently. The failure to exercise any remedy shall
not constitute a waiver thereof, nor shall use of any remedy prevent the subsequent or
concurrent resort to the same or any other remedy.

          (c) In
 lieu of the remedies provided in subsection “(b)” hereof, elect to take in
full payment for each Subsequent Loan the limited partner interest, in its sole discretion, that
are Collateral for such Subsequent Loan.

               II. Upon the occurrence of an Event of Default, except in connection with subsections 2(b),
5(a) or 5(c) with respect to Borrower or Guarantor, above, Lender shall

 

 

substitute one or more Apartment Complexes in Borrower’s portfolio, other than one of those
few indicated as “SOLD” on the spreadsheets previously provided to Lender, of equal size and value
for any of the Apartment Complexes with respect to which an event of
Default has occurred.

     7. Borrower
will not sell any further interests in its Operating Partnerships (other
than completing those few indicated as “SOLD” on Exhibit A (i) as long as the Subsequent
Loans are being funded as provided herein or, (ii) prior to Buyer’s failure to give Seller
Buyer’s Approval Notice or prior to Buyer’s terminating the Purchase Agreement as provided in Article
7.5 thereof, unless a closing on the Principal Transaction has taken place by then, in which
event the terms and conditions of the Principal Transaction as closed shall govern the sales of any
further interests in Borrower’s Operating Partnerships.

     8. Termination. This Agreement shall terminate upon satisfaction in full of the
indebtedness evidenced by each Subsequent Loan Note.

     9. Miscellaneous.

          (a) All notices, requests or other communications required hereunder must be
in writing and must be mailed by registered or certified mail, return receipt requested, or
delivered to the parties in person, at the addresses first above written. Each party may
change its address by notifying the other party in the manner set forth above. All such notices, requests
or other communications shall be effective when deposited in the mails or delivered in person as
aforesaid.

          (b) This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, personal representatives, successors, and permitted
assigns.

          (c) This Agreement contains the entire understanding and agreement of the
parties with respect to the subject matter hereof. This Agreement has been entered into after
full investigation, and neither party has relied upon any statements made by any person that are
not set forth herein; accordingly, this Agreement shall not be construed more strictly against
either party. This Agreement may not be modified, amended, or cancelled, nor shall any provision
thereof be waived, except in a writing signed by Borrower and Lender.

          (d) The section headings of this Agreement are for reference and are not part of or a guide
to the interpretation of this Agreement. Any singular word or term herein shall be read as in the
plural whenever the sense of this Agreement may require it.

          (e) This Agreement may be executed in one or more counterparts, each of which shall
constitute a complete agreement and all of which taken together shall constitute a single
agreement.

THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS LOAN
AGREEMENT MAY BE ENFORCED IN ANY UNITED

 

 

STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT AN ACTION IS AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY
THIS LOAN AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER AND BORROWER
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF THEM MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO
THE PRINCIPAL TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN), OR ACTIONS OF EITHER PARTY.

[“THE
REMAINDER OF THIS PAGE INTENTIONALLY HAS BEEN LEFT BLANK”.]

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their
names, the date and year first above written.

	 	 	 	 	 
	 	 	“BORROWER;”
	 	 	BAYFIELD LOW INCOME

HOUSING LIMITED

PARTNERSHIP, a Delaware limited

partnership,
	 	 	By: Megan Asset Management, Inc.,
General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	 	 	Paul J. Maddock, President
	 
	 	 	 	 
	 	 	“LENDER:”
	 	 	DOMINIUM DEVELOPMENT &
ACQUISITION, LLC, a Minnesota
limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul R. Sween
	 

	 	 	 	 
	 

	 	 	 	Paul R. Sween, Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On this the 19th day of September, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me known, who being by
me duly sworn, did depose and say that he has an address of 1424 West Century Avenue, #102,
Bismarck, North, Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name thereto on
behalf of said corporation for the purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and
year first above written.

	 	 	 
	LISA RENAE GUETTER

	 	/s/ Lisa Renae Guetter
	 

	 	 
	NOTARY
PUBLIC-MINNES0TA

	 	NOTARY PUBLIC
	My
commission expires Jan. 31, 2005

	 	My commission expires: 1/31/2005

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On this the 19th day of September, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Paul R. Sween, who is personally known to
me to be the individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as the Vice President
of Dominium Development & Acquisition, LLC on behalf of said company and for the purposes therein
contained.

      IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year first above written.

	 	 	 
	LISA RENAE GUETTER

	 	/s/ Lisa Renae Guetter
	 

	 	 
	NOTARY PUBLIC-MINNES0TA

	 	NOTARY PUBLIC
	My commission expires Jan. 31, 2005

	 	My commission expires: 1/31/2005

 

 

PROMISSORY NOTE

	 	 	 
	$116,130

	 	April 16, 2003
	 

	 	Bismarck,
	 

	 	North Dakota

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP (referred to herein as “Maker”), promises to pay to the order of DOMINIUM DEVELOPMENT
& ACQUISITION, LLC, a Minnesota limited liability company (referred to herein as “Payee”), at 2355
Polaris Lane N., Suite 100, Minneapolis, MN 55447, or at such other place as Payee may designate
in writing, from time to time, in legal tender of the United States of America, the sum of ONE
HUNDRED SIXTEEN THOUSAND ONE HUNDRED THIRTY AND No/100 DOLLARS ($116,130), together with interest
thereon at the rate of Five Percent (5%) per annum.

     Payments of principal and accrued interest shall be payable on the first to occur of (i) the
Closing on the Principal Transaction as defined in the Loan Agreement of even date herewith made
by Maker in favor of Payee (the “Loan Agreement”) or (ii) 360 days from the date hereof (the
“Maturity Date”).

     This Note is made pursuant to the Loan Agreement. This Note is secured by the Security
Agreement of even date herewith made by Maker in favor of Payee, and encumbering the limited
partnership interests of Maker in the Partnerships as defined in the Loan Agreement (the “Security
Agreement”). This Note is entitled to the protection of the Loan Agreement, the Security Agreement
and the Guaranty, the terms of which are by this reference incorporated herein. At the option of
Payee, any default under the terms of the Loan Agreement or the Security Agreement shall
constitute a default hereunder.

     The indebtedness evidenced by this Note may be prepaid in whole or in part at any time
without penalty, provided that any prepayments shall, be applied first against accrued and unpaid
interest, if any, and second to principal. Prepayment in part shall not affect or postpone Maker’s
duty to pay all obligations when due.

     Payee shall have the right to declare the total unpaid principal balance, together with all
accrued interest, to be due and payable forthwith upon the failure of Maker to pay any payment due
hereunder within thirty (30) days after the date when such payment shall become due; or upon the
sale or other conveyance or encumbrance by Maker of the Apartment Projects as defined in the Loan
Agreement or any part hereof, or after thirty (30) days prior written notice of any default under
the terms of the Loan Agreement, the Security Agreement, the Guaranty or any other document or
instrument executed in connection with or securing this Note, Failure by Payee to exercise this
right with respect to any failure or breach of Maker shall not constitute a waiver of the right
as to any subsequent failure or breach and maker expressly waives notice of Payee’s exercise of
this right.

     Time is of the essence of this Note. Maker covenants and agrees to pay all the costs and fees
(whether incurred in post-judgment collection, or in any successful dispute resolution proceeding
expended by Payee in the collection hereof, or in the event of any default on the part of Maker or
Guarantor in the making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Note, the Loan Agreement, the Guaranty, or the Security Agreement,
or in securing this Note or sustaining or defending the priority of any collateral against all
persons., including but not limited to the exercise of the power of eminent domain or other
governmental power of any kind. Nothing contained in this paragraph shall be construed as requiring
Payee to advance or spend money for any of

 

 

the purposes mentioned in this paragraph,

     The interest on this Note shall never be greater than an amount which, if added to the
amount of any discount, additional fees, or charges paid by Maker which constitute interest under
the laws of the State of Minnesota, would cause the total interest to exceed the maximum rate of
interest chargeable to the Maker under such law. If Payee shall receive any payment which is in
excess of the maximum rate permitted to be charged under such law, such payment shall automatically
be applied to reduce the principal sum outstanding on this Note, This provision shall control every
other provision of all agreements between Maker and Payee.

THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, AT THE OPTION OF LENDER, THIS NOTE MAY BE
ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT
SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH
FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY
THIS NOTE, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND MAKER
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE LOAN
EVIDENCED HEREBY, ALL DOCUMENTS AND AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH SAID LOAN, AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN), OR ACTIONS OF EITHER PARTY.

	 	 	 
	 

	 	“MAKER”
	 

	 	BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP, 

a Delaware limited
partnership., 

By: Megan Asset
Management, Inc., 

General Partner
	 
	 	 
	 

	 	/s/ Paul J. Maddock
	 

	 	 
	 

	 	Paul J. Maddock, President
	 
	 	 
	 

	 	Whose address is:
	 

	 	1424 W. Century Avenue, #102
	 

	 	Bismarck, ND 58503

2

 

PROMISSORY NOTE

	 	 	 
	$46,335

	 	July 18, 2003
	 

	 	Bismarck,
	 

	 	North Dakota

     FOR
VALUE RECEIVED, the undersigned BAYFIELD LOW .INCOME HOUSING LIMITED PARTNERSHIP
(referred to herein as “Maker”), promises to pay to the order of DOMINIUM DEVELOPMENT &
ACQUISITION, LLC, a Minnesota limited liability company (referred, to herein as “Payee”), at 2355
Polaris Lane N., Suite 100, Minneapolis, MN 55447, or at such other place as Payee may designate
in writing, from time to time, in legal tender of the United States of America, the sum of
FORTY-SIX THOUSAND THREE HUNDRED THIRTY-FIVE AND No/100 DOLLARS ($46,335), together with interest
thereon at the rate of Five Percent (5%) per annum.

     Payments of principal and accrued interest shall be payable on the first to occur of (i) the
Closing on the Principal Transaction as defined in the Loan Agreement of even date herewith made
by Maker in favor of Payee (the “Loan Agreement”) or (ii) April 12, 2004 (the “Maturity Date’’).

     This Note is made pursuant to the Loan Agreement. This Note is secured by the Security
Agreement dated April 16, 2003 made by Maker in favor of Payee, and encumbering the limited
partnership interests of Maker in the Partnerships as defined in the Loan Agreement (the “Security
Agreement”). This Note is entitled to the protection of the Loan Agreement, the Security
Agreement and the Guaranty, the terms of which are by this reference incorporated herein. At the
option of Payee, any default under the terms of the Loan Agreement or the Security Agreement shall
constitute a default hereunder.

     The indebtedness evidenced by this Note may be prepaid in whole or in part at any time
without penalty, provided that any prepayments shall be applied first against accrued and unpaid
interest, if any, and second to principal. Prepayment in part shall not affect or postpone Maker’s
duty to pay all obligations when due.

     Payee shall have the right to declare the total, unpaid principal balance, together with all
accrued interest, to be due and payable forthwith upon the failure of Maker to pay any payment due
hereunder within, thirty (30) days after the date when such payment shall become due; or upon the
sale or other conveyance or encumbrance by Maker of the Apartment Projects as defined in the Loan
Agreement or any part hereof; or after thirty (30) days prior written notice of any default under
the terms of the Loan Agreement, the Security Agreement, the Guaranty or any other document or
instrument executed in connection with or securing this Note. Failure by Payee to exercise this
right with respect to any failure or breach of Maker shall not constitute a waiver of the right as
to any subsequent failure or breach and maker expressly waives notice of Payee’s exercise of this
right.

     Time is of the essence of this Note. Maker covenants and agrees to pay all the costs and fees
(whether incurred in post-judgment collection, or in any successful dispute resolution proceeding
expended by Payee in the collection hereof, or in the event of any default on the part of Maker or
Guarantor in the making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Mote, the Loan Agreement, the Guaranty, or the Security Agreement,
or in, securing this Note or sustaining or defending the priority of any collateral against all
persons, including but not limited to the exercise of the power of eminent domain or other
governmental power of any kind. Nothing contained in this paragraph shall be construed, as
requiring Payee to advance or spend money for any of

 

 

the purposes mentioned in this paragraph.

     The interest on this Note shall never be greater than an amount which, if added to the amount
of any discount, additional fees, or charges paid by Maker which constitute interest under the laws
of the State of Minnesota, would cause the total interest to exceed the maximum rate of interest
chargeable to the Maker under such law. If Payee shall receive any payment which is in excess of
the maximum rate permitted to be charged under such law, such payment shall automatically be
applied to reduce the principal sum outstanding on this Note. This provision shall control every
other provision of all agreements between Maker and Payee.

THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER,
THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE
STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF
ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE
IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS NOTE, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND MAKER
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE LOAN
EVIDENCED HEREBY, ALL DOCUMENTS AND AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH SAID LOAN, AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN), OR ACTIONS OF EITHER PARTY.

	 	 	 
	 

	 	“MAKER”
	 

	 	BAYFIELD LOW INCOME
HOUSING LIMITED PARTNERSHIP,

a Delaware limited partnership,

By: Megan Asset Management, Inc.,

General Partner
	 
	 	 
	 

	 	/s/ Paul J. Maddock
	 

	 	 
	 

	 	Paul J. Maddock, President
	 
	 	 
	 

	 	Whose address is:
	 

	 	1424 W. Century Avenue, #102
	 

	 	Bismarck, ND 58503

2

 

SUBSEQUENT LOAN SECURITY AGREEMENT

THIS SECURITY AGREEMENT made this 18th day of September, 2003, by BAYFIELD LOW INCOME HOUSING
LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset
Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to herein as
“Debtor”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability
company, having an. office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).

     Debtor hereby agrees as follows:

     1. Security Interest. Debtor constitutes the sole limited partner of
COUSHATTA SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, SOUTHERN APARTMENTS, A LOUISIANA
PARTNERSHIP IN COMMENDAM, OAKDALE SENIOR APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, each a
Louisiana limited partnership, and JOAQUIN APARTMENTS, LTD. and PECANWOOD APARTMENTS III, LTD.,
each a Texas limited partnership (the “Partnerships”). Lender is a Minnesota limited liability
company, In consideration of and as an inducement for an extension of credit by Lender to Debtor
for the purpose of funding certain requirements of the Debtor, Debtor hereby gives Lender a
continuing and unconditional security interest (the “Security Interest”) in Debtor’s interest as a
limited partner in the Partnerships and in all additions, replacements, substitutions, increases
and profits, and in all proceeds and products thereof in any form to which Debtor is entitled
(collectively referred to herein as the “Collateral”). The Collateral shall include, without
limitation, Debtor’s entitlement to, if any, all distributions of Cash Flow, distributions of
proceeds resulting from a Refinancing, distributions of proceeds resulting from a Major Capital
Event, liquidating distributions, distributions in kind, upon a default all profits and losses
from the Partnership to Debtor, and all returns of capital, all as defined or described in, and in
accordance with the provisions of (i) that certain Amended and Restated Agreement and Certificate
of Limited Partnership of COUSHATTA SENIORS APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM,
executed as of the 1st day of August, 1988 and filed said amended agreement in the Office of the
Secretary of State of Louisiana on the 13th day of December, 1988 and that Amendment to the
Amended and Restated Agreement and Certificate of Limited Partnership of COUSHATTA SENIORS
APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, executed as of the 1st day of July,
1990, (ii) that certain Amended and Restated Agreement and Certificate of Limited Partnership of
SOUTHERN APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM executed as of the, 1st day of November,
1987 and filed said amended agreement in the Office of the Secretary of State of Louisiana on the
4th day of January, 1988 and that Amendment to the Amended and Restated Agreement and Certificate
of Limited Partnership of SOUTHERN APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, executed as
of the 1st day of July, 1990, (iii) that certain Amended and Restated Agreement and
Certificate of Limited Partnership of OAKDALE SENIOR APARTMENTS, A LOUISIANA PARTNERSHIP IN
COMMENDAM, executed as of the 1st day of November, 1987 and filed in the Office of the
Secretary of State of Louisiana on the 4th day of January, 1988 and that Amendment to the Amended
and Restated Agreement and Certificate of Limited Partnership of OAKDALE SENIOR APARTMENTS, A
LOUISIANA PARTNERSHIP IN COMMENDAM, executed as of the 1st day of July, 1990, (iv) that
certain Amended and Restated Agreement and Certificate of Limited Partnership of JOAQUIN
APARTMENTS, LTD., executed as of the 1st day of June, 1988 and filed said amended agreement in,
the Office of the Secretary of State of Texas on the 11th day of November, 1988 and that Amendment
to the Amended and Restated

 

 

Agreement and Certificate of Limited Partnership of JOAQUIN APARTMENTS, LTD., executed as of the
1st day of July, 1990, and (v) that certain Amended and Restated Agreement and
Certificate of Limited Partnership of PECANWOOD APARTMENTS III, LTD., executed as of the 1st day of
June, 1988 and filed in the Office of the Secretary of State of Louisiana on the 16th
day of December, 1988 and that Amendment to the Amended and Restated Agreement and Certificate of
Limited Partnership of PECANWOOD APARTMENTS III, LTD., executed as of
the 1st  day of July, 1990
(each as hereinbefore and hereinafter amended or restated),

     2. Indebtedness Secured. This Agreement and the Security Interests created hereby
secure the payment of that certain First Subsequent Loan Note of even date herewith executed and
delivered by Debtor in favor of Lender, in the original principal amount of One Hundred Twenty
Thousand and No/100 Dollars ($120,000 — the “Note” or sometimes herein the “Indebtedness”).

     3. Warranties of Debtor. Debtor represents and warrants, and for so long as this
Agreement continues in force, it shall, be deemed continuously to represent and warrant, that: (i)
each, item constituting the Collateral is genuine and in all respects what it purports to be; (ii)
Debtor is the owner of the Collateral free of all security interests or other encumbrances, except
the Security Interests; and (iii) Debtor is authorized to enter into this Security Agreement under
the Partnership Agreements, subject to the approval of the General Partner, which approval Debtor
has obtained in writing.

     4. Covenants of Debtor. So long as this Agreement has not been terminated as provided
hereinafter, Debtor covenants and agrees as follows:

          (a) Debtor will defend the Collateral against the claims of all other persons, including
without limitation, setoffs, claims, counter-claims, and defenses against either Debtor or Lender;
will keep the Collateral free from all security interests or other encumbrances, except this
Security Interest; and will not assign, deliver, sell, transfer, lease, or otherwise dispose of any
of the Collateral or any interest therein without the prior written, consent of Lender, in its sole
discretion.

          (b) Debtor will notify Lender promptly in writing of any change in Debtor’s address.

          (c) Debtor will not, without Lender’s written consent, in its sole discretion, make or agree
to make any alteration, modification, or cancellation of, substitution for, or credit, adjustment
or allowance on, any of the Collateral.

          (d) Debtor will execute and deliver to Lender such financing statements and other documents
and take such other actions and provide such further reasonable assurances as Lender may deem
advisable to perfect the Security Interests created by this Agreement.

          (e) Debtor will pay all taxes, assessments, and other charges of every nature which may be
levied or assessed against the Collateral and will deliver to Lender, on demand, such reasonable
certificates or other evidence satisfactory to Lender attesting thereto.

     5. Verification of Collateral. Lender shall have the right to verify the Collateral in
any manner and through any medium which Lender may reasonably consider appropriate, and Debtor
shall furnish such assistance and information, and perform such acts as Lender may reasonably
require in connection therewith.

     6. Default. At the option of Lender, the occurrence of any of the following
events shall

 

 

constitute an, Event of Default under this Agreement following the failure to cure within
thirty (30) days after written notice by Lender to Borrower:

          (a) Nonpayment when due, whether by acceleration or otherwise, after any applicable grace
period, of the principal of or interest on any Indebtedness, time being of the essence, and other
Subsequent Loan Note, or either of the Promissory Notes,

          (b) Failure by Debtor to perform any obligations under this Agreement.

          (c) Acceptance by Debtor of any payment or distribution of income or assets from the
Partnership in violation of Paragraph 7 (e) hereof.

          (d) The filing by or against Debtor, Guarantor, General Partner, or the Partnership of a
petition in bankruptcy or for reorganization under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution, liquidation, or similar law of any
jurisdiction.

          (e) The making of a general assignment by Debtor, Guarantor, General Partner, or the
Partnership for the benefit of creditors; the appointment of or taking possession by a receiver,
trustee, custodian or similar official for Debtor, Guarantor, General Partner, or the Partnership
or for any of their assets; or the institution by or against Debtor, Guarantor, General Partner, or
the Partnership of any kind of insolvency proceedings, or any proceeding for the dissolution or
liquidation of the Partnership,

          (f) Any material falsity in any certificate, statement, representation, warranty, or audit at
any time furnished by or on behalf of the Partnership, Debtor, or any endorser or guarantor or any
other party liable for payment of all or part of the Indebtedness, pursuant to or in connection
with this Agreement or otherwise, to Lender, including warranties in this Agreement, and any
failure to disclose any substantial contingent or liquidated liabilities or any material adverse
change in facts disclosed by any certificate, statement, representation, warranty or audit
furnished to Lender.

          (g) Any attachment or levy against the Collateral, or any other occurrence which inhibits
Lender’s free access to the Collateral.

          (h) Any default by Debtor under the Subsequent Loan. Agreement, any of the Subsequent Loan
Notes, any other Subsequent Loan Security Agreement, the Loan Agreement, or either of the
Promissory Notes, any default by the Guarantor under the Subsequent Loan Guaranty or the Guaranty,

     7. Rights of Lender.

          (a) Lender may, at its option, declare all or any part of the Indebtedness, any other
Subsequent Loan Note, or the Promissory Notes to be immediately due upon giving thirty (30) days
written notice to Debtor upon the occurrence of any Event of Default.

          (b) Upon the occurrence of any Event of Default, Lender’s rights with respect to the
Collateral shall be those of a secured party under the Uniform Commercial Code and any other
applicable law in effect from time to time.

          (c) Debtor agrees that any notice by Lender of the sale or disposition of the Collateral or
any other intended action hereunder, whether required by the Uniform Commercial Code or otherwise,
shall constitute reasonable notice to Debtor if the notice is mailed by regular or certified mail,

 

 

postage prepaid, at least fourteen (14) days before the action, to the Debtor’s address as above
first written, or to any other address which Debtor has specified in writing to Lender as the
address at which notices shall be given to Debtor.

          (d) Upon Debtor’s failure to perform any of its duties hereunder, Lender may, but shall not be
obligated to, perform any such duties, and Debtor shall forthwith upon demand reimburse Lender for
any expenses incurred by Lender in so doing. Debtor shall pay all costs and expenses incurred by
Lender in enforcing this Agreement, realizing upon any Collateral, and collecting any Indebtedness
whether or not suit is brought and whether incurred in connection with collection, trial, appeal,
bankruptcy, post-judgment collection, or otherwise; and shall be liable for any deficiencies in the
event the proceeds of disposition of the Collateral do not satisfy the Indebtedness in full.

          (e) Whether or not an Event of Default has occurred, Debtor authorizes Lender to receive all
income from the instruments constituting the Collateral to which Debtor may be entitled until this
Agreement has been terminated, in accordance with the terms of each Subsequent Loan Note. Debtor
will not demand or receive any income from the instruments constituting Collateral until the
Indebtedness has been paid in full, and if Debtor receives any such income, Debtor will pay it to
Lender within five (5) days of its receipt thereof without demand. Lender may apply the net cash
receipts of such income to payment of any of the Indebtedness, but Lender shall account for and pay
over to Debtor any income remaining after full payment of the Indebtedness,

          (f) Whether or not an Event of Default has occurred, Debtor authorizes Lender to receive any
increase in any instruments constituting Collateral and any distribution upon the dissolution and
liquidation of the Partnership, and to surrender such partnership interests or any part thereof in
exchange therefor, and to hold the receipt from any such distribution or increase as part of the
Collateral; provided, however, that Lender need not collect interest on or principal of any
Collateral or give any notice of nonpayment with respect to such principal or interest. If Debtor
receives any such increase, profits or distribution, Debtor will deliver such receipts promptly to
Lender, to be held by Lender as provided in this paragraph.

          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including, without limitation,
compliance with RD regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments, require that such
prospective bidders and purchasers have certain qualifications, and restrict such prospective
bidders and purchasers to persons who will represent and agree that they are purchasing for their
own account or investment and not with a view to the distribution or resale of such Collateral, or
in order to obtain any required approval of the sale or of the purchase by any governmental
regulatory authority or official); and Debtor further agrees that such compliance shall not result
in such sale being considered or deemed not to have been made in a commercially reasonable manner,
nor shall Lender be liable or accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or restriction. Debtor further
agrees that any sales by Lender shall not be considered to be other than “public sales” within the
meaning of Section 9-504 of the Uniform Commercial Code because such sales or solicitations arc
structured to comply with such limitations or restrictions, the intent of the parties being that
any public sale be subject to such limitations and restrictions,

          (h) Upon the occurrence of any Event of Default, Lender may exercise any rights that
Debtor has as a limited partner with respect to the Collateral.

 

 

          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF- AT THE OPTION OF LENDER,
THIS SECURITY AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER
OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE
CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their
names, the date and year first above written.

	 	 	 
	 

	 	“DEBTOR”
	 

	 	BAYFIELD LOW INCOME HOUSING LIMITED
PARTNERSHIP, 

a Delaware limited
partnership, 

By: Megan Asset
Management, Inc., 

General Partner
	 
	 	 
	 

	 	/s/ Paul J. Maddock
	 

	 	 
	 

	 	Paul J. Maddock, President

	 	 	 	 	 
	 	 	“LENDER:”
	 	 	DOMINIUM DEVELOPMENT &
ACQUISITION, LLC, a Minnesota
limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul R. Sween
	 

	 	 	 	 
	 	 	Paul R. Sween., Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On this the 19th day of September, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me
known, who being by me duly sworn, did depose and say that he has an address of 1424 West Century
Avenue, #102, Bismarck, North Dakota 58503; that he is the President of Megan Asset Management,
Inc., the corporation described in and which executed, and delivered the foregoing instrument as
the General Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name
thereto on behalf of said corporation for the purposes therein
contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal, the day and year first
above written.

	 	 	 
	(SEAL)

	 	 
	LISA RENAE GUETTER

	 	/s/ Lisa Renae Guetter
	 

	 	 
	NOTARY PUBLIC-MINNESOTA

	 	NOTARY PUBLIC
	My
Commission Expires Jan 31, 2005

	 	My commission expires: 1/31/2005

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On this the 19th day of September, 2003 before me, the undersigned, a notary public
of said state, duly commissioned and sworn, personally appeared Paul R. Sween, who is personally
known to me to be the individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as the Vice President of
Dominium Development & Acquisition, LLC on behalf of said company and for the purposes therein
contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed ray seal the day and year first
above written.

	 	 	 
	(SEAL)

	 	 
	LISA RENAE GUETTER

	 	/s/ Lisa Renae Guetter
	 

	 	 
	NOTARY PUBLIC-MINNESOTA

	 	NOTARY PUBLIC
	Commission Expires Jan 31, 2005

	 	My commission expires: 1/31/2005

 

 

FIRST AMENDMENT

TO

LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”), made as of July 1, 2003 between
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office
address c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D., 58503
(referred to herein as “Borrower”) and DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota
limited liability company, having an office address of 2355 Polaris Lane N., Suite 100,
Minneapolis, MN 55447 (referred to herein as “Lender”).

WITNESSETH

     A. Lender provided to Borrower, and Borrower accepted, a loan commitment dated April 2, 2003
regarding the Lender’s willingness to loan funds to Borrower (the “Loan”) upon the general terms
and conditions set forth in the loan, commitment (the “Commitment”).

     B. Borrower and Lender entered into the Loan Agreement dated April 16, 2003 regarding the
Loan (the “Loan Agreement”).

     C. The Loan Agreement did not contain one of the terms that the Commitment contained regarding
the Lender’s having the option to accept all or part of the collateral provided as security for the
Loan in full payment of the Loan, which Borrower and Lender intended to include in the Loan
Agreement.

     D. Borrower and Lender desire to amend the Loan Agreement to include the omitted term.

     E. In conjunction with the parties’ entering into this Amendment, Lender also will be
advancing to Borrower the second installment of the Loan.

     NOW, THEREFORE, in consideration of the mutual agreements, covenants, and promises herein
contained and for other good and valuable consideration, the receipt of which is hereby
acknowledged by each party to the other, Borrower and Lender agree as follows:

     1. Section 6.II. of the Loan Agreement is amended by deleting the word “approximate.”

     2. Section 9 of the Loan Agreement is amended by adding to the end thereof the following new
subsection 9(g):

     (g) At Lender’s sole option, if it does not proceed with the
Principal Transaction, it may elect to take in full payment for the
balance of principal and interest of the Loan then outstanding (the
“Outstanding Balance”) such of the Borrower’s Partnership

 

 

Interests provided as security for the Loan equal in value to the then
Outstanding Balance.

     3. The remaining provisions of the Loan Agreement are unchanged by this
Amendment and remain in full force and effect.

     IN WITNESS WHEREOF, the parties have signed this Amendment effective as of the above-stated
date.

	 	 	 	 	 
	 	 	“BORROWER”
	 
	 	 	 	 
	 	 	BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP, a

Delaware limited partnership,
	 
	 	 	 	 
	 	 	By: Megan Asset Management, Inc., its General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	 	 	Paul J. Maddock, President

	 	 	 	 	 
	 	 	“LENDER”
	 
	 	 	 	 
	 	 	DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota
limited liability company
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

 

 

FIRST AMENDMENT TO SUBSEQUENT LOAN AGREEMENT

THE SUBSEQUENT LOAN AGREEMENT made the 19th day of September 2003, by BAYFIELD
LOW INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address
c/o Megan Asset Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to
herein as “Borrower”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited
liability company, having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN
55447 (referred to herein as “Lender”) is hereby amended to add the following additional
collateral.

WITNESSETH

     A. Borrower is the sole limited partner of OAKWOOD APARTMENTS, LTD., which owns a twenty-four
(24) unit apartment complex and PERRY APARTMENTS, L.P,, which owns an eight (8) unit apartment
complex, each a Missouri limited partnership (the “Missouri Partnerships”) located in Hannibal and
Perry, Missouri, respectively (the “Missouri Apartment Projects”) all for low to moderate income
families. The Missouri Apartment Projects have each been financed through permanent mortgages from
Rural Development Services (formerly the Farmers Home Administration), U.S. Department of
Agriculture (“RD”) which mortgages had an approximate principal balance as of 12/31/2001 of
$576,203 and $182,500, respectively (the “RD Mortgages”).
J.V. Norton, Murray L. Childers, The J.
William Holliday Revocable Trust and Stephen G. Owsley are the sole general partners of the
Missouri Partnerships.

     B. In further consideration of Borrower’s agreement not to sell additional interests in its
123 Operating Partnerships prior to the Closing contemplate by the Purchase Agreement, Lender on
September 25, 2003 made a further loan to Borrower in the amount of $120,000 and pursuant to the
Subsequent Loan Agreement, Lender agreed to make further $60,000 loans to Borrower on the tenth
(10th) day of each of October and November, 2003. The Missouri Partnerships are being
provided as additional Collateral to further secure the $60,000 loan to be made in October, 2003
(the “October Subsequent Loan”). The October Subsequent Loan is evidenced by a promissory note in
the form of the Promissory Note and, in addition to the Missouri Partnerships, is secured by an
interest in one or more of Borrower’s Operating Partnership interests pursuant to a security
agreement in the form of the Security Agreement.

     C. To evidence, and upon the funding of, the October Subsequent Loan, Borrower will execute
and deliver to Lender a Promissory Note, in the principal amount of $60,000 (the “October
Subsequent Loan Note”) to represent the October Subsequent Loan.

     D. To secure the October Subsequent Loan, Borrower will execute and deliver to Lender a
further Security Agreement, granting to Lender a security interest in the Borrower’s Partnership
Interests in the Missorui Partnerships (the “Second Subsequent Loan Security Agreement”).

 

 

     E. Except as modified hereby, the remaining provisions of the Subsequent Loan Agreement
are unchanged by this Amendment and remain in full force and effect.

     F. This Agreement may be executed in one or more counterparts, each of which shall constitute
a complete agreement and all of which taken together shall constitute a single agreement.

THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS LOAN
AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE
STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF
ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS AN ACTION IS COMMENCED IN
ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY
FROM THE RELATIONSHIP CREATED BY THIS LOAN AGREEMENT, LENDER AT ITS
OPTION SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER AND BORROWER
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF THEM MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE
PRINCIPAL TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF EITHER PARTY.

[ THE REMAINDER OF THIS PAGE INTENTIONALLY HAS BEEN LEFT BLANK.]

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their
names, the date and year first above written.

	 	 	 	 	 
	 	 	“BORROWER:”
	 	 	BATFIELD LOW INCOME

HOUSING LIMITED

PARTNERSHIP, a Delaware limited

partnership,
	 	 	By: Megan Asset
Management, Inc.,

General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	 	 	Paul J. Maddock, President
	 
	 	 	 	 
	 	 	“LENDER:”
	 	 	DOMINIUM DEVELOPMENT & ACQUISITION,
LLC, a Minnesota limited liability
company
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Paul R. Sween, Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On this the 17th day of October, 2003 before me, the undersigned, a notary
public of said state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me
known, who being by me duly sworn, did depose and say that he has an address of 1424 West Century
Avenue, #102, Bismarck, North Dakota 58503; that he is the President of Megan Asset Management,
Inc., the corporation described in and which executed and delivered the foregoing instrument as
the General Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name
thereto on behalf of said corporation for the purposes therein contained.

     IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year first
above written.

	 	 	 
	(SEAL)

	 	 
	SANDRA
LEVORSEN

	 	/s/ Sandra Levorsen
	SANDRA
LEVERSON

	 	/s/ Sandra Levorsen
	 

	 	 
	Notary
public

	 	NOTARY PUBLIC
	State
of North Dakota

	 	My commission expires:
	My
Commission Expires Mar 23, 2009

	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

On this the                      day of October, 2003 before me, the undersigned, a notary public of said state, duly commissioned and sworn, personally appeared Paul R. Sween, who is personally
known to me to be the individual who executed and delivered the foregoing instrument, and he
duly acknowledged to me that he executed and delivered the same in his capacity as the Vice
President of Dominium Development & Acquisition, LLC on behalf of said company and for the
purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year
first above written.

	 	 	 
	 

	 	 
	(SEAL)

	 	NOTARY PUBLIC
	 

	 	My commission expires:

 

 

SECOND AMENDMENT TO SUBSEQUENT LOAN AGREEMENT

THE
SUBSEQUENT LOAN AGREEMENT, made the 19th day of September 2003, by BAYFIELD LOW
INCOME HOUSING LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address c/o
Megan Asset Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to
herein as “Borrower”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited
liability company, having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN
55447 (referred to herein as “Lender”) as amended by that First Amendment to Subsequent Loan
Agreement dated the 17th day of October, 2003 is hereby further amended to add the
following additional collateral.

WITNESSETH

     A. Borrower is the sole limited partner of AFM RRH, LTD, a Florida limited partnership, which
owns a thirty-six (36) unit apartment complex located in Anthony, Florida and ANDERSON COUNTRY
ESTATES, L.P., a Missouri limited partnership, which owns a twenty-four (24) unit apartment
complex, located in Palmyra, Missouri (the “Second Amendment Partnerships”) all for low to
moderate income families (the “Second Amendment Apartment Projects”). The Second Amendment
Apartment Projects have each been financed through permanent mortgages from Rural Development
Services (formerly the Farmers Home Administration), U.S. Department of Agriculture (“RD”) which
mortgages had an approximate principal balance as of 12/31/2001 of $1,078,799 and $579,390,
respectively (the “RD Mortgages”). AFM ONE, INC. and J.V. Norton, Murray L. Childers, The J.
William Holliday Revocable Trust and Stephen G. Owsley are the sole general partners of the Second
Amendment Partnerships, respectively.

     B. In further consideration of Borrower’s agreement not to sell additional interests in its
123 Operating Partnerships prior to the Closing contemplate by the Purchase Agreement, Lender made
further loans to Borrower in the amounts of $120,000 and $60,000 to Borrower on or about September
25, 2003 and October 23, 2003 and, pursuant to the Subsequent Loan Agreement, Lender agreed to make
a further $60,000 loan to Borrower on the tenth (10th) day of November, 2003. The
Second Amendment Partnerships are being provided as additional Collateral to further secure the
$60,000 loan to be made in November, 2003 (the “Third Subsequent Loan”). The Third Subsequent Loan
is evidenced by a promissory note in the form of the Promissory Note and, in addition to the Second
Amendment Partnerships, is secured by an interest in one or more of Borrower’s Operating
Partnership interests pursuant to a security agreement in the form of the Security Agreement and
the First Subsequent Loan Security Agreement.

     C. To evidence, and upon the funding of, the Third Subsequent Loan, Borrower will execute and
deliver to Lender a Promissory Note, in the principal amount of $60,000 (the “Third Subsequent
Loan Note”) to represent the Third Subsequent Loan.

     D. To secure the Third Subsequent Loan, Borrower will execute and deliver to

 

 

Lender a further Security Agreement, granting to Lender a security interest in the Borrower’s
Partnership Interests in the Second Amendment Partnerships (the “Third Subsequent Loan Security
Agreement”).

     E. Except as modified hereby, the remaining provisions of the Subsequent Loan Agreement, as
amended, are unchanged by this Amendment and remain in full force and effect.

     F. This Agreement may be executed in one or more counterparts, each of which shall constitute
a complete agreement and all of which taken together shall constitute
a single agreement.

THIS LOAN AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS LOAN
AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE
STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF
ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS AN ACTION IS COMMENCED IN
ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY
FROM THE RELATIONSHIP CREATED BY THIS LOAN AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

AS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN CONTEMPLATED HEREIN, LENDER AND BORROWER
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH OF THEM MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO THE
PRINCIPAL TRANSACTION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF EITHER PARTY.

[THE REMAINDER OF THIS PAGE INTENTIONALLY HAS BEEN LEFT BLANK.]

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their
names, the date and year first above written.

	 	 	 	 	 
	 	 	“BORROWER:”
	 	 	BAYFIELD LOW INCOME

HOUSING LIMITED

PARTNERSHIP, a Delaware limited

partnership,
	 	 	By: Megan Asset Management, Inc.,
General Partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	 	 	Paul J. Maddock, President
	 
	 	 	 	 
	 	 	“LENDER:”
	 	 	DOMINIUM DEVELOPMENT & ACQUISITION,
LLC, a Minnesota limited liability
company
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Paul R. Sween, Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF NORTH DAKOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF BURLEIGH

	 	 	)	 	 	 	 	 

     On this the 10 day of November, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me known who being by
me duly sworn, did depose and say that he has an address of 1424 West Century Avenue, #102,
Bismarck, North Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name thereto on
behalf of said corporation for the purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and
year first above written.

	 	 	 	 	 
	 

	 	/s/ Jessica L. Bashus
	 	 
	 

	 	 	 	 
	(SEAL)

	 	NOTARY PUBLIC	 	 
	JESSICA L. BASHUS
Notary Public, State of
North Dakota
My commission Expires February 18, 2009
STATE OF NORTH DAKOTA
NOTARY PUBLIC SEAL	 	My commission expires: Feb. 18, 2009	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On this the                      day of November, 2003 before me, the undersigned, a notary public
of said state, duly commissioned and sworn, personally appeared Paul R. Sween, who is personally
known to me to be the individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as the Vice President of
Dominium Development & Acquisition, LLC on behalf of said company and for the purposes therein
contained.

     IN WITNESS WHEREOF,
I have hereunto set my hand and affixed my seal the day and year first
above written.

	 	 	 	 	 
	(SEAL)

	 	 

NOTARY PUBLIC
	 	 
	 

	 	My commission expires;	 	 

 

 

SECOND SUBSEQUENT LOAN PROMISSORY NOTE

			
	$60,000
	 	October 17, 2003

Bismarck,           

North Dakota    

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP (referred
to herein as “Maker”), promises to pay to the order of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a
Minnesota limited liability company (referred to herein as “Payee”), at 2355 Polaris Lane N.,
Suite 100, Minneapolis, MN 55447, or at such other place as Payee may designate in writing, from
time to time, in legal tender of the United States of America, the sum of SIXTY THOUSAND AND
No/100 DOLLARS ($60,000), together with interest thereon at the rate of Five Percent (5%) per
annum.

     Payments of principal and accrued interest shall be payable on the first to occur of (i) the
Closing on the Principal Transaction as defined in the Subsequent Loan Agreement dated the
19th day of September, 2003, as amended, made by Maker in favor of Payee (the
“Subsequent Loan Agreement”) and then to be paid in installments in accordance with the agreement
with respect to the Principal Transaction, (ii) April 12, 2004 if Payee elects on or before such
date to take the collateral that secures this Note in full satisfaction of the then-outstanding
amount of this Note, or (iii) December 31, 2004 (the
“Maturity Date”). In addition, if the Closing
on the Principal Transaction occurs and, thus, clause (i) of the preceding sentence applies, no
further interest will accrue on, this Note from and after the date of the Closing.

     This Note is made pursuant to the Subsequent Loan Agreement, as amended. This Note is secured
by the Subsequent Loan Security Agreement dated September 19, 2003 and Second Subsequent Loan
Security Agreement of even date herewith made by Maker in favor of Payee, and encumbering the
limited partnership interests of Maker in OAKWOOD APARTMENTS, LTD. and PERRY APARTMENTS, L.P.,
each a Missouri limited partnership (the “Missouri Partnerships”) as defined in the First
Amendment to Subsequent Loan Agreement (the “Second Subsequent Loan Security Agreement”). This
Note is entitled to the protection of the Subsequent Loan Agreement, as amended, the Subsequent
Loan Security Agreement dated September 19, 2003 and Second Subsequent Loan Security Agreement and
the Subsequent Loan Guaranty, the terms of which are by this reference incorporated herein. At the
option of Payee, any default under the terms of the Loan Agreement, the Promissory Notes, the
Security Agreement, the Guaranty, the Subsequent Loan Agreement, as amended, any other Subsequent
Loan Note, the Subsequent Loan Security Agreement or the Second Subsequent Loan Security
Agreement, or the Subsequent Loan Guaranty shall constitute a default hereunder.

     The indebtedness evidenced by this Note may be prepaid in whole or in part at any time
without penalty, provided that any prepayments shall be applied first against accrued and unpaid
interest, if any, and second to principal. Prepayment in part shall not affect or postpone Maker’s
duty to pay all obligations when due.

     Payee shall have the right to declare the total unpaid principal balance, together with all
accrued interest, to be due and payable forthwith upon the failure of Maker to pay any payment due
hereunder, under any other Subsequent Loan Note, or under either of the Promissory Notes, within
thirty (30) days

 

 

after the date when such payment shall become due; or upon the sale or other conveyance or
encumbrance by Maker of the Apartment Projects as defined in the Subsequent Loan Agreement or any
part hereof; or after thirty (30) days prior written notice of any default under the terms of the
Loan Agreement, the Security Agreement, the Guaranty, the Subsequent Loan Agreement, as amended,
the Subsequent Loan Security Agreement or the Second Subsequent Loan Security Agreement, the
Subsequent Loan Guaranty or any other document or instrument executed in connection with or
securing this Note, any other Subsequent Loan Note, or either of the Promissory Notes. Failure by
Payee to exercise this right with respect to any failure or breach of Maker shall not constitute a
waiver of the right as to any subsequent failure or breach and maker expressly waives notice of
Payee’s exercise of this right.

     Time is of the essence of this Note. Maker covenants and agrees to pay all the costs and fees
(whether incurred in post-judgment collection, or in any successful dispute resolution proceeding
expended by Payee in the collection hereof, or in the event of any default on the part of Maker or
Guarantor in the making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Note, any other Subsequent Loan
Note, the Subsequent Loan
Agreement, as amended, the Subsequent Loan Guaranty, the Subsequent Loan Security Agreement or the
Second Subsequent Loan Security Agreement, the Loan Agreement, either of the Promissory Notes, the
Guaranty, or the Security Agreement, or in securing this Note, any other Subsequent Loan Note, or
either of the Promissory Notes, or sustaining or defending the priority of any collateral against
all persons, including but not limited to the exercise of the power of eminent domain or other
governmental power of any kind. Nothing contained in this paragraph shall be construed as requiring
Payee to advance or spend money for any of the purposes mentioned in this paragraph.

     The interest on this Note shall never be greater than an amount which, if added to the amount
of any discount, additional fees, or charges paid by Maker which constitute interest under the
laws of the State of Minnesota, would cause the total interest to exceed the maximum rate of
interest chargeable to the Maker under such law. If Payee shall receive any payment which is in
excess of the maximum rate permitted to be charged under such law, such payment shall
automatically be applied to reduce the principal sum outstanding on this Note. This provision
shall control every other provision of all agreements between Maker and Payee.

THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED
IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT
OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.

AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED
HEREBY, PAYEE AND MAKER KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION

2

 

ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE LOAN EVIDENCED HEREBY, ALL
DOCUMENTS AND AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH SAID LOAN,
EXCEPT THE WITH RESPECT TO THE PRINCIPAL TRANSACTION, AND ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY.

	 	 	 	 	 
	 

	 	“MAKER”

BAYFIELD LOW INCOME HOUSING

LIMITED PARTNERSHIP, a Delaware limited partnership,
By: Megan
Asset Management, Inc.,
General Partner	 	 
	 
	 	 	 	 
	 

	 	/s/ Paul J. Maddock
	 	 
	 

	 	 	 	 
	 

	 	Paul J. Maddock, President	 	 
	 
	 	 	 	 
	 

	 	Whose address is;	 	 
	 

	 	1424 W. Century Avenue, #102	 	 
	 

	 	Bismarck, ND 58503	 	 

3

 

SECOND SUBSEQUENT LOAN SECURITY AGREEMENT

THIS
SECURITY AGREEMENT made this 17th day of October, 2003, by BAYFIELD LOW INCOME HOUSING
LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset
Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N,D. 58503 (referred to herein as
“Debtor”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability
company, having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).

     Debtor hereby agrees as follows:

     1. Security
Interest. Debtor constitutes the sole limited partner
of OAKWOOD APARTMENTS, LTD. and PERRY APARTMENTS, L.P., each a Missouri limited partnership
(the “Missouri Partnerships”)  Lender is a Minnesota limited liability company. In
consideration of and as an inducement for an extension of credit by Lender to Debtor for the purpose of funding
certain requirements of the Debtor, Debtor hereby gives Lender a continuing and unconditional security
interest (the “Security Interest”) in Debtor’s interest as a limited partner in the Missouri
Partnerships and in all additions, replacements, substitutions, increases and profits, and in all proceeds and
products thereof in any form to which Debtor is entitled
(collectively referred to herein as the “Collateral”).
The Collateral shall include, without limitation, Debtor’s entitlement to, if any, all distributions of Cash
Flow, distributions of proceeds resulting from a Refinancing, distributions of proceeds resulting
from a Major Capital Event, liquidating distributions, distributions in kind, upon a default all profits
and losses from the Partnership to Debtor, and all returns of capital, all as defined or described in, and in
accordance with the provisions of (i) that certain Amended and Restated Agreement and Certificate of Limited
Partnership of OAKWOOD APARTMENTS, LTD., executed as of the 1st day of March, 1988 and filed said
amended agreement in the Office of the Secretary of State of Missouri on the 25th day of July,
1990 and that Amendment to the Amended and Restated Agreement and Certificate of Limited
Partnership of OAKWOOD APARTMENTS, LTD., executed as of the 13th day of July, 1990, and (ii) that
certain Amended and Restated Agreement and Certificate of Limited Partnership of PERRY APARTMENTS,
L.P. executed as of the 1st day of October, 1987 and filed said amended agreement in the
Office of the Secretary of State of Missouri on the 25th day of July, 1990 and that Amendment to the
Amended and Restated Agreement and Certificate of Limited Partnership of PERRY APARTMENTS, L.P.,
executed as of the 1st day of July, 1990 (each as hereinbefore and hereinafter
amended or restated).

     2. Indebtedness
Secured. This Agreement and the Security Interests created hereby and
the Subsequent Loan Security Agreement secure the payment of that certain Second Subsequent Loan
Note of even date herewith executed and delivered by Debtor in favor of Lender, in the original
principal amount of Sixty Thousand and No/100 Dollars ($60,000  — the “Note” or sometimes herein the
“Indebtedness”).

     3. Warranties
of
Debtor. Debtor represents and warrants, and for so long as this
Agreement continues in force, it shall be deemed continuously to represent and warrant, that: (i) each
item constituting the Collateral is genuine and in all respects what it purports to be; (ii) Debtor
is the owner of the Collateral free of all security interests or other encumbrances, except the Security
Interests; and (iii) Debtor is authorized to enter into this Security Agreement under the Partnership Agreements,
subject to the approval of the General Partner, which approval Debtor has obtained in writing.

     4. Covenants
of Debtor. So long as this Agreement has not been terminated as
provided

 

 

hereinafter, Debtor covenants and agrees as follows:

          (a) Debtor will defend the Collateral against the claims of all other persons,
including without limitation, setoffs, claims, counter-claims, and defenses against
either Debtor or Lender; will keep the Collateral free from all security interests or other encumbrances,
except this Security Interest; and will not assign, deliver, sell, transfer, lease, or otherwise
dispose of any of the Collateral or any interest therein without the prior written consent of Lender, in its
sole discretion.

          (b)
 Debtor will notify Lender promptly in writing of any change in
Debtor’s address.

          (c) Debtor will not, without Lender’s written consent, in its sole discretion, make or
agree to make any alteration, modification, or cancellation on substitution for, or credit,
adjustment or allowance on, any of the Collateral.

          (d) Debtor will execute and deliver to Lender such financing statements and other
documents and take such other actions and provide such further reasonable assurances as Lender
may deem advisable to perfect the Security Interests created by this Agreement.

          (c) Debtor will pay all taxes, assessments, and other charges of every nature which may be
levied or assessed against the Collateral and will deliver to Lender, on demand, such reasonable
certificates or other evidence satisfactory to Lender attesting thereto.

     5. Verification of Collateral. Lender shall have the right to verify the Collateral in
any manner and through any medium which Lender may reasonably consider appropriate, and Debtor
shall furnish such assistance and information and perform such acts as Lender may reasonably require
in connection therewith.

     6. Default. At the option of Lender, the occurrence of any of the following events
shall constitute an Event of Default under this Agreement following the failure to cure within
thirty (30) days after written, notice by Lender to Borrower:

          (a) Nonpayment when due, whether by acceleration or otherwise, after any
applicable grace period, of the principal of or interest on any Indebtedness, time being of
the essence, and other Subsequent Loan Note, or either of the Promissory Notes.

          (b) Failure by Debtor to perform any obligations under this Agreement.

          (c) Acceptance by Debtor of any payment or distribution of income or assets from
the Partnership in violation of Paragraph 7 (e) hereof.

          (d) The filing by or against Debtor, Guarantor, General Partner, or the Partnership of
a petition in bankruptcy or for reorganization under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution, liquidation, or similar law of any
jurisdiction.

          (e) The
making of a general assignment by Debtor, Guarantor, General Partner, or
the Partnership for the benefit of creditors; the appointment of or
taking possession, by a
receiver, trustee, custodian or similar official for Debtor, Guarantor, General Partner, or the Partnership or
for any of their assets; or the institution by or against Debtor, Guarantor, General Partner, or the
Partnership of any kind of insolvency proceedings, or any proceeding for the dissolution or liquidation of the
Partnership.

 

 

          (f) Any material falsity in any certificate, statement, representation, warranty, or
audit at any time furnished by or on behalf of the Partnership, Debtor, or any endorser or
guarantor or any other party liable for payment of all or part of the Indebtedness, pursuant to or in
connection with this Agreement or otherwise, to Lender, including warranties in this Agreement, and any failure to
disclose any substantial contingent or liquidated liabilities or any material adverse change in facts
disclosed by any certificate, statement, representation, warranty or audit furnished to Lender.

          (g) Any attachment or levy against the Collateral, or any other occurrence which
inhibits Lender’s free access to the Collateral.

          (h) Any default by Debtor under the Subsequent Loan Agreement, as amended, any of the
Subsequent Loan Notes, any other Subsequent Loan Security Agreement,
the Loan Agreement, or either
of the Promissory Notes, any default by the Guarantor under the Subsequent Loan Guaranty or the
Guaranty.

     7. Rights of Lender.

          (a) Lender may, at its option, declare all or any part of the Indebtedness, any other
Subsequent Loan Note, or the Promissory Notes to be immediately due upon giving thirty (30)
days written notice to Debtor upon the occurrence of any Event of Default.

          (b) Upon the occurrence of any Event of Default, Lender’s rights with respect to the
Collateral shall be those of a secured party under the Uniform Commercial Code and any other
applicable law in effect from time to time.

          (c) Debtor agrees that any notice by Lender of the sale or disposition of the
Collateral or any other intended action hereunder, whether required by the Uniform Commercial
Code or otherwise, shall constitute reasonable notice to Debtor if the notice is mailed by regular or
certified mail, postage prepaid, at least fourteen (14) days before the action, to the Debtor’s address as
above first written, or to any other address which Debtor has specified in writing to Lender as the
address at which notices shall be given to Debtor.

          (d) Upon
 Debtor’s failure to perform any of its duties hereunder, Lender may, but
shall not be obligated to, perform any such duties, and Debtor shall forthwith upon demand
reimburse Lender for any expenses incurred by Lender in so doing. Debtor shall pay all costs and
expenses incurred by Lender in enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness whether or not suit is brought and whether incurred in connection with collection, trial,
appeal, bankruptcy, post-judgment collection, or otherwise; and shall be liable for any deficiencies
in the event the proceeds of disposition of the Collateral do not satisfy the Indebtedness in full.

          (e) Whether or not an Event of Default has occurred, Debtor authorizes Lender to receive
all income from the instruments constituting the Collateral to which Debtor may be entitled until
this Agreement has been terminated, in accordance with the terms of
each Subsequent Loan Note. Debtor
will not demand or receive any income from the instruments constituting Collateral until the
Indebtedness has been paid in full, and if Debtor receives any such income, Debtor will pay it to Lender within Five
(5) days of its receipt thereof without demand. Lender may apply the net cash receipts of such income
to payment of any of the Indebtedness, but Lender shall account for and pay over to Debtor any income
remaining after full payment of the Indebtedness.

          (f) Whether
 or not an Event of Default has occurred, Debtor authorizes Lender to

 

 

receive any increase in any instruments constituting Collateral and any distribution upon
the dissolution and liquidation of the Partnership, and to surrender such partnership interests or
any part thereof in exchange therefor, and to hold the receipt from any such distribution or
increase as part of the Collateral; provided, however, that Lender need not collect interest on or
principal of any Collateral or give any notice of nonpayment with respect to such principal or
interest. If Debtor receives any such increase, profits or distribution, Debtor will deliver such
receipts promptly to Lender, to be held by Lender as provided in this paragraph.

          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including, without limitation,
compliance with RD regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments, require that such
prospective bidders and purchasers have certain qualifications, and restrict such prospective
bidders and purchasers to persons who will represent and agree that
they arr purchasing for their
own account or investment and not with a view to the distribution or resale of such Collateral, or
in order to obtain any required approval of the sale or of the purchase by any governmental
regulatory authority or official); and Debtor further agrees that such compliance shall not result
in such sale being considered or deemed not to have been made in a commercially reasonable manner,
nor shall Lender be liable or accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or restriction. Debtor further
agrees that any sales by Lender shall not be considered to be other than “public sales” within the
meaning of Section 9-504 of the Uniform Commercial Code because such sales or solicitations are
structured to comply with such limitations or restrictions, the intent of the parties being that
any public sale be subject to such limitations and restrictions.

          (h) Upon
 the occurrence of any Event of Default, Lender may exercise any rights that Debtor
has as a limited partner with respect to the Collateral.

          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER,
THIS SECURITY AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER
OR THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE
CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

     IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed in their
names, the date and year first above written.

 

 

	 	 	 
	 

	“DEBTOR”
	 

	BAYFIELD LOW INCOME
	 

	HOUSING LIMITED PARTNERSHIP,
	 

	a Delaware limited partnership,
	 

	By: Megan Asset Management, Inc.,
	 

	General Partner
	 
	 
	 

	/s/ Paul J. Maddock

	 

	 
	 

	Paul J. Maddock, President
	 
	 
	 

	“LENDER:”
	 

	DOMINIUM DEVELOPMENT &
	 

	ACQUISITION, LLC, a Minnesota
	 

	limited liability company
	 
	 
	 

	By:
	 

	 	 
	 

	Paul R. Sween, Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On
this the 17th day of October, 2003 before me, the undersigned, a notary public
of said state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me known, who
being by me duly sworn, did depose and say that he has an address of 1424 West Century Avenue,
#102, Bismarck, North Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name thereto on
behalf of said corporation for the purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and
year first above written.

	 	 	 	 	 
	 

	 	/s/ Sandra Levorsen
	 	 
	 

	 	 	 	 
	(SEAL)

	 	NOTARY PUBLIC	 	 
	SANDRA LEVORSEN
Notary Public
State of North Dakota
My Commission Expires Mar. 23, 2009	 	My commission expires:	 	 

	 	 	 	 	 
	STATE OF MINNESOTA                             )
	 		 	 
	 	  ss:	 	 	 
	COUNTY OF HENNEPIN                             )

	 	 	 	 

     On this the      day of October, 2003 before me, the undersigned, a notary public of
said state, duly commissioned and sworn, personally appeared Paul R. Sween, who is personally
known to me to be the individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as the Vice President
of Dominium Development & Acquisition, LLC on behalf of said company and for the purposes therein
contained.

     IN WITNESS WHEREOF, I have
 hereunto set my hand and affixed my seal the day and year first
above written.

	 	 	 	 	 
	(SEAL)

	 	 

NOTARY PUBLIC
	 	 
	 

	 	My commission expires:	 	 

 

 

THIRD SUBSEQUENT LOAN PROMISSORY NOTE

		 	
	$60,000
	 	November 10, 2003
	 
	 	Bismarck,      
        
	 
	 	North Dakota        
 

     FOR VALUE RECEIVED, the undersigned BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP (referred
to herein as “Maker”), promises to pay to the order of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a
Minnesota limited liability company (referred to herein as “Payee”), at 2355 Polaris Lane N.,
Suite 100, Minneapolis, MN 55447, or at such other place as Payee may designate in writing, from
time to time, in legal tender of the United States of America, the sum of SIXTY THOUSAND AND
No/100 DOLLARS ($60,000), together with interest thereon at the rate of Five Percent (5%) per
annum.

     Payments of principal and accrued interest shall be payable on the first to occur of (i) the
Closing on the Principal Transaction as defined in the Subsequent Loan Agreement dated the
19th day of September, 2003, as amended, made by Maker in favor of Payee (the
“Subsequent Loan Agreement”) and then to be paid in installments in accordance with the agreement
with respect to the Principal Transaction, (ii) April 12, 2004 if Payee elects on or before such
date to take the collateral that secures this Note in full satisfaction of the then-outstanding
amount of this Note, or (iii) December 31, 2004 (the “Maturity Date”). In addition, if the Closing
on the Principal Transaction occurs and, thus, clause (i) of the preceding sentence applies, no
further interest will accrue on this Note from and after the date of the Closing.

     This Note is made pursuant to the Subsequent Loan Agreement, as amended. This Note is secured
by the Third, Subsequent Loan Security Agreement of even date herewith made by Maker in favor of
Payee, and encumbering the limited partnership interests of Maker in APM RRH, LTD., a Florida
limited partnership and ANDERSON COUNTRY ESTATES, L.P., a Missouri limited partnership, (the
“Second Amendment Partnerships”) as defined in the Second Amendment to Subsequent Loan Agreement
(the “Second Amendment to Subsequent Loan Agreement”). This Note is entitled to the protection of
the Subsequent Loan Agreement, as amended, the Second Subsequent Loan Security Agreement, the
Third Subsequent Loan Security Agreement and the Subsequent Loan Guaranty, the terms of which are
by this reference incorporated herein. At the option of Payee, any default under the terms of the
Loan Agreement, the Promissory Notes, the Security Agreement, the Guaranty, the Subsequent Loan
Agreement, as amended, any other Subsequent Loan Note, the Subsequent Loan Security Agreement, the
Second Subsequent Loan Security Agreement, or the Third Subsequent Loan Security Agreement, or the
Subsequent Loan Guaranty shall constitute a default hereunder.

     The indebtedness evidenced by this Note may be prepaid in whole or in part at any time
without penalty, provided that any prepayments shall be applied first against accrued and unpaid
interest, if any, and second to principal. Prepayment in part shall not affect or postpone Maker’s
duty to pay all obligations when due.

     Payee shall have the right to declare the total unpaid principal balance, together with
all accrued interest, to be due and payable forthwith upon the failure of Maker to pay any payment
due hereunder, under any other Subsequent Loan Note, or under either of the Promissory Notes,
within thirty (30) days

 

 

after the date when such payment shall become due; or upon the sale or other conveyance or
encumbrance by Maker of the Apartment Projects as defined in the Subsequent Loan Agreement or any
part hereof; or after thirty (30) days prior written notice of any default under the terms of the
Loan Agreement, the Security Agreement, the Guaranty, the Subsequent Loan Agreement, as amended,
the Subsequent Loan Security Agreement, the Second Subsequent Loan Security Agreement, or the
Third Subsequent Loan Security Agreement, the Subsequent Loan Guaranty or any other document or
instrument executed in connection with or securing this Note, any other Subsequent Loan Note, or
either of the Promissory Notes. Failure by Payee to exercise this right with respect to any
failure or breach of Maker shall not constitute a waiver of the right as to any subsequent failure
or breach and maker expressly waives notice of Payee’s exercise of this right.

     Time is of the essence of this Note. Maker covenants and agrees to pay all the costs and fees
(whether incurred in post-judgment collection, or in any successful dispute resolution proceeding
expended by Payee in the collection hereof, or in the event of any default on the part of Maker or
Guarantor in the making of any payments, or in the performance of any of the agreements,
conditions, or covenants of this Note, any other Subsequent Loan Note, the Subsequent Loan
Agreement, as amended, the Subsequent Loan Guaranty, the Subsequent Loan Security Agreement, the
Second Subsequent Loan Security Agreement, or the Third Subsequent Loan Security Agreement, the
Loan Agreement, either of the Promissory Notes, the Guaranty, or the Security Agreement, or in
securing this Note, any other Subsequent Loan Note, or either of the Promissory Notes, or
sustaining or defending the priority of any collateral against all persons, including but not
limited to the exercise of the power of eminent domain or other governmental power of any kind.
Nothing contained in this paragraph shall be construed as requiring Payee to advance or spend
money for any of the purposes mentioned in this paragraph.

     The interest on this Note shall never be greater than an amount which, if added to the amount
of any discount, additional fees, or charges paid by Maker which constitute interest under the
laws of the State of Minnesota, would cause the total interest to exceed the maximum rate of
interest chargeable to the Maker under such law. If Payee shall receive any payment which is in
excess of the maximum rate permitted to be charged under such law, such payment shall
automatically be applied to reduce the principal sum outstanding on this Note. This provision
shall control every other provision of all agreements between Maker and Payee.

THIS NOTE, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED
IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN
MINNEAPOLIS, MINNESOTA; BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER OR THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT
OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.

AS A MATERIAL INDUCEMENT FOR PAYEE TO MAKE THE LOAN EVIDENCED HEREBY, PAYEE AND MAKER KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE THE

2

 

RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE LOAN EVIDENCED HEREBY, ALL DOCUMENTS AND AGREEMENTS
EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH SAID LOAN, EXCEPT THE WITH RESPECT TO
THE PRINCIPAL TRANSACTION, AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN), OR ACTIONS OF EITHER PARTY.

	 	 	 	 	 
	 

	 	“MAKER”	 	 
	 

	 	BAYFIELD LOW INCOME 
HOUSING
LIMITED PARTNERSHIP,	 	 
	 

	 	 a Delaware limited partnership,	 	 
	 

	 	 By: Megan Asset Management, Inc.,	 	 
	 

	 	General Partner	 	 
	 
	 	 	 	 
	 

	 	/s/ Paul J. Maddock
	 	 
	 

	 	 	 	 
	 

	 	Paul J. Maddock, President	 	 
	 
	 	 	 	 
	 

	 	Whose address is:	 	 
	 

	 	1424 W. Century Avenue, #102	 	 
	 

	 	Bismarck, ND 58503	 	 

3

 

THIRD SUBSEQUENT LOAN SECURITY AGREEMENT

THIS
SECURITY AGREEMENT made this 10th day of November, 2003, by BAYFIELD LOW INCOME HOUSING
LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset
Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to herein as
“Debtor”), in favor of DOMINIUM DEVELOPMENT & ACQUISITION, LLC, a Minnesota limited liability
company, having an office address of 2355 Polaris Lane N., Suite 100, Minneapolis, MN 55447
(referred to herein as “Lender”).

     Debtor hereby agrees as follows:

     1. Security
Interest. Debtor constitutes the sole limited partner of AFM RRH, LTD., a
Florida limited partnership and ANDERSON COUNTRY ESTATES, L.P., a Missouri
limited partnership, (the “Second Amendment Partnerships”). Lender is a Minnesota limited liability
company. In consideration of and as an inducement for an extension of credit by Lender to Debtor for the
purpose of funding certain requirements of the Debtor, Debtor hereby gives Lender a continuing and
unconditional security interest (the “Security Interest”) in Debtor’s interest as a limited partner in the
Second Amendment Partnerships and in all additions, replacements, substitutions, increases and
profits, and in all proceeds and products thereof in any form to which Debtor is entitled (collectively referred
to herein as the “Collateral”). The Collateral shall include, without limitation, Debtor’s entitlement to,
if any, all distributions of Cash Flow, distributions of proceeds resulting from a Refinancing,
distributions of proceeds resulting from a Major Capital Event, liquidating distributions, distributions in
kind, upon a default all profits and losses from the Partnership to Debtor, and all returns of capital, all
as defined or described in, and in accordance with the provisions of (i) that certain Amended and Restated
Agreement and Certificate of Limited Partnership of AFM RRH, LTD., a Florida limited partnership
executed as of the 13th day of September, 1988 and filed said amended agreement in the Office of the
Secretary of State of Florida on the 15th day of October, 1998 and that Amendment to the Amended and Restated
Agreement and Certificate of Limited Partnership of AFM RRH, LTD.,
executed as of the 1st day of July,
1990 and filed said amended agreement in the Office of the Secretary of State of Florida on the 15th
day of October, 1998, and that Second Amendment to the Amended and Restated Agreement and Certificate of
Limited Partnership of AFM RRH, LTD., executed as of the 1st day of March, 1998 and filed said amended
agreement in the Office of the Secretary of State of Florida on the 15th day of October, 1998,
and that Third Amendment to the Amended and Restated Agreement and Certificate of Limited Partnership of AFM
RRH, LTD., executed as of the 1st day of April, 1998 and filed said amended agreement in the
Office of the Secretary of State of Florida on the 15th day of
October, 1998, and (ii) that certain Amended
and Restated Agreement and Certificate of Limited Partnership of ANDERSON COUNTRY ESTATES, L.P., a
Missouri limited partnership, executed as of the 1st day of December, 1988 and filed in the
Office of the Secretary of State of Missouri on the 25th day of July, 1990 and that Amendment to the
Amended and Restated Agreement and Certificate of Limited Partnership of ANDERSON COUNTRY ESTATES, L.P.,
executed as of the Ist day of July, 1990 and filed in the Office of the Secretary
of State of Missouri on the 25th day of July, 1990, and that Second Amended and Restated Agreement and Certificate of
Limited Partnership of ANDERSON COUNTRY ESTATES, L.P., filed in the Office of the Secretary of State
of Missouri on the 5th day of November, 1991 and that Amendment to the Amendment Certificate of
Limited Partnership of ANDERSON COUNTRY ESTATES, L,P., filed in the Office of the Secretary of State
of Missouri on the 9th day of January, 1992 (each as hereinbefore and hereinafter amended or
restated).

     2. Indebtedness
Secured. This Agreement and the Security Interests created hereby
secure the payment of that certain Third Subsequent Loan Note of even date herewith executed and
delivered by

 

 

Debtor in favor of Lender, in the original principal amount of Sixty Thousand and No/100
Dollars ($60,000 — the “Note” or sometimes herein the “Indebtedness”).

     3. Warranties
of Debtor. Debtor represents and warrants, and for so long as this
Agreement continues in force, it shall be deemed continuously to
represent and warrant, that: (i) each
item constituting the Collateral is genuine and in all respects what it purports to be; (ii) Debtor
is the owner of the Collateral free of all security interests or other encumbrances, except the Security
Interests; and (iii) Debtor is authorized to enter into this Security Agreement under the Partnership Agreements,
subject to the approval of the General Partner, which approval Debtor has obtained in writing.

     4. Covenants
of Debtor. So long as this Agreement has not been terminated as provided
hereinafter, Debtor covenants and agrees as follows:

          (a) Debtor will defend the Collateral against the claims of all other persons,
including without limitation, setoffs, claims, counter-claims, and defenses against
either Debtor or Lender; will keep the Collateral free from all security interests or other encumbrances,
except this Security Interest; and will not assign, deliver, sell, transfer, lease, or otherwise
dispose of any of the Collateral or any interest therein without the prior written consent of Lender, in its
sole discretion.

          (b) Debtor will notify Lender promptly in writing of any change in Debtor’s address.

          (c) Debtor will not, without Lender’s written consent, in, its sole discretion, make or
agree to make any alteration, modification, or cancellation of, substitution for, or credit,
adjustment or allowance on, any of the Collateral.

          (d) Debtor will execute and deliver to Lender such financing statements and other
documents and take such other actions and provide such further reasonable assurances as Lender
may deem advisable to perfect the Security Interests created by this Agreement.

          (e) Debtor will pay all taxes, assessments, and other charges of every nature which
may be levied or assessed against the Collateral and will deliver to Lender, on demand, such
reasonable certificates or other evidence satisfactory to Lender attesting thereto,

     5. Verification
of Collateral. Lender shall have the right to verify the Collateral in
any manner and through any medium which Lender may reasonably consider appropriate, and Debtor
shall furnish such assistance and information and perform such acts as Lender may reasonably require
in connection therewith.

     6. Default. At the option of Lender, the occurrence of any of the following events
shall, constitute an Event of Default under this Agreement following the failure to cure within
thirty (30) days after written notice by Lender to Borrower:

          (a) Nonpayment when due, whether by acceleration or otherwise, after any
applicable grace period, of the principal of or interest on any Indebtedness, time being of
the essence, and other Subsequent Loan Note, or either of the Promissory Notes.

          (b) Failure by Debtor to perform any obligations under this Agreement.

          (c) Acceptance by Debtor of any payment or distribution of income or assets from

 

 

the Partnership in violation of Paragraph 7 (e) hereof.

          (d) The Filing by or against Debtor, Guarantor, General Partner, or the Partnership of
a petition in bankruptcy or for reorganization under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution, liquidation, or similar law of any
jurisdiction.

          (e) The making of a general assignment by Debtor, Guarantor, General Partner, or
the Partnership for the benefit of creditors; the appointment of or taking possession by a
receiver, trustee, custodian or similar official for Debtor, Guarantor, General Partner, or the Partnership or
for any of their assets; or the institution by or against Debtor, Guarantor, General Partner, or the
Partnership of any kind of insolvency proceedings, or any proceeding for the dissolution or liquidation of the
Partnership.

          (f) Any material falsity in any certificate, statement, representation, warranty, or
audit at any time furnished by or on behalf of the Partnership, Debtor, or any endorser or
guarantor or any other party liable for payment of all or part of the Indebtedness, pursuant to or in
connection with this Agreement or otherwise, to Lender, including warranties in this Agreement, and any failure to
disclose any substantial contingent or liquidated liabilities or any material adverse change in facts
disclosed by any certificate, statement, representation, warranty or audit furnished to Lender.

          (g) Any attachment or levy against the Collateral, or any other occurrence which
inhibits Lender’s free access to the Collateral.

          (h) Any default by Debtor under the Subsequent Loan Agreement, as amended, any of the
Subsequent Loan Notes, any other Subsequent Loan Security Agreement, the Loan Agreement, or either
of the Promissory Notes, any default by the Guarantor under the Subsequent Loan Guaranty or the
Guaranty,

     7. Rights
of Lender.

          (a) Lender
may, at its option, declare all or any part of the Indebtedness, any other
Subsequent Loan Note, or the Promissory Notes to be immediately due upon giving thirty (30)
days written notice to Debtor upon, the occurrence of any Event of Default.

          (b) Upon the occurrence of any Event of Default, Lender’s rights with respect to the
Collateral shall be those of a secured party under the Uniform Commercial Code and any other
applicable law in effect from time to time.

          (c) Debtor agrees that any notice by Lender of the sale or disposition of the
Collateral or any other intended action hereunder, whether required by the Uniform Commercial
Code or otherwise, shall, constitute reasonable notice to Debtor if the notice is mailed by regular or
certified mail, postage prepaid, at least fourteen (14) days before the action, to the Debtor’s address as
above first written, or to any other address which Debtor has specified in writing to Lender as the
address at which notices shall be given to Debtor.

          (d) Upon Debtor’s failure to perform any of its duties hereunder, Lender may, but
shall not be obligated to, perform any such duties, and Debtor shall forthwith upon demand
reimburse Lender for any expenses incurred by Lender in so doing. Debtor shall pay all costs and
expenses incurred by Lender in enforcing this Agreement, realizing upon any Collateral, and collecting any
Indebtedness whether or not suit is brought and whether incurred in connection with collection, trial,
appeal, bankruptcy, post-judgment collection, or otherwise; and shall be liable for any deficiencies
in the event

 

 

the proceeds of disposition of the Collateral do not satisfy the Indebtedness in full.

          (e) Whether or not an Event of Default has occurred, Debtor authorizes Lender to receive
all income from the instruments constituting the Collateral to which Debtor may be entitled
until this Agreement has been terminated, in accordance with the
terms of each Subsequent Loan Note.
Debtor will not demand or receive any income from the instruments constituting Collateral until the
Indebtedness has been paid in full, and if Debtor receives any such income, Debtor will pay it to Lender within
five (5) days of its receipt thereof without demand. Lender may apply the net cash receipts of such
income to payment of any of the Indebtedness, but Lender shall account for and pay over to Debtor any
income remaining after full payment of the Indebtedness.

          (f) Whether or not an Event of Default has occurred, Debtor authorizes Lender to
receive any increase in any instruments constituting Collateral and any distribution upon the
dissolution and liquidation of the Partnership, and to surrender such partnership interests or any part
thereof in exchange therefor, and to hold the receipt from any such distribution or increase as part of
the Collateral; provided, however, that Lender need not collect interest on or principal of any Collateral or
give any notice of nonpayment with respect to such principal or interest. If Debtor receives any such
increase, profits or distribution, Debtor will deliver such receipts promptly to Lender, to be held by
Lender as provided in this paragraph.

          (g) Debtor agrees that in any sale of the Collateral, Lender is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law (including, without limitation,
compliance with RD regulations and compliance with such procedures as may restrict the number of
prospective bidders and purchasers of any securities or other instruments, require that such prospective
bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers
to persons who will represent and agree that they are purchasing for their own account or investment and
not with a view to the distribution or resale of such Collateral, or in order to obtain any required
approval of the sale or of the purchase by any governmental regulatory authority or official); and Debtor further
agrees that such compliance shall not result in such sale being considered or deemed not to have been made
in a commercially reasonable manner, nor shall Lender be liable or accountable to Debtor for any
discount allowed by reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction. Debtor further agrees that any sales by Lender shall not be considered to be
other than “public sales” within the meaning of Section 9-504 of the Uniform Commercial Code because such sales
or solicitations are structured to comply with such limitations or restrictions, the intent of
the parties being that any public sale be subject to such limitations and restrictions.

          (h) Upon the occurrence of any Event of Default, Lender may exercise any rights that Debtor
has as a limited partner with respect to the Collateral.

          (i) THIS SECURITY AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER AND THE INTERPRETATION HEREOF
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. AT THE OPTION OF LENDER,
THIS SECURITY AGREEMENT MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MINNESOTA OR THE STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; DEBTOR CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT JURISDICTION IN SUCH FORUMS IS NOT PROPER
OR THAT VENUE IN SUCH FORUMS IS

 

 

NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER
ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
SECURITY AGREEMENT, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their
names, the date and year first above written.

	 	 	 
	 

	“DEBTOR”
	 

	BAYFIELD LOW INCOME
	 

	HOUSING LIMITED PARTNERSHIP,
	 

	a Delaware limited partnership,
	 

	By: Megan Asset Management, Inc.,
	 

	General Partner
	 
	 
	 

	/s/ Paul J. Maddock

	 

	 	 
	 

	Paul J. Maddock, President
	 
	 
	 

	“LENDER:”
	 

	DOMINIUM DEVELOPMENT &
	 

	ACQUISITION, LLC, a Minnesota
	 

	limited liability company
	 
	 
	 

	By:
	 

	 	 
	 

	Paul R. Sween, Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF NORTH DAKOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss	 	 
	COUNTY OF BURLEIGH

	 	 	)	 	 	 	 	 

     On this the 10 day of November, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Paul J. Maddock, to me known, who being by
me duly sworn, did depose and say that he has an address of 1424 West Century Avenue, #102,
Bismarck, North Dakota 58503; that he is the President of Megan Asset Management, Inc., the
corporation described in and which executed and delivered the foregoing instrument as the General
Partner of Bayfield Low Income Housing Limited Partnership; and he signed his name thereto on
behalf of said corporation for the purposes therein contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year
first above written.

	 	 	 
	(SEAL)	 	
	JESSICA L. BASHUS
Notary Public, State of North Dakota

My Commission Expires Feb 18, 2009	 	/s/ Jessica L. Bashus
	 STATE OF NORTH DAKOTA
NOTARY PUBLIC SEAL	 	NOTARY PUBLIC

     My Commission expires: Feb 18, 2009

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	ss:	 	 
	COUNTY OF HENNEPIN

	 	 	)	 	 	 	 	 

     On
this the                      day of November, 2003 before me, the undersigned, a notary public of said
state, duly commissioned and sworn, personally appeared Paul R. Sween, who is personally known to
me to be the individual who executed and delivered the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same in his capacity as the Vice President of
Dominium Development & Acquisition, LLC on behalf of said company and for the purposes therein
contained.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and year first
above written.

	 	 	 	 	 
	    (SEAL)

	 	 

NOTARY PUBLIC
	 	 
	 

	 

	 	 
	 

	 	     My commission expires:	 	 

 

 

ASSIGNMENT AND ASSUMPTION

          In consideration of $10,835 in hand paid from
Assignee and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bayfield Low Income Housing Limited Partnership (“Assignor”) hereby:

	 	1)	 	assigns and transfers to Dominium Acquisition Limited Partnership (“Assignee”) the
following:
	 
	 	 	 	Forty-nine and one-half percentage (49.5% points) of all of Assignor’s rights, interests,
powers and obligations as the Limited or Investor Partner under the Partnership Agreement,
as amended (the “Partnership Agreement”), of ANDERSON COUNTRY ESTATES, L. P. , a
Missouri limited partnership (the “Partnership”) in which Assignor owns an interest,
including forty-nine and one-half percentage points (49.5% points) of Assignor’s Accounts
Receivable due from the Partnership, excluding any Annual Distributions due Assignor from
the Partnership;

and

	 	2)	 	as grantee of all of Continental Construction Management Corporation’s (“Continental”)
rights, title and interests in and to any and all amounts payable to Continental under the
Plan (“Continental Interests”) pursuant to that Bill of Sale, Assignment and Power of
Attorney, granted it in December, 1991, Assignor does hereby release Assignee from and
assume and indemnify and hold Assignee harmless from the payment of One Hundred percentage
(100% points) of any Continental Interests with respect to the Partnership, including, but
not limited to those Continental Interests to which Megan Asset Management, Inc. (“Megan”)
is or may become entitled with respect to the Partnership and agrees to timely pay the same
to Megan.

Assignee hereby assumes and agrees to timely and faithfully perform forty-nine and one-half
percentage (49.5% points) of all obligations of Assignor:

	 	1)	 	as the Limited or Investor Partner under the Partnership Agreement arising from and after
the effective date hereof, except the Continental Interests.
	 
	 	2)	 	with respect to the eight percent (8%) interest in the amount of approximately Ten Thousand
Eight Hundred Four and No/100 ($10,804) Dollars still due by Assignor to the Partnership
payable pursuant to Article 15 (1)(a)(ii) of the Plan as a first priority from the proceeds
of any

 

 

     Capital Events.

     IN WITNESS WHEREOF, the undersigned have executed
this Assignment and Assumption effective as of April 10, 2004.

	 	 	 	 	 	 	 
	ASSIGNOR	 	BAYFIELD LOW
INCOME HOUSING 
LIMITED PARTNERSHIP,	 	 	 	 
	 	 	a Delaware limited partnership
	 	 	By: Megan Asset Management, Inc.,
	 	 	a Delaware corporation
	 	 	Its: General Partner
	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BAYFIELD ACQUISITION LIMITED
	ASSIGNEE	 	PARTNERSHIP, a Minnesota limited partnership
	 	 	By: Bayfield Acquisition, LLC
	 	 	a Minnesota limited liability company
	 	 	Its: General Partner
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Its: Manager	 	 

2

 

ASSIGNMENT AND ASSUMPTION

          In consideration of the payment by Bayfield Low Income Housing Limited Partnership
(“Assignee”) of Twenty-Two Thousand One Hundred Sixty-one and No/100 ($22,161) Dollars, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Bayfield Acquisition Limited Partnership (“Assignor”) hereby assigns and transfers to Assignee the
following:

All of Assignor’s limited partnership interest under each and every Operating
Partnership Agreement, as amended (as identified on the Exhibit A that is
attached to this Assignment and Assumption — the “Transferred Interests”),
consisting of all of Assignor’s rights, interests, powers, and obligations as the
Additional Limited Partner with respect to such Transferred Interests, and
Assignor’s Accounts Receivable due from such Operating Partnerships with respect
to, and to the extent of, the Transferred Interests, it being intended to be the
same interests assigned by Assignee to Assignor by that Assignment and Assumption
agreement effective as of January 1, 2004.

          Assignee
hereby assumes and agrees to timely and faithfully perform (i) all obligations of
Assignor as the Additional Limited Partner under the respective Operating Partnership agreement,
as amended (as identified on the Exhibit A that is attached to this Assignment and
Assumption), with respect to, and to the extent of, the Transferred Interests arising from and
after January 1, 2004, and (ii) the eight percent (8%) interest obligation still due by Assignee
to ANDERSON COUNTRY ESTATES, L.P. in the amount of, as of January 1, 2004, approximately $10,804 in
the aggregate, which amount is fixed, does not accrue additional interest, and is payable pursuant
to Article 15 (1)(a)(ii) of the Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In
re Bayfield Estates Limited Partnership and Related Cases (Bankruptcy EDNY Chapter 11 Case Nos,
189-92514 through 189-92516, 189-92683, 189-92817 through 189-92823,
189-92838 through 189-92842,
& 189-92955 through 189-92992) (the “Plan”) as a first priority from the proceeds of any Capital
Events (the “8% Interest Obligation”), it being intended to be the same obligations assumed by
Assignor by that Assignment and Assumption agreement effective as of January 1, 2004.

          Assignor and Assignee agree that the remaining outstanding balance of the November Subsequent
Loan Promissory Note as of January 1, 2004 was $41,159, which has continued to accrue interest at
the rate of Five Percent (5.0%) per annum in accordance with the November Subsequent Loan
Promissory Note since January 1, 2004.

[THE
REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

 

     IN
WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption effective as of
January 1, 2005.

	 	 	 	 	 	 	 
	ASSIGNEE	 	BAYFIELD ACQUISITION
LIMITED

PARTNERSHIP, a Minnesota limited partnership 
By;
Bayfield Acquisition LLC 
a Minnesota limited
liability company 
Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	/s/ [ILLEGIBLE]	 	 	 
	 

	 	 	 	 	 
	 	 	Its: Manager	 	 
	 
	 	 	 	 	 	 
	ASSIGNOR	 	BAYFIELD LOW INCOME HOUSING	 	 
	 	 	LIMITED PARTNERSHIP,
 a Delaware limited
partnership 
By: Megan Asset Management,
Inc.,
 a Delaware corporation	 	 
	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 /s/ Paul J. Maddock	 	 
	 

	 	 
	 	 	 
	 
	 	 	Its: President	 	 

2

 

Exhibit A

1. ANDERSON COUNTRY ESTATES, L.P., a Missouri partnership

	 	•	 	Amended and Restated Agreement and Certificate of Limited Partnership dated as
of December 1,1988
	 
	 	•	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	•	 	Amendment Certificate of Limited Partnership filed January 9, 1992

 

 

ASSIGNMENT AND ASSUMPTION

          In consideration of the payment by Bayfield Low Income Housing Limited Partnership
(“Assignee”) of Twenty-Two Thousand One Hundred Sixty-one and No/100 ($22,161) Dollars, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Bayfield Acquisition Limited Partnership (“Assignor”) hereby assigns and transfers to Assignee the
following:

All of Assignor’s limited partnership interest under each and every Operating
Partnership Agreement, as amended (as identified on the Exhibit A that is
attached to this Assignment and Assumption — the “Transferred Interests”),
consisting of all of Assignor’s rights, interests, powers, and obligations as the
Additional Limited Partner with respect to such Transferred Interests, and
Assignor’s Accounts Receivable due from such Operating Partnerships with respect
to, and to the extent of, the Transferred Interests, it being intended to be the
same interests assigned by Assignee to Assignor by that Assignment and Assumption
agreement effective as of January 1, 2004.

          Assignee hereby assumes and agrees to timely and faithfully perform (i) all obligations of
Assignor as the Additional Limited Partner under the respective Operating Partnership agreement,
as amended (as identified on the Exhibit A that is attached to this Assignment and
Assumption), with respect to, and to the extent of, the Transferred Interests arising from and
after January 1, 2004, and (ii) the eight percent (8%) interest obligation still due by Assignee
to ANDERSON COUNTRY ESTATES, L.P. in the amount of, as of January 1, 2004, approximately $10,804
in the aggregate, which amount is fixed, does not accrue additional interest, and is payable
pursuant to Article 15 (l)(a)(ii) of the Joint Plan of Reorganization of 52 Debtors dated May 9,
1990 — In re Bayfield Estates Limited Partnership and Related Cases (Bankruptcy EDNY Chapter 11
Case Nos. 189-92514 through 189-92516, 189-92683, 189-92817 through 189-92823, 189-92838 through
189-92842, & 189-92955 through 189-92992) (the “Plan”) as a first priority from the proceeds of
any Capital Events (the “8% Interest Obligation”), it being intended to be the same obligations
assumed by Assignor by that Assignment and Assumption agreement
effective as of January 1,2004.

          Assignor and Assignee agree that the remaining outstanding balance of the November Subsequent
Loan Promissory Note as of January 1, 2004 was $41,159, which has continued to accrue interest at
the rate of Five Percent (5.0%) per annum in accordance with the November Subsequent Loan
Promissory Note since January 1, 2004.

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

 

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption
effective as of January 1, 2005.

	 	 	 
	ASSIGNEE

	 	BAYFIELD ACQUISITION LIMITED
	 

	 	PARTNERSHIP, a Minnesota limited partnership
	 

	 	By: Bayfield Acquisition, LLC
	 

	 	a Minnesota limited liability company
	 

	 	Its: General Partner

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ [ILLEGIBLE] 	 
	 	Its:	      Manager 	 
	 	 	 	 
	 

	 	 	 
	ASSIGNOR

	 	BAYFIELD LOW INCOME HOUSING
	 

	 	LIMITED PARTNERSHIP,
	 

	 	a Delaware limited partnership
	 

	 	By: Megan Asset Management, Inc.,
	 

	 	a Delaware corporation
	 

	 	Its: General Partner

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ Paul J. Maddock
 	 
	 	Its: 	Pres.	 
	 	 	 	 

2

 

	 	 	 	 	 

Exhibit A

1. ANDERSON COUNTRY ESTATES, L.P., a Missouri partnership

	 	•	 	Amended and Restated Agreement and Certificate of Limited Partnership dated as
of December 1,1988
	 
	 	•	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	•	 	Amendment Certificate of Limited Partnership filed January 9, 1992

 

 

ASSIGNMENT AND ASSUMPTION

          In consideration of the payment by Bayfield Low Income Housing Limited Partnership
(“Assignee”) of Twenty-Two Thousand One Hundred Sixty-one and No/100 ($22,161) Dollars, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Bayfield Acquisition Limited Partnership (“Assignor”) hereby assigns and transfers to Assignee the
following:

All of Assignor’s limited partnership interest under each and every Operating
Partnership Agreement, as amended (as identified on the Exhibit A that is
attached to this Assignment and Assumption, — the “Transferred Interests”),
consisting of all of Assignor’s rights, interests, powers, and obligations as the
Additional Limited Partner with respect to such Transferred Interests, and
Assignor’s Accounts Receivable due from such Operating Partnerships with respect
to, and to the extent of, the Transferred Interests, it being intended to be the
same interests assigned by Assignee to Assignor by that Assignment and Assumption
agreement effective as of January 1, 2004.

          Assignee hereby assumes and agrees to timely and faithfully perform (i) all obligations of
Assignor as the Additional Limited Partner under the respective Operating Partnership agreement,
as amended (as identified on the Exhibit A that is attached to this Assignment and
Assumption), with respect to, and to the extent of, the Transferred Interests arising from and
after January 1,2004, and (ii) the eight percent (8%) interest obligation still due by Assignee to
ANDERSON COUNTRY ESTATES, L.P. in the amount of, as of January 1, 2004, approximately $10,804 in
the aggregate, which amount is fixed, does not accrue additional interest, and is payable pursuant
to Article 15 (l)(a)(ii) of the Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In
re Bayfield Estates Limited Partnership and Related Cases (Bankruptcy EDNY Chapter 11 Case Nos.
189-92514 through 189-92516, 189-92683, 189-92817 through 189-92823, 189-92838 through 189-92842,
& 189-92955 through 189-92992) (the “Plan”) as a first priority from the proceeds of any Capital
Events (the “8% Interest Obligation”), it being intended to be the same obligations assumed by
Assignor by that Assignment and Assumption agreement effective as of January 1, 2004.

          Assignor and Assignee agree that the remaining outstanding balance of the November
Subsequent Loan Promissory Note as of January 1, 2004 was $41,159, which has continued to accrue
interest at the rate of Five Percent (5.0%) per annum in accordance with the November Subsequent
Loan Promissory Note since January 1, 2004.

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

 

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption
effective as of January 1, 2005.

	 	 	 
	ASSIGNEE

	 	BAYFIELD ACQUISITION LIMITED
	 

	 	PARTNERSHIP, a Minnesota limited partnership
	 

	 	By: Bayfield Acquisition, LLC
	 

	 	a Minnesota limited liability company
	 

	 	Its: General Partner

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
[ILLEGIBLE] 	 
	 	Its: 	 Manager 	 
	 	 	 	 
	 

	 	 	 
	ASSIGNOR

	 	BAYFIELD LOW INCOME HOUSING
	 

	 	LIMITED PARTNERSHIP, 
	 

	 	a Delaware limited partnership 
	 

	 	By: Megan Asset Management, Inc.,
	 

	 	 a Delaware corporation
	 

	 	Its: General Partner

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Paul J. Maddock 	 
	 	Its:	 Pres.	 
	 	 	 	 

2

 

	 	 	 	 	 

Exhibit A

1. ANDERSON COUNTRY ESTATES, L.P., a Missouri partnership

	 	•	 	Amended and Restated Agreement and Certificate of Limited Partnership dated
as of December 1, 1988
	 
	 	•	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	•	 	Amendment Certificate of Limited Partnership filed January 9, 1992

 

 

ASSIGNMENT AND ASSUMPTION

          In consideration of $10,874 in hand paid from
Assignee and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bayfield Low Income Housing Limited Partnership (“Assignor”) hereby:

	 	1)	 	assigns and transfers to Dominium Acquisition Limited Partnership (“Assignee”) the
following:
	 
	 	 	 	Forty-nine and one-half percentage (49.5% points) of all of Assignor’s rights, interests,
powers and obligations as the Limited or Investor Partner under the Partnership Agreement,
as amended (the “Partnership Agreement”), of OAKWOOD
APARTMENTS, L. P., a Missouri
limited partnership (the “Partnership”) in which Assignor owns an interest, including
forty-nine and one-half percentage points (49.5% points) of Assignor’s Accounts Receivable
due from the Partnership, excluding any Annual Distributions due Assignor from the
Partnership;

and

	 	2)	 	as grantee of all of Continental Construction Management Corporation’s
(“Continental”) rights, title and interests in and to any and all amounts payable to
Continental under the Plan (“Continental Interests”) pursuant to that Bill of Sale,
Assignment and Power of Attorney, granted it in December, 1991, Assignor does hereby
release Assignee from and assume and indemnify and hold Assignee harmless from the payment
of One Hundred percentage (100% points) of any Continental Interests with respect to the
Partnership, including, but not limited to those Continental Interests to which Megan
Asset Management, Inc. (“Megan”) is or may become entitled with respect to the Partnership
and agrees to timely pay the same to Megan.

Assignee hereby assumes and agrees to timely and faithfully perform forty-nine and one-half
percentage (49.5% points) of all obligations of Assignor:

	 	1)	 	as the Limited or Investor Partner under the Partnership Agreement arising from and after
the effective date hereof, except the Continental Interests.
	 
	 	2)	 	with respect to the eight percent (8%) interest in the amount of approximately Ten Thousand
Eight Hundred Four and No/100 ($10,804) Dollars still due by Assignor to the Partnership
payable pursuant to Article 15 (1)(a)(ii) of the Plan as a first priority from the proceeds
of any

 

 

	 	 	 	Capital Events.

          IN WITNESS WHEREOF, the undersigned have executed
this Assignment and Assumption effective as of April 10, 2004.

	 	 	 
	 

	 	BAYFIELD LOW INCOME HOUSING
	ASSIGNOR

	 	LIMITED PARTNERSHIP,
	 

	 	a Delaware limited partnership
	 

	 	By: Megan Asset Management, Inc.,
	 

	 	a Delaware corporation

Its: General Partner

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 
	 

	 	BAYFIELD ACQUISITION LIMITED
	ASSIGNEE

	 	PARTNERSHIP, a Minnesota limited partnership
	 

	 	By: Bayfield Acquisition, LLC
	 

	 	a Minnesota limited liability company
	 

	 	Its: General Partner

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:
	 	Manager	 	 

2

 

ASSIGNMENT AND ASSUMPTION

          In consideration of $2,923 in hand paid from
Assignee and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bayfield Low Income Housing Limited Partnership (“Assignor”) hereby:

	 	1)	 	assigns and transfers to Dominium Acquisition Limited Partnership (“Assignee”) the
following:
	 
	 	 	 	Forty-nine and one-half percentage (49.5% points) of all of Assignor’s rights, interests,
powers and obligations as the Limited or Investor Partner under the Partnership Agreement,
as amended (the “Partnership Agreement”), of PERRY APARTMENTS, L.P. , a Missouri
limited partnership (the “Partnership”) in which Assignor owns an interest, including
forty-nine and one-half percentage points (49.5% points) of Assignor’s Accounts Receivable
due from the Partnership, excluding any Annual Distributions due Assignor from the
Partnership;

and

	 	2)	 	as grantee of all of Continental Construction Management Corporation’s
(“Continental”) rights, title and interests in and to any and all amounts payable to
Continental under the Plan (“Continental Interests”) pursuant to that Bill of Sale,
Assignment and Power of Attorney, granted it in December, 1991, Assignor does hereby
release Assignee from and assume and indemnify and hold Assignee harmless from the payment
of One Hundred percentage (100% points) of any Continental Interests with respect to the
Partnership, including, but not limited to those Continental Interests to which Megan
Asset Management, Inc. (“Megan”) is or may become entitled with respect to the Partnership
and agrees to timely pay the same to Megan.

Assignee hereby assumes and agrees to timely and faithfully perform forty-nine and one-half
percentage (49.5% points) of all obligations of Assignor:

	 	1)	 	as the Limited or Investor Partner under the Partnership Agreement arising from and after the
effective date hereof, except the Continental Interests.
	 
	 	2)	 	with respect to the eight percent (8%) interest in the amount of approximately Two Thousand
Five Hundred Seventy-eight and No/100 ($2,578) Dollars still due by Assignor to the
Partnership payable pursuant to Article 15 (1)(a)(ii) of the Plan as a first priority from
the

 

 

	 	 	 	proceeds of any Capital Events.

          IN WITNESS WHEREOF, the undersigned have executed
this Assignment and Assumption effective as of April 10, 2004.

	 	 	 
	 

	 	BAYFIELD LOW INCOME HOUSING
	ASSIGNOR

	 	LIMITED PARTNERSHIP,
	 

	 	a Delaware limited partnership
	 

	 	By: Megan Asset Management, Inc.,
	 

	 	a Delaware corporation

Its: General Partner

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 
	 

	 	BAYFIELD ACQUISITION LIMITED
	ASSIGNEE

	 	PARTNERSHIP, a Minnesota limited partnership
	 

	 	By: Bayfield Acquisition, LLC
	 

	 	a Minnesota limited liability company
	 

	 	Its: General Partner

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:
	 	Manager	 	 

2

 

EXHIBIT P

POWER OF ATTORNEY

THE UNDERSIGNED, having entered into that certain PURCHASE AGREEMENT made and entered into as
of the 27th day of August, 2003, by and between Bayfield Low Income Housing Limited Partnership, as
Seller (the “Investor Partner”), and Bayfield Acquisition Limited Partnership (“BALP”), the
Additional Limited Partner as Buyer (the “Purchase Agreement”), for the acquisition of
[Forty-nine and one-half percentage (49.5% points)or thirty-three percentage (33% points)or
Sixteen and one-half percentage (16.5% points) or One Hundred
percentage (100% points)— whichever
is applicable] of the Investor Partner’s rights, interests, powers and obligations as the
Limited or Investor Partner under that certain AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP OF [Operating Partnership Name], effective as of the                     day of
                    , 198___, as amended, (the “Operating Partnership Agreement”) and desiring to be
admitted to the Operating Partnership Agreement and Operating Partnership as an Additional Limited
Partner, the Undersigned hereby agrees to bound by the terms and provisions of the Operating
Partnership Agreement and hereby joins in the execution of the Operating Partnership Agreement and
authorizes this document to be attached thereto.

The Undersigned hereby irrevocably constitutes and appoints the general partner of the Operating
Partnership (the “General Partner”) as its true and lawful attorney-in-fact, with full power of
substitution and delegation, for it and in its name, place and stead and for its use and benefit,
to execute, acknowledge, certify, swear to, file and record (i) the Partnership Agreement and all
amendments thereto, (ii) any other certificates and limited partnership required by law
and all amendments thereto, (iii) any other certificates or instruments which may be required to be
filed by the Partnership under the laws of any state or by any Governmental Agency, or which the
General Partner may deem appropriate to file and (iv) any documents which may be required to effect
the continuation of the Partnership, the admission of the Undersigned as an additional or
substitute Limited Partner.

This Power of Attorney shall (i) be deemed coupled with an interests, (ii) be irrevocable and shall
survive the dissolution of the Undersigned and (iii) survive the delivery of any assignment by the
Undersigned of all or any part of the Undersigned’s Interest in the Partnership, except that where
the assignee thereof has been admitted to the Partnership as a substituted Limited Partner, this
Power of Attorney shall survive the delivery of such assignment for the sole purpose of enabling
the General Partner to execute, acknowledge, certify, swear to, file and record any instrument(s)
necessary to effect such substitution.

IN WITNESS WHEREOF, the Undersigned hereby executes this document both individually

 

and as a Limited Partner of the Partnership as of the ___day of ___, 2003.

	 	 	 
	 

	 	BAYFIELD ACQUISITION LIMITED
	 

	 	PARTNERSHIP
	 

	 	Additional Limited Partner
	 
Witness

	 	a Minnesota limited partnership
	

	 	By: Bayfield Acquisition, LLC
	 

	 	a Minnesota limited liability company
	 

	 	Its: General Partner
	 
	 	 
	 

	 	By:                                                             
	 
	 

	 	     Its:   Manager

2

 

ASSIGNMENT AND ASSUMPTION

          In consideration of the agreement by Bayfield Acquisition Limited Partnership (“Assignee”) to
treat this transfer as a partial payment of the outstanding indebtedness that Bayfield Low Income
Housing Limited Partnership (“Assignor”) owes to Assignee pursuant to (i) the Promissory Note dated
April 16, 2003 in the original principal amount of $116,130 that Assignor gave to Dominium
Development & Acquisition, LLC (“DDA”) and that DDA assigned to Assignee and (ii) the Promissory
Note dated July 18, 2003 in the original principal amount of $46,335 that Assignor gave to DDA and
that DDA assigned to Assignee (collectively, the “Promissory Notes”), and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor hereby assigns
and transfers to Assignee the following:

Forty-nine
and one-half percentage points (49.5% points) of Assignor’s limited
partnership interest under each, and every Operating Partnership Agreement, as
amended (as identified on the Exhibit A that is attached to this Assignment
and Assumption — the “Transferred Interests”), consisting of all of Assignor’s
rights, interests, powers, and obligations as the Limited or Investor Partner with
respect to such Transferred Interests, and Assignor’s Accounts Receivable due from
such Operating Partnerships with respect to, and to the extent of, the Transferred
Interests, excluding any Annual Distributions due Assignor from any such Operating
Limited Partnership.

          Assignee
hereby assumes and agrees to timely and faithfully perform all obligations of
Assignor as the limited or Investor Partner under the respective Operating Partnerships’
agreements, as amended (as identified on the Exhibit A that is attached to this Assignment
and Assumption), with respect to, and to the extent of, the Transferred Interests arising from and
after January 1, 2004, the effective date hereof. Assignee’s assumption does not include, and shall
not be understood or interpreted to include, the assumption of any obligation that Assignor may
have under any of (i) the Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In re
Bayfield Estates Limited Partnership and Related Cases
(Bankruptcy EDNY Chapter 11 Case Nos.
189-92514 through 189-92516, 189-92683, 189-92817 through 189-92823,
& 189-92955 through 189-92992) (the “Plan”), (ii) that certain letter settlement agreement dated
December 4, 1991 from Assignor and addressed to First American Holdings, Inc.; (iii) Amended and
Restated Management Agreement dated as of July 10, 1990 between Assignor and Megan Asset Management,
Inc.; (iv) any amendments of, restatements of, or successors to any of the documents that are
listed in the preceding clauses (i), (ii), or (iii). Without limiting the preceding sentence, each
of Assignor and Megan Asset Management, Inc. (“Megan”) specifically acknowledges and agrees that
neither Assignee nor any of the Operating Limited Partnerships that are identified on the
Exhibit A has any obligation with respect to the rights that Continental Construction
Management Corporation originally had under the Plan and, at least as to some of which, Borrower
and Megan succeeded.

          Assignor
and Assignee agree that (i) the outstanding aggregate balance of
the Promissory Notes
as of January 1, 2004 is $167,734, (ii) the amount of the partial payment that

 

 

Assignor is deemed to be making by assigning the Transferred Interests is $83,028, and
(iii) the remaining outstanding aggregate balance of the Promissory Notes is $84,706, which will
continue to accrue interest at the rate of Five Percent (5.0%) per annum in accordance with the
Promissory Notes.

          IN WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption effective as
of January 1, 2004.

	 	 	 	 	 
	ASSIGNOR	 	BAYFIELD LOW INCOME HOUSING
	 	 	LIMITED PARTNERSHIP,
	 	 	a Delaware limited partnership
	 

	 	By:
	 	Megan Asset Management, Inc.,
	 

	 	 	 	a Delaware corporation
	 

	 	Its:
	 	General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	Its:
	 	President
	 
	 	 	 	 
	ASSIGNEE	 	BAYFIELD ACQUISITION LIMITED
	 	 	PARTNERSHIP, a Minnesota limited partnership
	 

	 	By:
	 	Bayfield Acquisition, LLC
	 

	 	 	 	a Minnesota limited liability company
	 

	 	Its:
	 	General Partner
	 
	 	 	 	 
	 

	 	By:
	 	[ILLEGIBLE]
	 

	 	 	 	 
	 

	 	Its:
	 	Manager

	 
	ACKNOWLEDGED AND AGREED AS TO THE LAST SENTENCE OF THE SECOND PARAGRAPH:

	 	 	 	 	 
	 	 	MEGAN ASSET MANAGEMENT, INC.,
	 	 	a Delaware corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	Its:
	 	President

2

 

Exhibit A 

	1.	 	Blanchard Seniors Apartments, a Louisiana partnership in commendam

	 	*	 	Amended and Restated Agreement and Certificate of Limited Partnership dated as
of November 1, 1987
	 
	 	*	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	*	 	First Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated September 21, 2000
	 
	 	*	 	Amendment to Articles of Partnership dated June 4, 2001

	2.	 	Bunkle Seniors Apartments, a Louisiana partnership in commendam

	 	*	 	Amended and Restated Agreement and Certificate of Limited Partnership dated a
of November 1, 1987
	 
	 	*	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	*	 	First Amendment to Amended and Restated Agreement and
Certificate of Limited
Partnership dated September 20, 2000
	 
	 	*	 	Amendment to Articles of Partnership dated June 4, 2001

	3.	 	Cottonwood Seniors Apartments, a Louisiana partnership in commendam Amended and Restated

	 	*	 	Agreement and Certificate of Limited Partnership dated as of
August 1, 1988
	 
	 	*	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	*	 	First Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated September 20, 2000
	 
	 	*	 	Amendment to Articles of Partnership dated June 4, 2001

	4.	 	Lockport Seniors Apartments (a/k/a Donaldsonville Seniors), a Louisiana partnership in
commendam

	 	*	 	Amended and Restated Agreement and Certificate of Limited Partnership dated as
of June 1, 1988
	 
	 	*	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	*	 	First Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated September 18, 2000
	 
	 	*	 	Amendment to Articles of Partnership dated June 4, 2001

	5.	 	Many Seniors Apartments, a Louisiana partnership in commendam

	 	*	 	Amended and Restated Agreement and Certificate of Limited Partnership dated as
of August 1, 1988
	 
	 	*	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated as of July 1, 1990
	 
	 	*	 	Amendment to Articles of Partnership dated June 4, 2001
	 
	 	*	 	Amendment to Amended and Restated Agreement and Certificate of Limited
Partnership dated October 2, 2001

 

 

FACSIMILE

	 	 	 	 	 	 	 
	TO:

	 	Paul Markwardt
	 	FAX#:
	 	(612) 604-6800
	 
	 	 	 	 	 	 
	FROM:

	 	Sandy for Tom McAllister
	 	VOICE:
	 	(763) 354-5605
	 
	 	 	 	 	 	 
	DATE:

	 	January 24, 2005
	 	FAX:
	 	(763) 354-5650

Number Of Pages Being Transmitted — Including This Cover Sheet: 9

COMMENTS:

Re: Bayfield

Attached are the executed Collateral Assignment and Assumption Agreement, & Assignment and
Assumption

Please call Tom at (763) 354-5604 if you have any questions, Thank you.

Sandy

                    
Sent Via Federal Express

                    
 Sent Via UPS

                    
Sent Via Courier Service

                    
Sent Via U. S. Postal Service

                    
Other

If Fax Is Not Received Properly, Please Call (612) 354-5500

NOTICE— CONFIDENTIAL INFORMATION

The
information in this fax communication is privileged and strictly confidential. It is
intended solely for the use of the individual of entity named above. If the reader of this message
is not the intended recipient, or the employee or agent responsible
to deliver it to the intended
recipient, any dissemination, distribution, copying, or other use of the information contained in
this communication is strictly prohibited. If you have received this communication in error,
please first notify the sender immediately at the above telephone number of your erroneous receipt
and then return this fax communication at once to the sender at the
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Postal Service or by the method of delivery specified by the sender.

Minneapolis • Milwaukee • Chicago • Atlanta •Miami

2355 Polaris Lane North, Suite 100, Minneapolis, MN 55447 Phone (612) 354-5500 Fax (612) 354-5650

Development • Construction
• Management

 

 

COLLATERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS
AGREEMENT, effective as of the 1st day of January 2004, by BAYFIELD LOW INCOME HOUSING
LIMITED PARTNERSHIP, a Delaware limited partnership, having an office address c/o Megan Asset
Management, Inc., 1424 W. Century Avenue, #102, Bismarck, N.D. 58503 (referred to herein as
“Borrower”) and Bayfield Acquisition Limited Partnership, a Minnesota limited partnership, having
an office address of 2355 Polaris Lane N, Suite 100, Minneapolis, MN 55447 (referred to herein as
“Assignee”).

     WHEREAS, Borrower and DDA (as hereinafter defined) entered into the following transactions:

	A.	 	THE LOAN
	 
	 	 	Pursuant to that certain Loan Agreement dated April 16, 2003 by and between Borrower
and Dominium Development and Acquisition, LLC, as Lender
(“DDA”), as amended by that certain
First Amendment to Loan Agreement dated as of July 1, 2003 by and between the Borrower and DDA
(collectively the “Loan Agreement”), Lender agreed to and loaned (i) $162,465 to Borrower
evidenced by the Promissory Note dated April 16, 2003 in the original principal amount of
$116,130 that Borrower gave to DDA and that DDA assigned to Assignee and (ii) $46,335 to
Borrower (collectively the “Loan”) evidenced by the Promissory Note dated July 18, 2003 in
the original principal amount of $46,335 that Borrower gave to DDA and that DDA assigned to
Assignee (collectively, the “Loan Promissory Notes”).
	 
	 	 	To secure the Loan, Borrower executed and delivered to Lender a Security Agreement dated
April 16, 2003, granting Lender a security interest to Borrower’s limited partnership
interests (the “Partnership Interests”) in BLANCHARD SENIORS APARTMENTS, BUNKIE SENIORS
APARTMENTS, COTTONWOOD SENIORS APARTMENTS, LOCKPORT SENIORS APARTMENTS (AKA DONALDSONVILLE
SENIORS) and MANY SENIORS APARTMENTS, each a Louisiana limited partnership (the “Loan
Collateral Partnerships”).
	 
	B.	 	THE SUBSEQUENT LOAN
	 
	 	 	Pursuant to that certain SUBSEQUENT LOAN AGREEMENT, made the 19th day of September
2003, by Borrower and DDA, DDA agreed to and made a further loan to Borrower in the amount
of $120,000 (the “September Subsequent Loan”) evidenced by

the Promissory Note dated September_____, 2003 in the original principal amount of
$120,000 that Borrower gave to DDA and that DDA assigned to Assignee (the “September
Subsequent Loan Promissory Note”) and agreed to make further loans each in the amount of
$60,000 on the tenth (10th) day of each of October and November, 2003 (the “October
Subsequent Loan” and “November Subsequent Loan” respectively).

 

 

	 	 	To secure the September Subsequent Loan, Borrower executed and delivered to Lender a
Subsequent Loan Security Agreement dated September 18, 2003, granting Lender a security
interest in the Borrower’s Partnership Interests in COUSHATTA SENIORS APARTMENTS, A
LOUISIANA PARTNERSHIP IN COMMENDAM, SOUTHERN APARTMENTS, A LOUISIANA PARTNERSHIP IN
COMMENDAM, OAKDALE SENIOR APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM, each a
Louisiana limited partnership and JOAQUIN APARTMENTS, LTD. and PECANWOOD APARTMENTS III,
LTD., each a Texas limited partnership (the “Subsequent Loan Collateral Partnerships”).
	 
	C.	 	THE FIRST AMENDMENT TO SUBSEOUENT LOAN
	 
	 	 	Pursuant to that certain FIRST AMENDMENT TO SUBSEQUENT LOAN AGREEMENT, made the 19th
day of September 2003, by Borrower and DDA, DDA agreed to and
made a further loan to
Borrower in the amount of $60,000 (the “October Subsequent Loan”) evidenced by the
Promissory Note dated October 17, 2003 in the original principal amount of $60,000 that
Borrower gave to DDA and that DDA assigned to Assignee (the “October Subsequent Loan
Promissory Note”).
	 
	 	 	To secure the October Subsequent Loan, Borrower executed and
delivered to Lender a Second
Subsequent Loan Security Agreement dated November 17, 2003, granting Lender a security
interest in the Borrower’s Partnership Interests in OAKWOOD APARTMENTS, LTD. and PERRY
APARTMENTS, L.P., each a Missouri limited partnership (the “Missouri Collateral
Partnerships”).
	 
	D.	 	THE SECOND AMENDMENT TO SUBSEQUENT LOAN
	 
	 	 	Pursuant to that certain SECOND AMENDMENT TO SUBSEQUENT LOAN AGREEMENT, made the
10th day of November 2003, by Borrower and DDA, DDA agreed to and made a further loan to
Borrower in the amount of $60,000 (the “November Subsequent Loan”) evidenced by the
Promissory Note dated November 10, 2003 in the original principal amount of $60,000 that
Borrower gave to DDA and that DDA assigned to Assignee (the “November Subsequent Loan
Promissory Note”).
	 
	 	 	To secure the November Subsequent Loan, Borrower executed and delivered to Lender a Third
Subsequent Loan Security Agreement dated November 10,2003, granting Lender a security
interest in the Borrower’s Partnership Interests in AFM RRH, LTD., a Florida limited
partnership and ANDERSON COUNTRY ESTATES, L.P., a Missouri limited partnership (the “Third
Subsequent Loan Collateral Partnerships”).

     WHEREAS, Assignee has elected to accept Borrower’s Partnership Interests in the Loan
Collateral Partnerships, the Subsequent Loan Collateral Partnerships, the Missouri Collateral
Partnerships and the Third Subsequent Loan Collateral Partnerships in repayment of and in
satisfaction of the Loan Promissory Notes, the September Subsequent Loan Promissory Note, the
October Subsequent Loan Promissory Note and the November Subsequent Loan Promissory Note
(collectively the “Indebtedness”), such that it will not cause a technical termination of any of
the Collateral Partnerships.

2

 

     NOW,
THEREFORE, for food and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and the mutual covenants herein, contained, the parties mutually agree as
follows:

1) Pursuant to the election of Assignee to accept part of the Collateral Partnerships as a partial
payment of the outstanding Indebtedness that Borrower owes to
Assignee:

(a) Effective as of January 1, 2004, Borrower will assign and transfer to Assignee
forty-nine and one-half percentage points (49.5% points) of Its interests in each of
the Collateral Partnership, consisting of all of Assignor’s rights, interests,
powers, and obligations as the Limited or Investor Partner with respect to such
Transferred Interests, and Borrower’s Accounts Receivable due from such Collateral
Partnerships with respect to, and to the extent of, the Transferred Interests,
excluding any Annual Distributions due Borrower from any such Collateral Partnerships
as long as Borrower owns any interest therein and must have any asset management
services provided for it in connection therewith.

(b) Effective as of January 1,2004, Assignee will assume and agree to timely and
faithfully perform (i) all obligations of Borrower as the Limited or Investor Partner
under the respective Collateral Partnerships agreements, as amended
(as identified on the Exhibit A that is attached to this Assignment), and (ii) the eight
percent (8%) interest obligation still due by Borrower to the Missouri Collateral
Partnerships and Anderson Country Estates, L.P. in the amount of, as of January 1,
2004, approximately $24,256 in the aggregate as to all three partnerships, which
amount is fixed, does not accrue additional interest, and is payable pursuant to
Article 15(l)(a)(ii) of the Plan as a first priority from the proceeds of any Capital
Events (the “8% Interest Obligation”) and, as to each of (i) and (ii), with respect
to, and to the extent of, the Transferred Interests arising, except as to the 8%
Interest Obligation, from and after January 1, 2004, the
effective date hereof.
Assignee’s assumption does not include, and shall not be understood or interpreted to
include, the assumption of any obligation that Borrower may have under any of (i) the
Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 — In re Bayfield Estates
Limited Partnership and Related Cases (Bankruptcy EDNY Chapter 11 Case Nos. 189-92514
through 189-92516,189- 92683, 189-92814 through 189-92823, 189-92838 through
189-92842, & 189- 92955 through 189-92992) (the “Plan”), except 8% Interest
Obligation; (ii) that certain letter settlement agreement dated December 4,1991 from
Borrower and addressed to First American Holdings, Inc.; (iii) Amended and Restated
Management Agreement dated as of July 10, 1990 between Borrower and Megan Asset
Management, Inc.; and (iv) any amendments of, restatements, of or successors to any of
the documents that are listed in the preceding clauses (i),
(ii) or (iii). Without
limiting the preceding sentence, each of Borrower and Megan Asset Management, Inc.
(“Megan”) will specifically acknowledge and agree that neither Assignee nor any of
the Collateral Partnerships that are identified on the Exhibit A has any
obligation with respect to the rights that Continental Construction Management
Corporation originally had under the Plan and, at least es to some of which,
Borrower and Megan succeeded.

3

 

2) Pursuant to the election of Assignee to accept the balance of Borrower’s Partnership Interest in
the Collateral Partnerships as payment of the balance of principal and interest on the outstanding
Indebtedness that Borrower owes to Assignee:

(a) Borrower will assign and transfer to Assignee one hundred percentage points
(100% points) of its remaining interests in each of the Collateral Partnership twelve
(12) months and one (1) day from the execution of this Agreement, including any
Annual Distributions due Borrower from any such Collateral Partnerships, with all
Tax Items (as defined in each Collateral Partnership Agreement) for the year 2005
relating to the Borrower’s remaining interests in the Collateral Partnerships
allocated to Assignor; and

(b) Assignee will assume and agree to timely and faithfully perform all obligations
of Borrower as the Limited or Investor Partner under the respective Collateral
Partnerships’ agreements, as amended (as identified on the Exhibit A that is
attached to this Assignment), with respect to, and to the extent of, the Transferred
Interests arising from and after twelve (12) months and one (1) day from the
execution of this Agreement. Assignee’s assumption does not include, and shall not be
understood or interpreted to include, the assumption of any obligation that Borrower
may have under any of (i) the Plan, except the 8% Interest Obligation; (ii) that
certain letter settlement agreement dated December 4, 1991 from Borrower and
addressed to First American Holdings, Inc., (iii) Amended and Restated Management
Agreement dated as of July 10, 1990 between Borrower and Megan Asset Management, Inc.,
(iv) any amendments of, restatements of, or successors to any of the documents that
an listed in the preceding clauses (i), (ii), or (iii). Without limiting the
preceding sentence, each of Borrower and Megan Asset Management, Inc. will
specifically acknowledge and agree that neither Assignee nor any of the Collateral
Partnerships that are identified on the Exhibit A has any obligation with
respect to the rights that Continental Construction Management Corporation originally
had under the Plan.

3) This Agreement and the exhibit attached embodies the entire agreement between the
parties with relation to the transactions contemplated hereby, and there have been and are
no covenants, agreements, representations, warranties or restrictions between the parties
with regard thereto.

4) The undersigned agree that this instrument may be signed in any number of
counterparts, each of which will constitute an original, and that a facsimile copy of any
signature of any party will be deemed as enforceable and effective as an original
signature. All such counterparts together will constitute one and the
same instrument.

4

 

     IN
WITNESS WHEREOF, the undersigned have executed this AGREEMENT effective as of the above
written-date.

	 	 	 	 	 
	BORROWER	 	BAYFIELD LOW INCOME HOUSING
	 	 	LIMITED PARTNERSHIP,
	 	 	a Delaware limited partnership
	 

	 	By:
	 	Megan Asset Management, Inc.,
	 

	 	 	 	a Delaware corporation
	 

	 	Its:
	 	General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Maddock
	 

	 	 	 	 
	 

	 	Its:
	 	Pres.
	 
	 	 	 	 
	ASSIGNEE	 	BAYFIELD ACQUISITION LIMITED
	 	 	PARTNERSHIP, a Minnesota limited partnership
	 

	 	By:
	 	Bayfield Acquisition, LLC
	 

	 	 	 	a Minnesota limited liability company
	 

	 	Its:
	 	General Partner
	 
	 	 	 	 
	 

	 	By:
	 	/s/ [ILLEGIBLE]
	 

	 	 	 	 
	 

	 	Its:
	 	Manager

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]