Document:

Exhibit 4.10 - Multifamily Note - Highland Pointe

    
      

    

    Freddie
      Mac Loan Number 940977397

    

    

      MULTIFAMILY
        NOTE

      MULTISTATE
        - FIXED TO FLOAT

      (REVISION
        DATE 03-30-2006)

    

    
      	
              US
                $13,000,000.00

            	
              Effective
                Date: as of January 31, 2007

            

    

    

    

    FOR
      VALUE
      RECEIVED, the undersigned (together with such party’s or parties’ successors and
      assigns, “Borrower”),
      jointly and severally (if more than one) promises to pay to the order of
      NorthMarq Capital, Inc., a Minnesota corporation, the principal sum of Thirteen
      Million and No/100 Dollars (US $13,000,000.00), with interest on the unpaid
      principal balance, as hereinafter provided.

    

    1. Defined
      Terms. 

    

    (a) As
      used
      in this Note: 

    

    “Adjustable
      Interest Rate”
means
      the variable annual interest rate calculated for each Interest Adjustment Period
      so as to equal the Index Rate for such Interest Adjustment Period (truncated
      at
      the fifth (5th)
      decimal
      place if necessary) plus the Margin. 

     

    “Amortization
      Period”
means
      a
      period of 360 full consecutive calendar months.

     

    “Base
      Recourse”
      means a
      portion
      of the Indebtedness equal to zero percent (0%) of the original principal balance
      of this Note.

    

    “Business
      Day”
means
      any day other than a Saturday, a Sunday or any other day on which Lender or
      the
      national banking associations are not open for business.

    

    “Default
      Rate”
means
      (i) during the Fixed Rate Period, an annual interest rate equal to four (4)
      percentage points above the Fixed Interest Rate; and (ii) during the Extension
      Period, a variable annual interest rate equal to four (4) percentage points
      above the Adjustable Interest Rate in effect from time to time. However, at
      no
      time will the Default Rate exceed the Maximum Interest Rate.

    

    “Extended
      Maturity Date”
means,
      if the Extension Period becomes effective pursuant to this Note, the earlier
      of
      (i) February 1, 2018, and (ii) the date on which the unpaid principal balance
      of
      this Note becomes due and payable by acceleration or otherwise pursuant to
      the
      Loan Documents or the exercise by Lender of any right or remedy thereunder.
      

    
      
        
        

      

      
        PAGE
          1

        
          

        

      

      
        
        

      

    

    “Extension
      Period”
means
      the twelve (12) consecutive calendar months period commencing on the Scheduled
      Initial Maturity Date.

    

    “Fixed
      Interest Rate”
means
      the annual interest rate of five and sixty seven hundredths percent (5.67%).
      

    

    “Fixed
      Rate Period”
means
      the period beginning on the date of this Note and
      continuing through January 31, 2017. 

    

    “Index
      Rate”
means,
      for any Interest Adjustment Period, the Reference Billâ
      Index
      Rate for such Interest Adjustment Period. 

     

    “Initial
      Maturity Date”
      means the
      earlier of (i)
      February 1, 2017 (the “Scheduled
      Initial Maturity Date”),
      and
      (ii) the date on which the unpaid principal balance of this Note becomes due
      and
      payable by acceleration or otherwise pursuant to the Loan Documents or the
      exercise by Lender of any right or remedy thereunder. 

    

    “Installment
      Due Date”
means,
      for any monthly installment of interest only or principal and interest, the
      date
      on which such monthly installment is due and payable pursuant to Section 3
      of
      this Note. The “First
      Installment Due Date”
under
      this Note is March 1, 2007. 

     

    “Interest
      Adjustment Period”
means
      each successive one calendar
      month period during the Extension Period and until the entire Indebtedness
      is
      paid in full.

    

    “Lender”
means
      the holder from time to time of this Note.

    

    “LIBOR
      Index”
means
      the British Bankers Association’s (BBA) one (1) month LIBOR Rate for United
      States Dollar deposits, as displayed on the LIBOR Index Page used to establish
      the LIBOR Index Rate. 

    

    “LIBOR
      Index Rate”
means,
      for any Interest Adjustment Period after the first Interest Adjustment Period,
      the BBA’s LIBOR Rate for the LIBOR Index released by the BBA most recently
      preceding the first day of such Interest Adjustment Period, as such LIBOR Rate
      is displayed on the LIBOR Index Page. The LIBOR Index Rate for the first
      Interest Adjustment Period means the British Bankers Association’s (BBA) LIBOR
      Rate for the LIBOR Index released by the BBA most recently preceding the first
      day of the month in which the first Interest Adjustment Period begins, as such
      LIBOR Rate is displayed on the LIBOR Index Page. “LIBOR
      Index Page”
is
      the
      Bloomberg L.P., page “BBAM”, or such other page for the LIBOR Index as may
      replace page BBAM on that service, or at the option of Lender (i) the applicable
      page for the LIBOR Index on another

    
      
        
        

      

      
        PAGE
          2

        
          

        

      

      
        
        

      

    

    service
      which electronically transmits or displays BBA LIBOR Rates, or (ii) any
      publication of LIBOR rates available from the BBA. In the event the BBA ceases
      to set or publish a LIBOR rate/interest settlement rate for the LIBOR Index,
      Lender will designate an alternative index, and such alternative index shall
      constitute the LIBOR Index Page.

    

    “Loan”
means
      the loan evidenced by this Note.

    

    
      	 	 	
              “Margin”
                means two and one-half (2.5) percentage points (250 basis
                points).

            

    

    

    “Maturity
      Date”
means
      the Extended Maturity Date unless pursuant to Section 3(e) of this Note the
      Extension Period does not or cannot become effective, in which case the Maturity
      Date means the Initial Maturity Date. 

    

    “Maximum
      Interest Rate”
means
      the rate of interest that results in the maximum amount of interest allowed
      by
      applicable law. 

    

    “Prepayment
      Premium Period”
means
      the period during which, if a prepayment of principal occurs, a prepayment
      premium will be payable by Borrower to Lender. The Prepayment Premium Period
      is
      the period from and including the date of this Note until but not including
      the
      first day of the Window Period. For this Note, the Prepayment Premium Period
      equals the Yield Maintenance Period.

    

    “Reference
      Billsâ“
means
      the unsecured general obligations of the Federal Home Loan Mortgage Corporation
      (“Freddie
      Mac”)
      designated by Freddie Mac as “Reference BillsâSecurities”
      and having original durations to maturity most comparable to the term of the
      Reference Bill Index, and issued by Freddie Mac at regularly scheduled auctions.
      In the event Freddie Mac shall at any time cease to designate any unsecured
      general obligations of Freddie Mac as “Reference Bills Securities”, then at the
      option of Lender (i) Lender may select from time to time another unsecured
      general obligation of Freddie Mac having original durations to maturity most
      comparable to the term of the Reference Bill Index and issued by Freddie Mac
      at
      regularly scheduled auctions, and the term “Reference Bills” as used in this
      Note shall mean such other unsecured general obligations as selected by Lender;
      or (ii) for any one or more Interest Adjustment Periods, Lender may use the
      applicable LIBOR Index Rate as the Index Rate for such Interest Adjustment
      Period(s). 

    

    “Reference
      Bill Index”
means
      the one-month Reference Bills. One-month reference bills have original durations
      to maturity of approximately 30 days. 

    

    “Reference
      Bill Index Rate”
means,
      for any Interest Adjustment Period after the first Interest Adjustment Period,
      the Money Market Yield for the Reference Bills

    
      
        
        

      

      
        PAGE
          3

        
          

        

      

      
        
        

      

    

    as
      established by the Reference Bill auction conducted by Freddie Mac most recently
      preceding the first day of such Interest Adjustment Period, as displayed on
      the
      Reference Bill Index Page. The Reference Bill Index Rate for the first Interest
      Adjustment Period means the Money Market Yield for the Reference Bills as
      established by the Reference Bill auction conducted by Freddie Mac most recently
      preceding the first day of the month in which the first Interest Adjustment
      Period begins, as displayed on the Reference Bill Index Page. The “Reference
      Bill Index Page”
is
      the
      Freddie Mac Debt Securities Web Page (accessed via the Freddie Mac internet
      site
      at www.freddiemac.com), or at the option of Lender, any publication of Reference
      Bills auction results available from Freddie Mac. However, if Freddie Mac has
      not conducted a Reference Bill auction within the 60-calendar day period prior
      to the first day of an Interest Adjustment Period, the Reference Bill Index
      Rate
      for such Interest Adjustment Period will be the LIBOR Index Rate for such
      Interest Adjustment Period. 

     

    “Remaining
      Amortization Period”
means,
      at any point in time, the number of consecutive calendar months equal to the
      number of months in the Amortization Period minus the number of scheduled
      monthly installments of principal
      and interest
      that
      have elapsed since the date of this Note.

     

    “Security
      Instrument”
means
      the multifamily mortgage, deed to secure debt or deed of trust effective as
      of
      the effective date of this Note, from Borrower to or for the benefit of Lender
      and securing this Note.

    

         
“Treasury
      Security”
means
      the 8.75% U.S. Treasury Security due May 15, 2017. 

    

    “Window
      Period”
means
      the Extension Period.

    

    “Yield
      Maintenance Period”
means
      the period from and including the date of this Note until but not including
      the
      Scheduled Initial Maturity Date.

    

    (b) Other
      capitalized terms used but not defined in this Note shall have the meanings
      given to such terms in the Security Instrument.

    

    2. Address
      for Payment.
      All
      payments due under this Note shall be payable at 3500 American Boulevard West,
      Suite 500, Bloomington, Minnesota 55431, or such other place as may be
      designated by Notice to Borrower from or on behalf of Lender.

    

    3. Payments. 

    

    (a) During
      the Fixed Rate Period, interest will accrue on the outstanding principal balance
      of this Note at the Fixed Interest Rate, subject to the provisions of Section
      8
      of this Note. During the Extension Period, interest will accrue on the
      outstanding principal balance of this Note at the Adjustable Interest Rate,
      subject to the provisions of Section 8 of this Note. 

    
      
        
        

      

      
        PAGE
          4

        
          

        

      

      
        
        

      

    

    

    (b) Interest
      under this Note shall be computed, payable and allocated on the basis of an
      actual/360 interest calculation schedule (interest is payable for the actual
      number of days in each month, and each month’s interest is calculated by
      multiplying the unpaid principal amount of this Note as of the first day of
      the
      month for which interest in being calculated by the Fixed Interest Rate (during
      the Fixed Rate Period) or the applicable Adjustable Interest Rate (during the
      Extension Period), dividing the product by 360, and multiplying the quotient
      by
      the number of days in the month for which interest is being calculated). For
      convenience in determining the amount of a monthly installment of principal
      and
      interest under this Note, Lender will use a 30/360 interest calculation payment
      schedule (each year is treated as consisting of twelve 30-day months). However,
      as provided above, the portion of the monthly installment actually payable
      as
      and allocated to interest will be based upon an actual/360 interest calculation
      schedule, and the amount of each installment attributable to principal and
      the
      amount attributable to interest will vary based upon the number of days in
      the
      month for which such installment is paid. Each monthly payment of principal
      and
      interest will first be applied to pay in full interest due, and the balance
      of
      the monthly payment paid by Borrower will be credited to principal.

     

    (c) Unless
      disbursement of principal is made by Lender to Borrower on the first day of
      a
      calendar month, interest for the period beginning on the date of disbursement
      and ending on and including the last day of such calendar month shall be payable
      by Borrower simultaneously with the execution of this Note. If disbursement
      of
      principal is made by Lender to Borrower on the first day of a calendar month,
      then no payment will be due from Borrower at the time of the execution of this
      Note. The Installment Due Date for the first monthly installment payment under
      Section 3(d) of interest only or principal and interest, as applicable, will
      be
      the First Installment Due Date set forth in Section 1(a) of this Note. Except
      as
      provided in this Section 3(c) and in Section 10, accrued interest will be
      payable in arrears.

    

    
      	 	
              (d)

            	
              (i)

            	
              Beginning
                on the First Installment Due Date, and continuing until and including
                the
                monthly installment due on February 1, 2009, accrued interest only
                shall
                be payable by Borrower in consecutive monthly installments due and
                payable
                on the first day of each calendar month. The amount of each monthly
                installment of interest only payable pursuant to this Subsection
                3(d)(i)
                on an Installment Due Date shall vary, and shall equal $2,047.50
                multiplied by the number of days in the month prior to the Installment
                Due
                Date. 

            

    

    

    
      	 	 	
              (ii)

            	
              Beginning
                on March 1, 2009, and continuing until and including the monthly
                installment due on the Initial Maturity Date, principal and accrued
                interest shall be payable by Borrower in consecutive monthly installments
                due and payable on the first day of each calendar month. The amount
                of the
                monthly installment of principal and interest payable pursuant to
                this
                Subsection 3(d)(ii) on an Installment Due Date shall be Seventy Five
                Thousand Two Hundred Five and 09/100 Dollars ($75,205.09).
                

            

    

    
      
        
        

      

      
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          5

        
          

        

      

      
        
        

      

    

    

    (e) Except
      as
      otherwise provided in this Section 3(e), all remaining Indebtedness, including
      all principal and interest, shall be due and payable by Borrower on the Initial
      Maturity Date. However, so long as (i) the Initial Maturity Date has not
      occurred prior to the Scheduled Initial Maturity Date, and (ii) no Event of
      Default or event or circumstance which, with the giving of notice or passage
      of
      time or both, could constitute an Event of Default exists on the Scheduled
      Initial Maturity Date, then the Extension Period automatically will become
      effective and the date for full payment of the Indebtedness automatically shall
      be extended until the Extended Maturity Date. If the Extension Period becomes
      effective, monthly installments of principal and interest or interest only
      will
      be payable during the Extension Period as provided in Section 3(f). Anything
      in
      Section 21 of the Security Instrument to the contrary notwithstanding, during
      the Extension Period, Borrower will not request that Lender consent to, and
      Lender will not consent to, a Transfer that, absent such consent, would
      constitute an Event of Default.

    

    (f) If
      the
      Extension Period becomes effective, beginning on March 1, 2017, and continuing
      until and including the monthly installment due on the Extended Maturity Date,
      principal and accrued interest shall be payable by Borrower in consecutive
      monthly installments due and payable on the first day of each calendar month.
      The amount of the monthly installment of principal and interest payable pursuant
      to this Section 3(f) on an Installment Due Date shall be calculated so as to
      equal the monthly payment amount which would be payable on the Installment
      Due
      Date as if the unpaid principal balance of this Note as of the first day of
      the
      Interest Adjustment Period immediately preceding the Installment Due Date was
      to
      be fully amortized, together with interest thereon at the Adjustable Interest
      Rate in effect for such Interest Adjustment Period, in equal consecutive monthly
      payments paid on the first day of each calendar month over the Remaining
      Amortization Period.

     

    (g) During
      the Extension Period, Lender shall provide Borrower with Notice, given in the
      manner specified in the Security Instrument, of the amount of each monthly
      installment due under this Note. However, if Lender has not provided Borrower
      with prior notice of the monthly payment due on any Installment Due Date, then
      Borrower shall pay on that Installment Due Date an amount equal to the monthly
      installment payment for which Borrower last received notice. If Lender at any
      time determines that Borrower has paid one or more monthly installments in
      an
      incorrect amount because of the operation of the preceding sentence, or because
      Lender has miscalculated the Adjustable Interest Rate or has otherwise
      miscalculated the amount of any monthly installment, then Lender shall give
      notice to Borrower of such determination. If such determination discloses that
      Borrower has paid less than the full amount due for the period for which the
      determination was made, Borrower, within 30 calendar days after receipt of
      the
      notice from Lender, shall pay to Lender the full amount of the deficiency.
      If
      such determination discloses that Borrower has paid more than the full amount
      due for the period for which the determination was made, then the amount of
      the
      overpayment shall be credited to the next installment(s) of interest only or
      principal and interest, as applicable, due under this Note (or, if an Event
      of
      Default has occurred and is continuing, such overpayment shall be credited
      against any amount owing by Borrower to Lender).

    
      
        
        

      

      
        PAGE
          6

        
          

        

      

      
        
        

      

    

    

    (h) All
      payments under this Note shall be made in immediately available U.S.
      funds.

     

    (i) Any
      regularly scheduled monthly installment of interest only or principal and
      interest payable pursuant to this Section 3 that is received by Lender
      before the date it is due shall be deemed to have been received on the due
      date
      for the purpose of calculating interest due.

    

    (j) Any
      accrued interest remaining past due for 30 days or more, at Lender’s discretion,
      may be added to and become part of the unpaid principal balance of this Note
      and
      any reference to “accrued interest” shall refer to accrued interest which has
      not become part of the unpaid principal balance. Any amount added to principal
      pursuant to the Loan Documents shall bear interest at the applicable rate or
      rates specified in this Note and shall be payable with such interest upon demand
      by Lender and absent such demand, as provided in this Note for the payment
      of
      principal and interest. 

    

    (k) In
      accordance with Section 14, interest charged under this Note cannot exceed
      the
      Maximum Interest Rate. If the Adjustable Interest Rate at any time exceeds
      the
      Maximum Interest Rate, resulting in the charging of interest hereunder to be
      limited to the Maximum Interest Rate, then any subsequent reduction in the
      Adjustable Interest Rate shall not reduce the rate at which interest under
      this
      Note accrues below the Maximum Interest Rate until the total amount of interest
      accrued hereunder equals the amount of interest which would have accrued had
      the
      Adjustable Interest Rate at all times been in effect. 

    

    4. Application
      of Payments. If
      at any
      time Lender receives, from Borrower or otherwise, any amount applicable to
      the
      Indebtedness which is less than all amounts due and payable at such time, Lender
      may apply the amount received to amounts then due and payable in any manner
      and
      in any order determined by Lender, in Lender’s discretion. Borrower agrees that
      neither Lender’s acceptance of a payment from Borrower in an amount that is less
      than all amounts then due and payable nor Lender’s application of such payment
      shall constitute or be deemed to constitute either a waiver of the unpaid
      amounts or an accord and satisfaction.

     

    5. Security.
      The
      Indebtedness is secured by, among other things, the Security Instrument, and
      reference is made to the Security Instrument for other rights of Lender as
      to
      collateral for the Indebtedness.

    

    6. Acceleration.
      If
      an
      Event of Default has occurred and is continuing, the entire unpaid principal
      balance, any accrued interest, any prepayment premium payable under
      Section 10, and all other amounts payable under this Note and any other
      Loan Document, shall at once become due and payable, at the option of Lender,
      without any prior notice to Borrower (except if notice is required by applicable
      law, then after such notice). Lender may exercise this option to accelerate
      regardless of any prior forbearance. For
      purposes of exercising such option, Lender shall calculate the prepayment
      premium as if prepayment occurred on the date of acceleration. If prepayment
      occurs thereafter, lender shall recalculate the prepayment premium as of the
      actual prepayment date.

    
      
        
        

      

      
        PAGE
          7

        
          

        

      

      
        
        

      

    

    

    7. Late
      Charge. 

    

    (a) If
      any
      monthly installment of interest or principal and interest or other amount
      payable under this Note or under the Security Instrument or any other Loan
      Document is not received in full by Lender (i) during the Fixed Rate Period,
      within ten (10) days after the installment or other amount is due, or (ii)
      during the Extension Period, within five (5) days after the installment or
      other
      amount is due, counting from and including the date such installment or other
      amount is due (unless applicable law requires a longer period of time before
      a
      late charge may be imposed, in which event such longer period shall be
      substituted), Borrower shall pay to Lender, immediately and without demand
      by
      Lender, a late charge equal to five percent (5%) of such installment or other
      amount due (unless applicable law requires a lesser amount be charged, in which
      event such lesser amount shall be substituted). 

    

    (b) Borrower
      acknowledges that its failure to make timely payments will cause Lender to
      incur
      additional expenses in servicing and processing the Loan and that it is
      extremely difficult and impractical to determine those additional expenses.
      Borrower agrees that the late charge payable pursuant to this
      Section represents a fair and reasonable estimate, taking into account all
      circumstances existing on the date of this Note, of the additional expenses
      Lender will incur by reason of such late payment. The late charge is payable
      in
      addition to, and not in lieu of, any interest payable at the Default Rate
      pursuant to Section 8.

    

    8. Default
      Rate. 

    

    (a) So
      long
      as (i) any monthly installment under this Note remains past due for thirty
      (30) days or more or (ii) any other Event of Default has occurred and is
      continuing, then notwithstanding anything in Section 3 of this Note to the
      contrary, interest under this Note shall accrue on the unpaid principal balance
      from the Installment Due Date of the first such unpaid monthly installment
      or
      the occurrence of such other Event of Default, as applicable, at the Default
      Rate. 

    

    (b) From
      and
      after the Maturity Date, the unpaid principal balance shall continue to bear
      interest at the Default Rate until and including the date on which the entire
      principal balance is paid in full. 

    

    (c) Borrower
      acknowledges that (i) its failure to make timely payments will cause Lender
      to incur additional expenses in servicing and processing the Loan,
      (ii) during the time that any monthly installment under this Note is
      delinquent for thirty (30) days or more, Lender will incur additional costs
      and
      expenses arising from its loss of the use of the money due and from the adverse
      impact on Lender’s ability to meet its other obligations and to take advantage
      of other investment opportunities; and (iii)  it is extremely difficult and
      impractical to determine those additional costs and expenses. Borrower also
      acknowledges that, during the time that any monthly installment under this
      Note
      is delinquent for thirty (30) days or more or any other Event of Default has
      occurred and is continuing, Lender’s risk of nonpayment of this Note will be
      materially increased and Lender is entitled to be compensated for such increased
      risk. Borrower 

    
      
        
        

      

      
        PAGE
          8

        
          

        

      

      
        
        

      

    

    agrees
      that the increase in the rate of interest payable under this Note to the Default
      Rate represents a fair and reasonable estimate, taking into account all
      circumstances existing on the date of this Note, of the additional costs and
      expenses Lender will incur by reason of the Borrower’s delinquent payment and
      the additional compensation Lender is entitled to receive for the increased
      risks of nonpayment associated with a delinquent loan.

    

    9. Limits
      on Personal Liability. 

    

    (a) Except
      as
      otherwise provided in this Section 9, Borrower shall have no personal
      liability under this Note, the Security Instrument or any other Loan Document
      for the repayment of the Indebtedness or for the performance of any other
      obligations of Borrower under the Loan Documents and Lender’s only recourse for
      the satisfaction of the Indebtedness and the performance of such obligations
      shall be Lender’s exercise of its rights and remedies with respect to the
      Mortgaged Property and to any other collateral held by Lender as security for
      the Indebtedness. This limitation on Borrower’s liability shall not limit or
      impair Lender’s enforcement of its rights against any guarantor of the
      Indebtedness or any guarantor of any other obligations of Borrower.

    

    (b) Borrower
      shall be personally liable to Lender for the amount of the Base Recourse, plus
      any other amounts for which Borrower has personal liability under this
      Section 9. 

    

    (c) In
      addition to the Base Recourse, Borrower shall be personally liable to Lender
      for
      the repayment of a further portion of the Indebtedness equal to any loss or
      damage suffered by Lender as a result of the occurrence of any of the following
      events:

    

    
      	 	
              (i)

            	
              Borrower
                fails to pay to Lender upon demand after an Event of Default all
                Rents to
                which Lender is entitled under Section 3(a) of the Security
                Instrument and the amount of all security deposits collected by Borrower
                from tenants then in residence. However, Borrower will not be personally
                liable for any failure described in this subsection (i) if Borrower
                is unable to pay to Lender all Rents and security deposits as required
                by
                the Security Instrument because of a valid order issued in a bankruptcy,
                receivership, or similar judicial
                proceeding.

            

    

    

    
      	 	
              (ii)

            	
              Borrower
                fails to apply all insurance proceeds and condemnation proceeds as
                required by the Security Instrument. However, Borrower will not be
                personally liable for any failure described in this subsection (ii)
                if Borrower is unable to apply insurance or condemnation proceeds
                as
                required by the Security Instrument because of a valid order issued
                in a
                bankruptcy, receivership, or similar judicial
                proceeding.

            

    

    

    
      	 	
              (iii)

            	
              Borrower
                fails to comply with Section 14(g) or (h) of the Security Instrument
                relating to the delivery of books and records, statements, schedules
                and
                reports. 

            

    

    
      
        
        

      

      
        PAGE
          9

        
          

        

      

      
        
        

      

    

    

    
      	 	
              (iv)

            	
              Borrower
                fails to pay when due in accordance with the terms of the Security
                Instrument the amount of any item
                below marked “Deferred”; provided however, that if no item is marked
                “Deferred”, this Section 9(c)(iv) shall be of no force or effect.
                

            

    

          [Collect] Hazard
      Insurance premiums or other insurance premiums,

    [Collect] Taxes,
      

    [Deferred] water
      and
      sewer charges (that could become a lien 

          
on
      the Mortgaged
      Property),

    [N/A] 
ground
      rents, 

    [Deferred] assessments
      or other charges (that could become a 

                    
      lien on the Mortgaged Property)

    

    (d) In
      addition to the Base Recourse, Borrower shall be personally liable to Lender
      

    for:

    

    
      	 	 	
              (i)

            	
              the
                performance of all of Borrower’s obligations under Section 18 of the
                Security Instrument (relating to environmental
                matters);

            

    

    

    
      	 	 	
              (ii)

            	
              the
                costs of any audit under Section 14(g) of the Security Instrument;
                and 

            

    

    

    
      	 	 	
              (iii)

            	
              any
                costs and expenses incurred by Lender in connection with the collection
                of
                any amount for which Borrower is personally liable under this
                Section 9, including Attorneys’ Fees and Costs and the costs of
                conducting any independent audit of Borrower’s books and records to
                determine the amount for which Borrower has personal
                liability.

            

    

    

    (e) 
      All
      payments made by Borrower with respect to the Indebtedness and all amounts
      received by Lender from the enforcement of its rights under the Security
      Instrument and the other Loan Documents shall be applied first to the portion
      of
      the Indebtedness for which Borrower has no personal liability. 

    

    (f) Notwithstanding
      the Base Recourse, Borrower shall become personally liable to Lender for the
      repayment of all of the Indebtedness upon the occurrence of any of the following
      Events of Default: 

    

    
      	 	 	
              (i)

            	
              Borrower’s
                ownership of any property or operation of any business not permitted
                by
                Section 33 of the Security
                Instrument;

            

    

    

    
      	 	 	
              (ii)

            	
              a
                Transfer (including, but not limited to, a lien or encumbrance) that
                is an
                Event of Default under Section 21 of the Security Instrument, other
                than a Transfer consisting solely of the involuntary removal or
                involuntary withdrawal of a general partner in a limited partnership
                or a
                manager in a limited liability company; or

            

    

    
      
        
        

      

      
        PAGE
          10

        
          

        

      

      
        
        

      

    

    

    
      	 	 	
              (iii)

            	
              fraud
                or written material misrepresentation by Borrower or any officer,
                director, partner, member or employee of Borrower in connection with
                the
                application for or creation of the Indebtedness or any request for
                any
                action or consent by Lender.

            

    

    

    (g) To
      the
      extent that Borrower has personal liability under this Section 9, Lender
      may exercise its rights against Borrower personally without regard to whether
      Lender has exercised any rights against the Mortgaged Property or any other
      security, or pursued any rights against any guarantor, or pursued any other
      rights available to Lender under this Note, the Security Instrument, any other
      Loan Document or applicable law. To
      the
      fullest extent permitted by applicable law, in any action to enforce Borrower’s
      personal liability under this Section 9, Borrower waives any right to set
      off the value of the Mortgaged Property against such personal
      liability.

    

    10. Voluntary
      and Involuntary Prepayments.

    

    (a) Any
      receipt by Lender of principal due under this Note prior to the Maturity Date,
      other than principal required to be paid in monthly installments pursuant to
      Section 3, constitutes a prepayment of principal under this Note. Without
      limiting the foregoing, any application by Lender, prior to the Maturity Date,
      of any proceeds of collateral or other security to the repayment of any portion
      of the unpaid principal balance of this Note constitutes a prepayment under
      this
      Note. 

     

    (b) Borrower
      may voluntarily prepay all of the unpaid principal balance of this Note on
      an
      Installment Due Date so long as Borrower designates the date for such prepayment
      in a Notice from Borrower to Lender given at least 30 days prior to the date
      of
      such prepayment. If an Installment Due Date (as defined in Section 1(a)) falls
      on a day which is not a Business Day, then with respect to payments made under
      this Section 10 only, the term “Installment Due Date” shall mean the Business
      Day immediately preceding the scheduled Installment Due Date.

    

    (c) Notwithstanding
      subsection (b) above, Borrower may voluntarily prepay all of the unpaid
      principal balance of this Note on a Business Day other than an Installment
      Due
      Date if Borrower provides Lender with the Notice set forth in subsection (b)
      and
      meets the other requirements set forth in this subsection. Borrower acknowledges
      that Lender has agreed that Borrower may prepay principal on a Business Day
      other than an Installment Due Date only because Lender shall deem any prepayment
      received by Lender on any day other than an Installment Due Date to have been
      received on the Installment Due Date immediately following such prepayment
      and
      Borrower shall be responsible for all interest that would have been due if
      the
      prepayment had actually been made on the Installment Due Date immediately
      following such prepayment.

    

    (d) Unless
      otherwise expressly provided in the Loan Documents, Borrower may not voluntarily
      prepay less than all of the unpaid principal balance of this Note. In order
      to

    
      
        
        

      

      
        PAGE
          11

        
          

        

      

      
        
        

      

    

    voluntarily
      prepay all or any part of the principal of this Note, Borrower must also pay
      to
      Lender, together with the amount of principal being prepaid, (i) all accrued
      and
      unpaid interest due under this Note, plus (ii) all other sums due to Lender
      at
      the time of such prepayment, plus (iii) any prepayment premium calculated
      pursuant to Section 10(e).

    

    (e) Except
      as
      provided in Section 10(f), a prepayment premium shall be due and payable by
      Borrower in connection with any prepayment of principal under this Note during
      the Prepayment Premium Period. The prepayment premium shall be whichever is
      the
      greater of subsections (A) and (B) below:

    

    
      	 	 	 	
              (A)

            	
              1.0%
                of the amount of principal being prepaid; or

            

    

    

    (B) the
      product obtained by multiplying:

    

    (1) the
      amount of principal being prepaid or accelerated, 

    by

    
      	 	 	 	 	
              (2)

            	
              the
                excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
                Rate, 

            

    

    by

    (3) the
      Present Value Factor.

    

    For
      purposes of subsection (B), the following definitions shall
      apply:

    

    
      	 	 	 	
              Monthly
                Note Rate:
                one-twelfth (1/12) of the Fixed Interest Rate, expressed as a decimal
                calculated to five digits.

            

    

    

    
      	 	 	 	
              Prepayment
                Date:
                in
                the case of a voluntary prepayment, the date on which the prepayment
                is
                made; in the case of the application by Lender of collateral or security
                to a portion of the principal balance, the date of such
                application.

            

    

    

    
      	 	 	 	
              Assumed
                Reinvestment Rate:
                one-twelfth (1/12) of the yield rate, as of the date 5 Business Days
                before the Prepayment Date, on the Treasury Security, as reported
                in
                The
                Wall Street Journal,
                expressed as a decimal calculated to five digits. In the event that
                no
                yield is published on the applicable date for the Treasury Security,
                Lender, in its discretion, shall select the non-callable Treasury
                Security
                maturing in the same year as the Treasury Security with the lowest
                yield
                published in The
                Wall Street Journal
                as
                of the applicable date. If the publication of such yield rates in
                The
                Wall Street Journal
                is
                discontinued for any reason, Lender shall select a security with
                a
                comparable rate and term to the Treasury Security. The selection
                of an
                alternate security pursuant to this Section shall be made in Lender’s
                discretion.

            

    

    
      
        
        

      

      
        PAGE
          12

        
          

        

      

      
        
        

      

    

    

    
      	 	 	 	
              Present
                Value Factor: the
                factor that discounts to present value the costs resulting to Lender
                from
                the difference in interest rates during the months remaining in the
                Yield
                Maintenance Period, using the Assumed Reinvestment Rate as the discount
                rate, with monthly compounding, expressed numerically as
                follows:

            

    

    

    (equation
      graphic omitted)

     

    
      	 	 	 	
              n
                =
                the number of months remaining in Yield Maintenance Period; provided,
                however, if a prepayment occurs on an Installment Due Date, then
                the
                number of months remaining in the Yield Maintenance Period shall
                be
                calculated beginning with the month in which such prepayment occurs
                and if
                such prepayment occurs on a Business Day other than an Installment
                Due
                Date, then the number of months remaining in the Yield Maintenance
                Period
                shall be calculated beginning with the month immediately following
                the
                date of such prepayment.

            

    

     

    ARR
      =
      Assumed
      Reinvestment Rate

     

    (f) Notwithstanding
      any other provision of this Section 10, no prepayment premium shall be
      payable with respect to (i) any prepayment made during the Window Period,
      or (ii) any prepayment occurring as a result of the application of any
      insurance proceeds or condemnation award under the Security
      Instrument.

    

    (g) Unless
      Lender agrees otherwise in writing, a permitted or required prepayment of less
      than the unpaid principal balance of this Note shall not extend or postpone
      the
      due date of any subsequent monthly installments or change the amount of such
      installments. 

    

    (h) Borrower
      recognizes that any prepayment of any of the unpaid principal balance of this
      Note, whether voluntary or involuntary or resulting from an Event of Default
      by
      Borrower, will result in Lender’s incurring loss, including reinvestment loss,
      additional expense and frustration or impairment of Lender’s ability to meet its
      commitments to third parties. Borrower agrees to pay to Lender upon demand
      damages for the detriment caused by any prepayment, and agrees that it is
      extremely difficult and impractical to ascertain the extent of such damages.
      Borrower therefore acknowledges and agrees that the formula for calculating
      prepayment premiums set forth in this Note represents a reasonable estimate
      of
      the damages Lender will incur because of a prepayment. Borrower further
      acknowledges that any lockout and the prepayment premium provisions of this
      Note
      are a material part of the consideration for the 

    
      
        
        

      

      
        PAGE
          13

        
          

        

      

      
        
        

      

    

    Loan,
      and
      that the terms of this Note are in other respects more favorable to Borrower
      as
      a result of the Borrower’s voluntary agreement to the lockout and prepayment
      premium provisions. 

    

    11. Costs
      and Expenses. To
      the
      fullest extent allowed by applicable law, Borrower shall pay all expenses and
      costs, including Attorneys’ Fees and Costs incurred by Lender as a result of any
      default under this Note or in connection with efforts to collect any amount
      due
      under this Note, or to enforce the provisions of any of the other Loan
      Documents, including those incurred in post-judgment collection efforts and
      in
      any bankruptcy proceeding (including any action for relief from the automatic
      stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
      proceeding.

    

    12. Forbearance.
      Any
      forbearance by Lender in exercising any right or remedy under this Note, the
      Security Instrument, or any other Loan Document or otherwise afforded by
      applicable law, shall not be a waiver of or preclude the exercise of that or
      any
      other right or remedy. The acceptance by Lender of any payment after the due
      date of such payment, or in an amount which is less than the required payment,
      shall not be a waiver of Lender’s right to require prompt payment when due of
      all other payments or to exercise any right or remedy with respect to any
      failure to make prompt payment. Enforcement by Lender of any security for
      Borrower’s obligations under this Note shall not constitute an election by
      Lender of remedies so as to preclude the exercise of any other right or remedy
      available to Lender. 

    

    13. Waivers.
      Borrower
      and all endorsers and guarantors of this Note and all other third party obligors
      waive presentment, demand, notice of dishonor, protest, notice of acceleration,
      notice of intent to demand or accelerate payment or maturity, presentment for
      payment, notice of nonpayment, grace, and diligence in collecting the
      Indebtedness.

    

    14. Loan
      Charges.
      Neither
      this Note nor any of the other Loan Documents shall be construed to create
      a
      contract for the use, forbearance or detention of money requiring payment of
      interest at a rate greater than the Maximum Interest Rate. If any applicable
      law
      limiting the amount of interest or other charges permitted to be collected
      from
      Borrower in connection with the Loan is interpreted so that any interest or
      other charge provided for in any Loan Document, whether considered separately
      or
      together with other charges provided for in any other Loan Document, violates
      that law, and Borrower is entitled to the benefit of that law, that interest
      or
      charge is hereby reduced to the extent necessary to eliminate that violation.
      The amounts, if any, previously paid to Lender in excess of the permitted
      amounts shall be applied by Lender to reduce the unpaid principal balance of
      this Note. For the purpose of determining whether any applicable law limiting
      the amount of interest or other charges permitted to be collected from Borrower
      has been violated, all Indebtedness that constitutes interest, as well as all
      other charges made in connection with the Indebtedness that constitute interest,
      shall be deemed to be allocated and spread ratably over the stated term of
      this
      Note. Unless otherwise required by applicable law, such allocation and spreading
      shall be effected in such a manner that the rate of interest so computed is
      uniform throughout the stated term of this Note. 

    
      
        
        

      

      
        PAGE
          14

        
          

        

      

      
        
        

      

    

    

    15. Commercial
      Purpose. Borrower
      represents that Borrower is incurring the Indebtedness solely for the purpose
      of
      carrying on a business or commercial enterprise, and not for personal, family,
      household, or agricultural purposes.

    

    16. Counting
      of Days. Except
      where otherwise specifically provided, any reference in this Note to a period
      of
“days” means calendar days, not Business Days.

    

    17. Governing
      Law. This
      Note
      shall be governed by the law of the Property Jurisdiction.

    

    18. Captions.
      The
      captions of the Sections of this Note are for convenience only and shall be
      disregarded in construing this Note.

    

    19. Notices;
      Written Modifications.  

    

    (a) All
      Notices, demands and other communications required or permitted to be given
      pursuant to this Note shall be given in accordance with Section 31 of the
      Security Instrument. 

    

    (b) Any
      modification or amendment to this Note shall be ineffective unless in writing
      signed by the party sought to be charged with such modification or amendment;
      provided, however, that in the event of a Transfer under the terms of the
      Security Instrument that requires Lender’s consent, any or some or all of the
      Modifications to Multifamily Note set forth in Exhibit A to this Note may
      be modified or rendered void by Lender at Lender’s option, by Notice to Borrower
      and the transferee, as a condition of Lender’s consent.

    

    20. Consent
      to Jurisdiction and Venue.
      Borrower
      agrees that any controversy arising under or in relation to this Note may be
      litigated in the Property Jurisdiction. The state and federal courts and
      authorities with jurisdiction in the Property Jurisdiction shall have
      jurisdiction over all controversies that shall arise under or in relation to
      this Note. Borrower irrevocably consents to service, jurisdiction, and venue
      of
      such courts for any such litigation and waives any other venue to which it
      might
      be entitled by virtue of domicile, habitual residence or otherwise. However,
      nothing in this Note is intended to limit any right that Lender may have to
      bring any suit, action or proceeding relating to matters arising under this
      Note
      in any court of any other jurisdiction.

    

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

    
      
        
        

      

      
        PAGE
          15

        
          

        

      

      
        
        

      

    

    

    22.  State-Specific
      Provisions.
      N/A.

    

    ATTACHED
      EXHIBIT. The Exhibit noted below, if marked with an “X” in the

    space
      provided, is attached to this Note: 

    

    [X] 
      Exhibit A  Modifications
      to Multifamily Note 

    

    [The
      remainder of this page is intentionally left blank, signature page
      follows.]

    

     

     

     

     

     

     

     

     

    PAGE
      16

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      and in
      consideration of the Lender’s agreement to lend Borrower the principal amount
      set forth above, Borrower has signed and delivered this Note under seal or
      has
      caused this Note to be signed and delivered under seal by its duly authorized
      representative. 

    

    West
      OKC
      HighlandPointe Associates LLC, 

    an
      Oklahoma limited liability company

    

    

    By:   
/s/
      John W. Alvey

     John
      W. Alvey,
      Manager

    

    Borrower’s
      Social Security/Employer ID Number: 

    48-1293956

     

     

     

     

     

     

     

     

    Signature
      Page - Highland Pointe Apartments -
      Note                                                                        PAGE
      S-1

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FHLMC
      Loan No. 940977397

    

    

    PAY
      TO
      THE ORDER OF     FEDERAL
      HOME LOAN MORTGAGE CORPORATION,
      

    WITHOUT
      RECOURSE, AS OF THE 31ST DAY OF JANUARY, 2007.

    

    

    NorthMarq
      Capital, Inc.,

    a
      Minnesota corporation

     

    By:
      /s/
      Paul W. Cairns

    Paul
      W.
      Cairns

    Vice
      President

    

     

     

     

     

     

     

     

     

    Signature Page - Highland Pointe Apartments -
      Note                                                                        PAGE
      S-2

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A 

    

    MODIFICATIONS
      TO MULTIFAMILY NOTE

    

    The
      following modifications are made to the text of the Note that precedes this
      Exhibit.

    

    None.

    

    953719v1 

     

     

     

     

     

     

     

     

    PAGE
      A-1Exhibit 4.11 - Multifamily Mortgage - Highland Pointe

     

      
        

      

    

    

    Prepared
      by, and after recording 

    return
      to: 

    

    Moss
      & Barnett, A Professional Association (TLG)

    4800
      Wells Fargo Center

    90
      South
      Seventh Street

    Minneapolis,
      MN 55402

    

    

    

    

    

    

    

    

    

     

    

      MULTIFAMILY
        MORTGAGE,

      ASSIGNMENT
        OF RENTS

      AND
        SECURITY AGREEMENT

      (OKLAHOMA
        - REVISION DATE 05-11-2004)

      

      FHLMC
        Loan No. 940977397

    

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      MULTIFAMILY
        MORTGAGE,

      ASSIGNMENT
        OF RENTS

      AND
        SECURITY AGREEMENT

      (OKLAHOMA
        - REVISION DATE 05-11-2004)

    THIS
      MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”)
      is
      made as of January 31, 2007, between West OKC HighlandPointe Associates LLC,
      a
      limited liability company organized and existing under the laws of Oklahoma,
      whose address is 104 Armour Road, Kansas City, Missouri 64116, as mortgagor
      (“Borrower”),
      and
      NorthMarq Capital, Inc., a corporation organized and existing under the laws
      of
      Minnesota, whose address is 3500 American Boulevard West, Suite 500,
      Bloomington, Minnesota 55431, as mortgagee (“Lender”).
      Borrower’s organizational identification number, if applicable, is
      3500705223.

    

    Borrower
      is indebted to Lender in the principal amount of $13,000,000.00, as evidenced
      by
      Borrower’s Multifamily Note payable to Lender dated as of the date of this
      Instrument, and maturing on February 1, 2018 (the “Maturity
      Date”).

    

    TO
      SECURE
      TO LENDER the repayment of the Indebtedness, and all renewals, extensions and
      modifications of the Indebtedness, and the performance of the covenants and
      agreements of Borrower contained in the Loan Documents, Borrower mortgages,
      warrants, grants, conveys and assigns to Lender, with power of sale, the
      Mortgaged Property, including the Land located in Canadian County, State of
      Oklahoma, and described in Exhibit A attached to this Instrument.

    

    Borrower
      represents and warrants that Borrower is lawfully seized of the Mortgaged
      Property and has the right, power and authority to grant, convey and assign
      the
      Mortgaged Property, and that the Mortgaged Property is unencumbered except
      as
      shown on the schedule of exceptions to coverage in the title policy issued
      to
      and accepted by Lender contemporaneously with the execution and recordation
      of
      this Instrument and insuring Lender’s interest in the Mortgaged Property (the
“Schedule
      of Title Exceptions”).
      Borrower covenants that Borrower will warrant and defend generally the title
      to
      the Mortgaged Property against all claims and demands, subject to any easements
      and restrictions listed in the Schedule of Title Exceptions.

    

    UNIFORM
      COVENANTS

    REVISION
      DATE 01-30-2006

     

    Covenants.
      In consideration of the mutual promises set forth in this Instrument, Borrower
      and Lender covenant and agree as follows:

     

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

     

    
      
        
        

      

      
        PAGE
          1

        
          

        

      

      
        
        

      

    

    (a) “Attorneys’
      Fees and Costs”
means
      (i) fees and out-of-pocket costs of Lender’s and Loan Servicer’s attorneys,
      as applicable, including costs of Lender’s and Loan Servicer’s in-house counsel,
      support staff costs, costs of preparing for litigation, computerized research,
      telephone and facsimile transmission expenses, mileage, deposition costs,
      postage, duplicating, process service, videotaping and similar costs and
      expenses; (ii) costs and fees of expert witnesses, including appraisers;
      and (iii) investigatory fees.

     

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

     

    (c) “Business
      Day”
means
      any day other than a Saturday, a Sunday or any other day on which Lender or
      the
      national banking associations are not open for business.

     

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

     

    (e) “Controlling
      Entity”
means
      an entity which owns, directly or indirectly through one or more intermediaries,
      (i) a general partnership interest or a Controlling Interest of the limited
      partnership interests in Borrower (if Borrower is a partnership or joint
      venture), (ii) a manager’s interest in Borrower or a Controlling Interest
      of the ownership or membership interests in Borrower (if Borrower is a limited
      liability company), (iii) a Controlling Interest of any class of voting
      stock of Borrower (if Borrower is a corporation), (iv) a trustee’s interest
      or a Controlling Interest of the beneficial interests in Borrower (if Borrower
      is a trust), or (v) a managing partner’s interest or a Controlling Interest of
      the partnership interests in Borrower (if Borrower is a limited liability
      partnership).

     

    (f) “Controlling
      Interest”
means
      (i) 51 percent or more of the ownership interests in an entity, or
      (ii) a percentage ownership interest in an entity of less than
      51 percent, if the owner(s) of that interest actually
      direct(s) the business and affairs of the entity without the requirement of
      consent of any other party. The Controlling Interest shall be deemed to be
      51 percent unless otherwise stated in Exhibit B.

     

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

     

    (h) “Event
      of Default”
means
      the occurrence of any event listed in Section 22.

     

    (i) “Fixtures”
means
      all property owned by Borrower which is so attached to the Land or the
      Improvements as to constitute a fixture under applicable law, including:
      machinery, 

     

    
      
        
        

      

      
        PAGE
          2

        
          

        

      

      
        
        

      

    

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

     

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

     

    (k) “Hazard
      Insurance”
is
      defined in Section 19.

     

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

     

    (m) “Hazardous
      Materials Laws”
means
      all federal, state, and local laws, ordinances and regulations and standards,
      rules, policies and other governmental requirements, administrative rulings
      and
      court judgments and decrees in effect now or in the future and including all
      amendments, that relate to Hazardous Materials or the protection of human health
      or the environment and apply to Borrower or to the Mortgaged Property. Hazardous
      Materials Laws include, but are not limited to, the Comprehensive Environmental
      Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et
      seq.,
      the
      Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901,
et
      seq.,
      the
      Toxic Substance Control Act, 15 U.S.C. Section 2601, et
      seq.,
      the
      Clean Water Act, 33 U.S.C. Section 1251, et
      seq.,
      and
      the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101
et
      seq.,
      and
      their state analogs.

     

    (n) “Impositions”
and
      “Imposition
      Deposits”
are
      defined in Section 7(a).

     

    
      
        
        

      

      
        PAGE
          3

        
          

        

      

      
        
        

      

    

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

     

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

     

    (q) “Initial
      Owners”
means,
      with respect to Borrower or any other entity, the persons or entities that
      (i) on the date of the Note, or (ii) on the date of a Transfer to
      which Lender has consented, own in the aggregate 100 percent of the
      ownership interests in Borrower or that entity.

     

    (r) “Land”
means
      the land described in Exhibit A.

     

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

     

    (t) “Lender”
means
      the entity identified as “Lender” in the first paragraph of this Instrument, or
      any subsequent holder of the Note.

     

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

     

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

     

    (w) “MMP”
means
      a
      moisture management plan to control water intrusion and prevent the development
      of Mold or moisture at the Mortgaged Property throughout the term of this
      Instrument. At a minimum, the MMP must contain a provision for (i) staff
      training, (ii) information to be provided to tenants, (iii) documentation of
      the
      plan, (iv) the appropriate protocol for incident response and remediation and
      (v) routine, scheduled inspections of common space and unit
      interiors.

     

    (x) “Mold”
means
      mold, fungus, microbial contamination or pathogenic organisms.

     

    
      
        
        

      

      
        PAGE
          4

        
          

        

      

      
        
        

      

    

    (y) “Mortgaged
      Property”
means
      all of Borrower’s present and future right, title and interest in and to all of
      the following:

     

    
      	 	
              (i)

            	
              the
                Land;

            

    

     

    
      	 	
              (ii)

            	
              the
                Improvements;

            

    

     

    
      	 	
              (iii)

            	
              the
                Fixtures;

            

    

     

    
      	 	
              (iv)

            	
              the
                Personalty;

            

    

     

    
      	 	
              (v)

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

            

    

     

    
      	 	
              (vi)

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

            

    

     

    
      	 	
              (vii)

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

            

    

     

    
      	 	
              (viii)

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

            

    

     

    
      	 	
              (ix)

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

            

    

     

    
      	 	
              (x)

            	
              all
                Rents and Leases;

            

    

     

    
      
        
        

      

      
        PAGE
          5

        
          

        

      

      
        
        

      

    

    
      	 	
              (xi)

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

            

    

     

    
      	 	
              (xii)

            	
              all
                Imposition Deposits;

            

    

     

    
      	 	
              (xiii)

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

            

    

     

    
      	 	
              (xiv)

            	
              all
                tenant security deposits which have not been forfeited by any tenant
                under
                any Lease and any bond or other security in lieu of such deposits;
                and

            

    

     

    
      	 	
              (xv)

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

            

    

     

    (z) “Note”
means
      the Multifamily Note described on page 1 of this Instrument, including all
      schedules, riders, allonges and addenda, as such Multifamily Note may be amended
      from time to time.

     

    (aa) “O&M
      Program”
is
      defined in Section 18(d).

     

    (bb) “Personalty”
means
      all:

     

    
      	 	
              (i)

            	
              accounts
                (including deposit accounts) of Borrower related to the Mortgaged
                Property;

            

    

     

    
      	 	
              (ii)

            	
              equipment
                and inventory owned by Borrower, which are used now or in the future
                in
                connection with the ownership, management or operation of the Land
                or
                Improvements or are located on the Land or Improvements, including
                furniture, furnishings, machinery, building materials, goods, supplies,
                tools, books, records (whether in written or electronic form), computer
                equipment (hardware and software);

            

    

     

    
      	 	
              (iii)

            	
              other
                tangible personal property owned by Borrower which is used now or
                in the
                future in connection with the ownership, management or operation
                of the
                Land or Improvements or is located on the Land or in the Improvements,
                including ranges, stoves, microwave ovens, refrigerators, dishwashers,
                garbage disposers, washers, dryers and other appliances (other than
                Fixtures);

            

    

     

    
      
        
        

      

      
        PAGE
          6

        
          

        

      

      
        
        

      

    

    
      	 	
              (iv)

            	
              any
                operating agreements relating to the Land or the
                Improvements;

            

    

     

    
      	 	
              (v)

            	
              any
                surveys, plans and specifications and contracts for architectural,
                engineering and construction services relating to the Land or the
                Improvements;

            

    

     

    
      	 	
              (vi)

            	
              all
                other intangible property, general intangibles and rights relating
                to the
                operation of, or used in connection with, the Land or the Improvements,
                including all governmental permits relating to any activities on
                the Land
                and including subsidy or similar payments received from any sources,
                including a governmental authority;
                and

            

    

     

    
      	 	
              (vii)

            	
              any
                rights of Borrower in or under letters of
                credit.

            

    

     

    (cc) “Property
      Jurisdiction”
is
      defined in Section 30(a).

     

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

     

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

     

    (ff) “Transfer”
is
      defined in Section 21.

     

    2. UNIFORM
      COMMERCIAL CODE SECURITY AGREEMENT.

     

    (a) This
      Instrument is also a security agreement under the Uniform Commercial Code for
      any of the Mortgaged Property which, under applicable law, may be subjected
      to a
      security interest under the Uniform Commercial Code, whether such Mortgaged
      Property is owned now or acquired in the future, and all products and cash
      and
      non-cash proceeds thereof (collectively, “UCC
      Collateral”),
      and
      Borrower hereby grants to Lender a security interest in the UCC Collateral.
      Borrower hereby authorizes Lender to prepare and file financing statements,
      continuation statements and financing statement amendments in such form as
      Lender may require to perfect or continue the perfection of this security
      interest and Borrower agrees, if Lender so requests, to execute and deliver
      to
      Lender such financing statements, continuation statements and amendments.
      Borrower shall pay all filing costs and all costs and expenses of any record
      searches for financing statements and/or amendments that Lender may require.
      Without the prior written consent of Lender, Borrower shall not create or permit
      to exist any other lien or security interest in any of the UCC
      Collateral.

     

    
      
        
        

      

      
        PAGE
          7

        
          

        

      

      
        
        

      

    

    (b) Unless
      Borrower gives Notice to Lender within 30 days after the occurrence of any
      of the following, and executes and delivers to Lender modifications or
      supplements of this Instrument (and any financing statement which may be filed
      in connection with this Instrument) as Lender may require, Borrower shall not
      (i) change its name, identity, structure or jurisdiction of organization;
      (ii) change the location of its place of business (or chief executive
      office if more than one place of business); or (iii) add to or change any
      location at which any of the Mortgaged Property is stored, held or
      located.

     

    (c) If
      an
      Event of Default has occurred and is continuing, Lender shall have the remedies
      of a secured party under the Uniform Commercial Code, in addition to all
      remedies provided by this Instrument or existing under applicable law. In
      exercising any remedies, Lender may exercise its remedies against the UCC
      Collateral separately or together, and in any order, without in any way
      affecting the availability of Lender’s other remedies.

     

    (d) This
      Instrument constitutes a financing statement with respect to any part of the
      Mortgaged Property that is or may become a Fixture, if permitted by applicable
      law.

     

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

     

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

     

    (b) After
      the
      occurrence of an Event of Default, Borrower authorizes Lender to collect, sue
      for and compromise Rents and directs each tenant of the Mortgaged Property
      to
      pay all Rents to, or as directed by, Lender. However, until the occurrence
      of an
      Event of Default, Lender hereby grants to Borrower a revocable license to
      collect and receive all Rents, to hold all Rents in trust for the benefit of
      Lender and to apply all Rents to pay the installments of interest and principal
      then due and payable under the Note and the other amounts then due and payable
      under the other Loan Documents, including Imposition Deposits, and to pay the
      current costs and expenses of managing, operating and maintaining the Mortgaged
      Property, including utilities, Taxes and insurance premiums (to the extent
      not
      included in Imposition Deposits), tenant 

     

    
      
        
        

      

      
        PAGE
          8

        
          

        

      

      
        
        

      

    

    improvements
      and other capital expenditures. So long as no Event of Default has occurred
      and
      is continuing, the Rents remaining after application pursuant to the preceding
      sentence may be retained by Borrower free and clear of, and released from,
      Lender’s rights with respect to Rents under this Instrument. From and after the
      occurrence of an Event of Default, and without the necessity of Lender entering
      upon and taking and maintaining control of the Mortgaged Property directly,
      or
      by a receiver, Borrower’s license to collect Rents shall automatically terminate
      and Lender shall without Notice be entitled to all Rents as they become due
      and
      payable, including Rents then due and unpaid. Borrower shall pay to Lender
      upon
      demand all Rents to which Lender is entitled. At any time on or after the date
      of Lender’s demand for Rents, (i) Lender may give, and Borrower hereby
      irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged
      Property instructing them to pay all Rents to Lender, (ii) no tenant shall
      be obligated to inquire further as to the occurrence or continuance of an Event
      of Default, and (iii) no tenant shall be obligated to pay to Borrower any
      amounts which are actually paid to Lender in response to such a notice. Any
      such
      notice by Lender shall be delivered to each tenant personally, by mail or by
      delivering such demand to each rental unit. Borrower shall not interfere with
      and shall cooperate with Lender’s collection of such Rents.

     

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

     

    (d) If
      an
      Event of Default has occurred and is continuing, Lender may, regardless of
      the
      adequacy of Lender’s security or the solvency of Borrower and even in the
      absence of waste, enter upon and take and maintain full control of the Mortgaged
      Property in order to perform all acts that Lender in its discretion determines
      to be necessary or desirable for the operation and maintenance of the Mortgaged
      Property, including the execution, cancellation or modification of Leases,
      the
      collection of all Rents, the making of repairs to the Mortgaged Property and
      the
      execution or termination of contracts providing for the management, operation
      or
      maintenance of the Mortgaged Property, for the purposes of enforcing the
      assignment of Rents pursuant to Section 3(a), protecting the Mortgaged
      Property or the security of this Instrument, or for such other purposes as
      Lender in its discretion may deem necessary or desirable. Alternatively, if
      an
      Event of Default has occurred and is continuing, regardless of the adequacy
      of
      Lender’s security, without regard to Borrower’s solvency and without the
      necessity of giving prior notice (oral or written) to Borrower, Lender may
      apply to any court having jurisdiction for the appointment of a receiver for
      the
      Mortgaged Property to take any or all of the actions set forth in the preceding
      sentence. If Lender elects to seek the appointment of a receiver for the
      Mortgaged Property at any time after an Event of Default has occurred and is
      continuing, Borrower, by its execution of this Instrument, expressly consents
      to
      the appointment of such receiver, including the

     

    
      
        
        

      

      
        PAGE
          9

        
          

        

      

      
        
        

      

    

    appointment
      of a receiver ex
      parte
      if
      permitted by applicable law. Lender or the receiver, as the case may be, shall
      be entitled to receive a reasonable fee for managing the Mortgaged Property.
      Immediately upon appointment of a receiver or immediately upon the Lender’s
      entering upon and taking possession and control of the Mortgaged Property,
      Borrower shall surrender possession of the Mortgaged Property to Lender or
      the
      receiver, as the case may be, and shall deliver to Lender or the receiver,
      as
      the case may be, all documents, records (including records on electronic or
      magnetic media), accounts, surveys, plans, and specifications relating to the
      Mortgaged Property and all security deposits and prepaid Rents. In the event
      Lender takes possession and control of the Mortgaged Property, Lender may
      exclude Borrower and its representatives from the Mortgaged Property. Borrower
      acknowledges and agrees that the exercise by Lender of any of the rights
      conferred under this Section 3 shall not be construed to make Lender a
      mortgagee-in-possession of the Mortgaged Property so long as Lender has not
      itself entered into actual possession of the Land and Improvements.

     

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

     

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

     

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

     

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

     

    (a) As
      part
      of the consideration for the Indebtedness, Borrower absolutely and
      unconditionally assigns and transfers to Lender all of Borrower’s right, title
      and interest in, to and under the Leases, including Borrower’s right, power and
      authority to modify the terms of any such Lease, or extend or terminate any
      such
      Lease. It is the intention of Borrower to establish a present, absolute and
      irrevocable transfer and assignment to Lender of all of Borrower’s right, title
      and interest in, to and under the Leases. Borrower and Lender intend this
      assignment of the Leases to be immediately effective and to constitute an
      absolute present assignment and not an assignment for additional security only.
      For purposes of giving effect to this absolute assignment of the Leases, and
      for
      no other purpose, the Leases shall not be deemed to be a part of the Mortgaged
      Property. However, if this present, absolute and unconditional assignment of
      the
      Leases is not enforceable by its terms under the laws of the
      Property

     

    
      
        
        

      

      
        PAGE
          10

        
          

        

      

      
        
        

      

    

    Jurisdiction,
      then the Leases shall be included as a part of the Mortgaged Property and it
      is
      the intention of the Borrower that in this circumstance this Instrument create
      and perfect a lien on the Leases in favor of Lender, which lien shall be
      effective as of the date of this Instrument.

     

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

     

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

     

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

     

    (e) Borrower
      shall, promptly upon Lender’s request, deliver to Lender an executed copy of
      each residential Lease then in effect. All Leases for residential dwelling
      units
      shall be on forms approved by Lender, shall be for initial terms of at least
      six
      months and not more than two 

     

    
      
        
        

      

      
        PAGE
          11

        
          

        

      

      
        
        

      

    

    years,
      and shall not include options to purchase. If Borrower is a cooperative housing
      corporation, association or other validly organized entity under municipal,
      county, state or federal law, notwithstanding
      anything to the contrary contained in this subsection, so long as Borrower
      is
      not in breach of any covenant of this Instrument, Lender hereby consents to
      the
      execution of leases of apartments for a term in excess of two years from
      Borrower to a tenant shareholder of Borrower, to the surrender or termination
      of
      such leases of apartments where the surrendered or terminated lease is
      immediately replaced or where the Borrower makes its best efforts to secure
      such
      immediate replacement by a newly executed lease of the same apartment to a
      tenant shareholder of the Borrower. However, no consent is hereby given by
      Lender to any execution, surrender, termination or assignment of a lease under
      terms that would waive or reduce the obligation of the resulting tenant
      shareholder under such lease to pay cooperative assessments in full when due
      or
      the obligation of the former tenant shareholder to pay any unpaid portion of
      such assessments.

     

    (f) Borrower
      shall not lease any portion of the Mortgaged Property for non-residential use
      except with the prior written consent of Lender and Lender’s prior written
      approval of the Lease agreement. Borrower shall not modify the terms of, or
      extend or terminate, any Lease for non-residential use (including any Lease
      in
      existence on the date of this Instrument) without the prior written consent
      of Lender. However, Lender’s consent shall not be required for the modification
      or extension of a non-residential Lease if such modification or extension is
      on
      terms at least as favorable to Borrower as those customary at that time in
      the
      applicable market and the income from the extended or modified Lease will not
      be
      less than the income received from the Lease as of the date of this Instrument.
      Borrower shall, without request by Lender, deliver an executed copy of each
      non-residential Lease to Lender promptly after such Lease is signed. All
      non-residential Leases, including renewals or extensions of existing Leases,
      shall specifically provide that (i) such Leases are subordinate to the lien
      of this Instrument; (ii) the tenant shall attorn to Lender and any
      purchaser at a foreclosure sale, such attornment to be self-executing and
      effective upon acquisition of title to the Mortgaged Property by any purchaser
      at a foreclosure sale or by Lender in any manner; (iii) the tenant agrees
      to execute such further evidences of attornment as Lender or any purchaser
      at a
      foreclosure sale may from time to time request; (iv) the Lease shall not be
      terminated by foreclosure or any other transfer of the Mortgaged Property;
      (v) after a foreclosure sale of the Mortgaged Property, Lender or any other
      purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option,
      accept or terminate such Lease; and (vi) the tenant shall, upon receipt
      after the occurrence of an Event of Default of a written request from Lender,
      pay all Rents payable under the Lease to Lender.

     

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

     

    5. PAYMENT
      OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT
      PREMIUM.
      Borrower
      shall pay the Indebtedness when due in accordance with the terms of the Note
      and
      the other Loan Documents and shall perform, observe and comply with all other
      provisions of the Note and the other Loan Documents. 

     

    
      
        
        

      

      
        PAGE
          12

        
          

        

      

      
        
        

      

    

    Borrower
      shall pay a prepayment premium in connection with certain prepayments of the
      Indebtedness, including a payment made after Lender’s exercise of any right of
      acceleration of the Indebtedness, as provided in the Note.

     

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

     

    7. DEPOSITS
      FOR TAXES, INSURANCE AND OTHER CHARGES.

     

    (a) Unless
      this requirement is waived in writing by Lender, which waiver may be contained
      in this Section 7(a), Borrower shall deposit with Lender on the day monthly
      installments of principal or interest, or both, are due under the Note (or
      on
      another day designated in writing by Lender), until the Indebtedness is paid
      in
      full, an additional amount sufficient to accumulate with Lender the entire
      sum
      required to pay, when due, the items marked “Collect” below. Lender will not
      require the Borrower to make Imposition Deposits with respect to the items
      marked “Deferred” below.

     

    [Collect]     Hazard
      Insurance premiums or other insurance premiums required by Lender under
      Section 19,

    [Collect]     
      Taxes,

    
      [Deferred]     water
        and
        sewer charges (that could become a lien on the 

                Mortgaged
        Property),

      [N/A]      ground
        rents,

    

    [Deferred]   
assessments
      or other
      charges (that could become a lien on the 

              Mortgaged
      Property)

     

    The
      amounts deposited under the preceding sentence are collectively referred to
      in
      this Instrument as the “Imposition Deposits.” The obligations of Borrower for
      which the Imposition Deposits are required are collectively referred to in
      this
      Instrument as “Impositions.” The amount of the Imposition Deposits shall be
      sufficient to enable Lender to pay each Imposition before the last date upon
      which such payment may be made without any penalty or interest charge being
      added. Lender shall maintain records indicating how much of the monthly
      Imposition Deposits and how much of the aggregate Imposition Deposits held
      by
      Lender are held for the purpose of paying Taxes, insurance premiums and each
      other Imposition.

    

    (b) Imposition
      Deposits shall be held in an institution (which may be Lender, if Lender is
      such
      an institution) whose deposits or accounts are insured or guaranteed by a
      federal agency. Lender shall not be obligated to open additional accounts or
      deposit Imposition Deposits in additional institutions when the amount of the
      Imposition Deposits exceeds the maximum amount of the federal deposit insurance
      or guaranty. Lender shall apply the Imposition Deposits to pay Impositions
      so
      long as no Event of Default has occurred and is continuing. Unless applicable
      law requires, Lender shall not be required to pay Borrower any interest,
      earnings or profits on the Imposition Deposits. As additional security for
      all
      of 

     

    
      
        
        

      

      
        PAGE
          13

        
          

        

      

      
        
        

      

    

    Borrower’s
      obligations under this Instrument and the other Loan Documents, Borrower hereby
      pledges and grants to Lender a security interest in the Imposition Deposits
      and
      all proceeds of, and all interest and dividends on, the Imposition Deposits.
      Any
      amounts deposited with Lender under this Section 7 shall not be trust
      funds, nor shall they operate to reduce the Indebtedness, unless applied by
      Lender for that purpose under Section 7(e).

     

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

     

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

     

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

     

    (f) If
      Lender
      does not collect an Imposition Deposit with respect to an Imposition either
      marked “Deferred” in Section 7(a) or pursuant to a separate written waiver
      by Lender, then on or before the date each such Imposition is due, or on the
      date this Instrument requires each such Imposition to be paid, Borrower must
      provide Lender with proof of payment of each such Imposition for which Lender
      does not require collection of Imposition Deposits. Lender may revoke its
      deferral or waiver and require Borrower to deposit with Lender any or all of
      the
      Imposition Deposits listed in Section 7(a), regardless of whether any such
      item is marked “Deferred” in such section, upon Notice to Borrower, (i) if
      Borrower does not timely pay any of the Impositions, (ii) if Borrower fails
      to provide timely proof to Lender of such payment, or (iii) at any time
      during the existence of an Event of Default.

     

    (g) In
      the
      event of a Transfer prohibited by or requiring Lender’s approval under
      Section 21, Lender’s waiver of the collection of any Imposition Deposit in
      this Section 7 may be modified or rendered void by Lender at Lender’s
      option by Notice to Borrower and the transferee(s) as a condition of Lender’s
      approval of such Transfer.

     

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

     

    
      
        
        

      

      
        PAGE
          14

        
          

        

      

      
        
        

      

    

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

     

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

     

    11. USE
      OF PROPERTY.
      Unless
      required by applicable law, Borrower shall not (a) allow changes in the use
      for which all or any part of the Mortgaged Property is being used at the time
      this Instrument was executed, except for any change in use approved by Lender,
      (b) convert any individual dwelling units or common areas to commercial
      use, (c) initiate a change in the zoning classification of the Mortgaged
      Property or acquiesce without Notice to and consent of Lender in a change in
      the
      zoning classification of the Mortgaged Property, (d) establish any
      condominium or cooperative regime with respect to the Mortgaged Property,
      (e) combine all or any part of the Mortgaged Property with all or any part
      of a tax parcel which is not part of the Mortgaged Property, or
      (f) subdivide or otherwise split any tax parcel constituting all or any
      part of the Mortgaged Property without the prior consent of Lender.

     

    12. PROTECTION
      OF LENDER’S SECURITY; INSTRUMENT SECURES FUTURE ADVANCES.

     

    (a) If
      Borrower fails to perform any of its obligations under this Instrument or any
      other Loan Document, or if any action or proceeding is commenced which purports
      to affect the Mortgaged Property, Lender’s security or Lender’s rights under
      this Instrument, including eminent domain, insolvency, code enforcement, civil
      or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent
      conveyance or reorganizations or proceedings involving a

     

    
      
        
        

      

      
        PAGE
          15

        
          

        

      

      
        
        

      

    

    bankrupt
      or decedent, then Lender at Lender’s option may make such appearances, file such
      documents, disburse such sums and take such actions as Lender reasonably deems
      necessary to perform such obligations of Borrower and to protect Lender’s
      interest, including (i) payment of Attorneys’ Fees and Costs,
      (ii) payment of fees and out-of-pocket expenses of accountants, inspectors
      and consultants, (iii) entry upon the Mortgaged Property to make repairs or
      secure the Mortgaged Property, (iv) procurement of the insurance required
      by Section 19, and (v) payment of amounts which Borrower has failed to
      pay under Sections 15 and 17.

     

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

     

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

     

    13. INSPECTION.

     

    (a) Lender,
      its agents, representatives, and designees may make or cause to be made entries
      upon and inspections of the Mortgaged Property (including environmental
      inspections and tests) during normal business hours, or at any other
      reasonable time, upon reasonable notice to Borrower if the inspection is to
      include occupied residential units (which notice need not be in writing). Notice
      to Borrower shall not be required in the case of an emergency, as determined
      in
      Lender’s discretion, or when an Event of Default has occurred and is
      continuing.

     

    (b) If
      Lender
      determines that Mold has developed as a result of a water intrusion event or
      leak, Lender, at Lender’s discretion, may require that a professional inspector
      inspect the Mortgaged Property as frequently as Lender determines is necessary
      until any issue with Mold and its cause(s) are resolved to Lender’s
      satisfaction. Such inspection shall be limited to a visual and olfactory
      inspection of the area that has experienced the Mold, water intrusion event
      or
      leak. Borrower shall be responsible for the cost of such professional inspection
      and any remediation deemed to be necessary as a result of the professional
      inspection. After any issue with Mold, water intrusion or leaks is remedied
      to
      Lender’s satisfaction, Lender shall not require a professional inspection any
      more frequently than once every three years unless Lender is otherwise aware
      of
      Mold as a result of a subsequent water intrusion event or leak.

     

    (c) If
      Lender
      or Loan Servicer determines not to conduct an annual inspection of the Mortgaged
      Property, and in lieu thereof Lender requests a certification, Borrower shall
      be
      prepared to provide and must actually provide to Lender a factually correct
      certification each year that the annual inspection is waived to the following
      effect:

     

    Borrower
      has not received any written complaint, notice, letter or other written
      communication from tenants, management agent or

     

    
      
        
        

      

      
        PAGE
          16

        
          

        

      

      
        
        

      

    

    governmental
      authorities regarding odors, indoor air quality, mold, fungus, microbial
      contamination or pathogenic organisms (“Mold”) or any activity, condition, event
      or omission that causes or facilitates the growth of Mold on or in any part
      of
      the Mortgaged Property or if Borrower has received any such written complaint,
      notice, letter or other written communication that Borrower has investigated
      and
      determined that no Mold activity, condition or event exists or alternatively
      has
      fully and properly remediated such activity, condition, event or omission in
      compliance with the Moisture Management Plan for the Mortgaged
      Property.

     

    If
      Borrower is unwilling or unable to provide such certification, Lender may
      require a professional inspection of the Mortgaged Property at Borrower’s
      expense.

     

    14. BOOKS
      AND RECORDS; FINANCIAL REPORTING.

     

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

     

    (b) Within
      120 days after the end of each fiscal year of Borrower, Borrower shall furnish
      to Lender a statement of income and expenses for Borrower’s operation of the
      Mortgaged Property for that fiscal year, a statement of changes in financial
      position of Borrower relating to the Mortgaged Property for that fiscal year
      and, when requested by Lender, a balance sheet showing all assets and
      liabilities of Borrower relating to the Mortgaged Property as of the end of
      that
      fiscal year. If Borrower’s fiscal year is other than the calendar year, Borrower
      must also submit to Lender a year-end statement of income and expenses within
      120 days after the end of the calendar year.

     

    (c) Within
      120 days after the end of each calendar year, and at any other time, upon
      Lender’s request, Borrower shall furnish to Lender each of the following.
      However, Lender shall not require any of the following more frequently than
      quarterly except when there has been an Event of Default and such Event of
      Default is continuing, in which case Lender may, upon written request to
      Borrower, require Borrower to furnish any of the following more
      frequently:

     

    
      	 	
              (i)

            	
              a
                rent schedule for the Mortgaged Property showing the name of each
                tenant,
                and for each tenant, the space occupied, the lease expiration
                date,

            

    

     

    
      
        
        

      

      
        PAGE
          17

        
          

        

      

      
        
        

      

    

    the
      rent
      payable for the current month, the date through which rent has been paid, and
      any related information requested by Lender;

     

    
      	 	
              (ii)

            	
              an
                accounting of all security deposits held pursuant to all Leases,
                including
                the name of the institution (if any) and the names and identification
                numbers of the accounts (if any) in which such security deposits are
                held and the name of the person to contact at such financial institution,
                along with any authority or release necessary for Lender to access
                information regarding such accounts;
                and

            

    

     

    
      	 	
              (iii)

            	
              a
                statement that identifies all owners of any interest in Borrower
                and any
                Controlling Entity and the interest held by each (unless Borrower
                or any
                Controlling Entity is a publicly-traded entity in which case such
                statement of ownership shall not be required), if Borrower or a
                Controlling Entity is a corporation, all officers and directors of
                Borrower and the Controlling Entity, and if Borrower or a Controlling
                Entity is a limited liability company, all managers who are not
                members.

            

    

     

    (d) At
      any
      time upon Lender’s request, Borrower shall furnish to Lender each of the
      following. However, Lender shall not require any of the following more
      frequently than quarterly except when there has been an Event of Default and
      such Event of Default is continuing, in which case Lender may require Borrower
      to furnish any of the following more frequently:

     

    
      	 	
              (i)

            	
              a
                balance sheet, a statement of income and expenses for Borrower and
                a
                statement of changes in financial position of Borrower for Borrower’s most
                recent fiscal year;

            

    

     

    
      	 	
              (ii)

            	
              a
                quarterly or year-to-date income and expense statement for the Mortgaged
                Property; and

            

    

     

    
      	 	
              (iii)

            	
              a
                monthly property management report for the Mortgaged Property, showing
                the
                number of inquiries made and rental applications received from tenants
                or
                prospective tenants and deposits received from tenants and any other
                information requested by Lender.

            

    

     

    (e) Upon
      Lender’s request at any time when an Event of Default has occurred and is
      continuing, Borrower shall furnish to Lender monthly income and expense
      statements and rent schedules for the Mortgaged Property.

     

    (f) An
      individual having authority to bind Borrower shall certify each of the
      statements, schedules and reports required by Sections 14(b) through
      14(e) to be complete and accurate. Each of the statements, schedules and
      reports required by Sections 14(b) through 14(e) shall be in such
      form and contain such detail as Lender may reasonably require. Lender also
      may
      require that any of the statements, schedules or reports listed in
      Section 14(b) and

     

    
      
        
        

      

      
        PAGE
          18

        
          

        

      

      
        
        

      

    

    14(c)(i) and
      (ii) be audited at Borrower’s expense by independent certified public
      accountants acceptable to Lender, at any time when an Event of Default has
      occurred and is continuing or at any time that Lender, in its reasonable
      judgment, determines that audited financial statements are required for an
      accurate assessment of the financial condition of Borrower or of the Mortgaged
      Property.

     

    (g) If
      Borrower fails to provide in a timely manner the statements, schedules and
      reports required by Sections 14(b) through (e), Lender shall give
      Borrower Notice specifying the statements, schedules and reports required by
      Section 14(b) through (e) that Borrower has failed to provide. If
      Borrower has not provided the required statements, schedules and reports within
      10 Business Days following such Notice, then Lender shall have the right to
      have
      Borrower’s books and records audited, at Borrower’s expense, by independent
      certified public accountants selected by Lender in order to obtain such
      statements, schedules and reports, and all related costs and expenses of Lender
      shall become immediately due and payable and shall become an additional part
      of
      the Indebtedness as provided in Section 12. Notice to Borrower shall not be
      required in the case of an emergency, as determined in Lender’s discretion, or
      when an Event of Default has occurred and is continuing.

     

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

     

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

     

    15. TAXES;
      OPERATING EXPENSES.

     

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

     

    (b) Subject
      to the provisions of Section 15(c), Borrower shall (i) pay the
      expenses of operating, managing, maintaining and repairing the Mortgaged
      Property (including utilities, repairs and replacements) before the last
      date upon which each such payment may be made without any penalty or interest
      charge being added, and (ii) pay insurance premiums at least 30 days
      prior to the expiration date of each policy of insurance, unless applicable
      law
      specifies some lesser period.

     

    (c) If
      Lender
      is collecting Imposition Deposits, to the extent that Lender holds sufficient
      Imposition Deposits for the purpose of paying a specific Imposition, then
      Borrower shall not be obligated to pay such Imposition, so long as no Event
      of
      Default exists and Borrower has timely delivered to Lender any bills or premium
      notices that it has received. If an Event of Default exists, Lender may exercise
      any rights Lender may have with respect to Imposition Deposits without regard
      to
      whether Impositions are then due and payable. Lender shall have no liability
      to
      Borrower for failing to pay any Impositions to the extent that (i) any
      Event of Default

     

    
      
        
        

      

      
        PAGE
          19

        
          

        

      

      
        
        

      

    

    has
      occurred and is continuing, (ii) insufficient Imposition Deposits are held
      by Lender at the time an Imposition becomes due and payable or
      (iii) Borrower has failed to provide Lender with bills and premium notices
      as provided above.

     

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

     

    (e) Borrower
      shall promptly deliver to Lender a copy of all notices of, and invoices for,
      Impositions, and if Borrower pays any Imposition directly, Borrower shall
      furnish to Lender on or before the date this Instrument requires such
      Impositions to be paid, receipts evidencing that such payments were
      made.

     

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

     

    17. PRESERVATION,
      MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

     

    (a) Borrower
      shall not commit waste or permit impairment or deterioration of the Mortgaged
      Property.

     

    (b) Borrower
      shall not abandon the Mortgaged Property.

     

    (c) Borrower
      shall restore or repair promptly, in a good and workmanlike manner, any damaged
      part of the Mortgaged Property to the equivalent of its original condition,
      or
      such other condition as Lender may approve in writing, whether or not insurance
      proceeds or condemnation awards are available to cover any costs of such
      restoration or repair; however, Borrower shall not be obligated to perform
      such
      restoration or repair if (i) no Event of Default has occurred and is
      continuing, and (ii) Lender has elected to apply any available insurance
      proceeds and/or condemnation awards to the payment of Indebtedness pursuant
      to
      Section 19(h)(ii), (iii), (iv) or (v), or pursuant to
      Section 20.

     

    (d) Borrower
      shall keep the Mortgaged Property in good repair, including the replacement
      of
      Personalty and Fixtures with items of equal or better function and
      quality.

     

    
      
        
        

      

      
        PAGE
          20

        
          

        

      

      
        
        

      

    

    (e) Borrower
      shall provide for professional management of the Mortgaged Property by a
      residential rental property manager satisfactory to Lender at all times under
      a
      contract approved by Lender in writing, which contract must be terminable upon
      not more than 30 days notice without the necessity of establishing cause
      and without payment of a penalty or termination fee by Borrower or its
      successors.

     

    (f) Borrower
      shall give Notice to Lender of and, unless otherwise directed in writing by
      Lender, shall appear in and defend any action or proceeding purporting to affect
      the Mortgaged Property, Lender’s security or Lender’s rights under this
      Instrument. Borrower shall not (and shall not permit any tenant or other person
      to) remove, demolish or alter the Mortgaged Property or any part of the
      Mortgaged Property, including any removal, demolition or alteration occurring
      in
      connection with a rehabilitation of all or part of the Mortgaged Property,
      except (i) in connection with the replacement of tangible Personalty,
      (ii) if Borrower is a cooperative housing corporation, to the extent
      permitted with respect to individual dwelling units under the form of
      proprietary lease or occupancy agreement and (iii) repairs and replacements
      in connection with making an individual unit ready for a new
      occupant.

     

    (g) Unless
      otherwise waived by Lender in writing, Borrower must have or must establish
      and
      must adhere to the MMP. If the Borrower is required to have an MMP, the Borrower
      must keep all MMP documentation at the Mortgaged Property or at the management
      agent’s office and available for the Lender or the Loan Servicer to review
      during any annual assessment or other inspection of the Mortgaged Property
      that
      is required by Lender.

     

    18. ENVIRONMENTAL
      HAZARDS.

     

    (a) Except
      for matters described in Section 18(b), Borrower shall not cause or permit
      any of the following:

     

    
      	 	
              (i)

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

            

    

     

    
      	 	
              (ii)

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

            

    

     

    
      	 	
              (iii)

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

            

    

     

    
      	 	
              (iv)

            	
              any
                violation of or noncompliance with the terms of any Environmental
                Permit
                with respect to the Mortgaged Property or any property of Borrower
                that is
                adjacent to the Mortgaged Property;

            

    

     

    
      
        
        

      

      
        PAGE
          21

        
          

        

      

      
        
        

      

    

    
      	 	
              (v)

            	
              any
                violation or noncompliance with the terms of any O&M Program as
                defined in subsection (d).

            

    

     

    The
      matters described in clauses (i) through (v) above, except as
      otherwise provided in Section 18(b), are referred to collectively in this
      Section 18 as “Prohibited
      Activities or Conditions.”

     

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

     

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

     

    (d) As
      required by Lender, Borrower shall also have established a written operations
      and maintenance program with respect to certain Hazardous Materials. Each such
      operations and maintenance program and any additional or revised operations
      and
      maintenance programs established for the Mortgaged Property pursuant to this
      Section 18 must be approved by Lender and shall be referred to herein as an
“O&M
      Program.”
      Borrower shall comply in a timely manner with, and cause all employees, agents,
      and contractors of Borrower and any other persons present on the Mortgaged
      Property to comply with each O&M Program. Borrower shall pay all costs of
      performance of Borrower’s obligations under any O&M Program, and Lender’s
      out-of-pocket costs incurred in connection with the monitoring and review of
      each O&M Program and Borrower’s performance shall be paid by Borrower upon
      demand by Lender. Any such out-of-pocket costs of Lender that Borrower fails
      to
      pay promptly shall become an additional part of the Indebtedness as provided
      in
      Section 12.

     

    (e) Borrower
      represents and warrants to Lender that, except as previously disclosed by
      Borrower to Lender in writing (which written disclosure may be in certain
      environmental assessments and other written reports accepted by Lender in
      connection with the funding of the Indebtedness and dated prior to the date
      of
      this Instrument):

     

    
      
        
        

      

      
        PAGE
          22

        
          

        

      

      
        
        

      

    

        

    
      	 	
              (i) 

               

               

              (ii)

            	
              Borrower
                has not at any time engaged in, caused or permitted any Prohibited
                Activities or Conditions on the Mortgaged
                Property;

               

               

              to
                the best of Borrower’s knowledge after reasonable and diligent inquiry, no
                Prohibited Activities or Conditions exist or have existed on the
                Mortgaged
                Property;

            

    

     

    
      	 	
              (iii)

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

            

    

     

    
      	 	
              (iv)

            	
              to
                the best of Borrower’s knowledge after reasonable and diligent inquiry,
                Borrower has complied with all Hazardous Materials Laws, including
                all
                requirements for notification regarding releases of Hazardous Materials.
                Without limiting the generality of the foregoing, Borrower has obtained
                all Environmental Permits required for the operation of the Mortgaged
                Property in accordance with Hazardous Materials Laws now in effect
                and all
                such Environmental Permits are in full force and
                effect;

            

    

     

    
      	 	
              (v)

            	
              to
                the best of Borrower’s knowledge after reasonable and diligent inquiry, no
                event has occurred with respect to the Mortgaged Property that
                constitutes, or with the passing of time or the giving of notice
                would
                constitute, noncompliance with the terms of any Environmental
                Permit;

            

    

     

    
      	 	
              (vi)

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

            

    

     

    
      	 	
              (vii)

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

            

    

     

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

     

    
      	 	
              (i)

            	
              Borrower’s
                discovery of any Prohibited Activity or
                Condition;

            

    

     

    
      
        
        

      

      
        PAGE
          23

        
          

        

      

      
        
        

      

    

    
      	 	
              (ii)

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

            

    

     

    
      	 	
              (iii)

            	
              Borrower’s
                breach of any of its obligations under this
                Section 18.

            

    

     

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

     

    (g) Borrower
      shall pay promptly the costs of any environmental inspections, tests or audits,
      a purpose of which is to identify the extent or cause of or potential for a
      Prohibited Activity or Condition (“Environmental
      Inspections”), required
      by Lender in connection with any foreclosure or deed in lieu of foreclosure,
      or
      as a condition of Lender’s consent to any Transfer under Section 21, or
      required by Lender following a reasonable determination by Lender that
      Prohibited Activities or Conditions may exist. Any such costs incurred by Lender
      (including Attorneys’ Fees and Costs and the costs of technical consultants
      whether incurred in connection with any judicial or administrative process
      or
      otherwise) that Borrower fails to pay promptly shall become an additional
      part of the Indebtedness as provided in Section 12. As long as (i) no
      Event of Default has occurred and is continuing, (ii) Borrower has actually
      paid for or reimbursed Lender for all costs of any such Environmental
      Inspections performed or required by Lender, and (iii) Lender is not
      prohibited by law, contract or otherwise from doing so, Lender shall make
      available to Borrower, without representation of any kind, copies of
      Environmental Inspections prepared by third parties and delivered to Lender.
      Lender hereby reserves the right, and Borrower hereby expressly authorizes
      Lender, to make available to any party, including any prospective bidder at
      a
      foreclosure sale of the Mortgaged Property, the results of any Environmental
      Inspections made by or for Lender with respect to the Mortgaged Property.
      Borrower consents to Lender notifying any party (either as part of a notice
      of
      sale or otherwise) of the results of any Environmental Inspections made by
      or for Lender. Borrower acknowledges that Lender cannot control or otherwise
      assure the truthfulness or accuracy of the results of any Environmental
      Inspections and that the release of such results to prospective bidders at
      a
      foreclosure sale of the Mortgaged Property may have a material and adverse
      effect upon the amount that a party may bid at such sale. Borrower agrees that
      Lender shall have no liability whatsoever as a result of delivering the results
      to any third party of any Environmental Inspections made by or for Lender,
      and
      Borrower hereby releases and forever discharges Lender from any and all claims,
      damages, or causes of action, arising out of, connected with or incidental
      to
      the results of, the delivery of any of Environmental Inspections made by or
      for
      Lender.

     

    (h) If
      any
      investigation, site monitoring, containment, clean-up, restoration or other
      remedial work (“Remedial
      Work”) is
      necessary to comply with any Hazardous Materials Law or order of any
      Governmental Authority that has or acquires jurisdiction over the
      Mortgaged

     

    
      
        
        

      

      
        PAGE
          24

        
          

        

      

      
        
        

      

    

    Property
      or the use, operation or improvement of the Mortgaged Property, or is otherwise
      required by Lender as a consequence of any Prohibited Activity or Condition
      or
      to prevent the occurrence of a Prohibited Activity or Condition, Borrower shall,
      by the earlier of (i) the applicable deadline required by Hazardous
      Materials Law or (ii) 30 days after Notice from Lender demanding such
      action, begin performing the Remedial Work, and thereafter diligently prosecute
      it to completion, and shall in any event complete the work by the time required
      by applicable Hazardous Materials Law. If Borrower fails to begin on a timely
      basis or diligently prosecute any required Remedial Work, Lender may, at its
      option, cause the Remedial Work to be completed, in which case Borrower shall
      reimburse Lender on demand for the cost of doing so. Any reimbursement due
      from
      Borrower to Lender shall become part of the Indebtedness as provided in
      Section 12.

     

    (i) Borrower
      shall comply with all Hazardous Materials Laws applicable to the Mortgaged
      Property. Without limiting the generality of the previous sentence, Borrower
      shall (i) obtain and maintain all Environmental Permits required by
      Hazardous Materials Laws and comply with all conditions of such Environmental
      Permits; (ii) cooperate with any inquiry by any Governmental Authority; and
      (iii) comply with any governmental or judicial order that arises from any
      alleged Prohibited Activity or Condition.

     

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

     

    
      	 	
              (i)

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

            

    

     

    
      	 	
              (ii)

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

            

    

     

    
      	 	
              (iii)

            	
              the
                existence or alleged existence of any Prohibited Activity or
                Condition;

            

    

     

    
      	 	
              (iv)

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

            

    

     

    
      	 	
              (v)

            	
              the
                actual or alleged violation of any Hazardous Materials
                Law.

            

    

     

    (k) Counsel
      selected by Borrower to defend Indemnitees shall be subject to the approval
      of
      those Indemnitees. In any circumstances in which the indemnity under this
      Section 18 applies, Lender may employ its own legal counsel and consultants
      to prosecute,

     

    
      
        
        

      

      
        PAGE
          25

        
          

        

      

      
        
        

      

    

    defend
      or
      negotiate any claim or legal or administrative proceeding and Lender, with
      the
      prior written consent of Borrower (which shall not be unreasonably withheld,
      delayed or conditioned) may settle or compromise any action or legal or
      administrative proceeding. However, unless an Event of Default has occurred
      and
      is continuing, or the interests of Borrower and Lender are in conflict, as
      determined by Lender in its discretion, Lender shall permit Borrower to
      undertake the actions referenced in this Section 18 in accordance with this
      Section 18(k) and Section 18(l) so long as Lender approves such
      action, which approval shall not be unreasonably withheld or delayed. Borrower
      shall reimburse Lender upon demand for all costs and expenses incurred by
      Lender, including all costs of settlements entered into in good faith,
      consultants’ fees and Attorneys’ Fees and Costs.

     

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

     

    (m) Borrower’s
      obligation to indemnify the Indemnitees shall not be limited or impaired by
      any
      of the following, or by any failure of Borrower or any guarantor to receive
      notice of or consideration for any of the following:

     

    
      	 	
              (i)

            	
              any
                amendment or modification of any Loan
                Document;

            

    

     

    
      	 	
              (ii)

            	
              any
                extensions of time for performance required by any Loan
                Document;

            

    

     

    
      	 	
              (iii)

            	
              any
                provision in any of the Loan Documents limiting Lender’s recourse to
                property securing the Indebtedness, or limiting the personal liability
                of
                Borrower or any other party for payment of all or any part of the
                Indebtedness;

            

    

     

    
      	 	
              (iv)

            	
              the
                accuracy or inaccuracy of any representations and warranties made
                by
                Borrower under this Instrument or any other Loan
                Document;

            

    

     

    
      	 	
              (v)

            	
              the
                release of Borrower or any other person, by Lender or by operation
                of law,
                from performance of any obligation under any Loan
                Document;

            

    

     

    
      	 	
              (vi)

            	
              the
                release or substitution in whole or in part of any security for the
                Indebtedness; and

            

    

     

    
      	 	
              (vii)

            	
              Lender’s
                failure to properly perfect any lien or security interest given as
                security for the Indebtedness.

            

    

     

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

     

    
      
        
        

      

      
        PAGE
          26

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              (i)

               

               

              (ii)

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

               

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

            

    

     

    
      	 	
              (iii)

            	
              reimburse
                Indemnitees for any and all expenses, including Attorneys’ Fees and Costs,
                paid or incurred in connection with the enforcement by Indemnitees
                of
                their rights under this Section 18, or in monitoring and
                participating in any legal or administrative
                proceeding.

            

    

     

    (o) The
      provisions of this Section 18 shall be in addition to any and all other
      obligations and liabilities that Borrower may have under applicable law or
      under
      other Loan Documents, and each Indemnitee shall be entitled to indemnification
      under this Section 18 without regard to whether Lender or that Indemnitee
      has exercised any rights against the Mortgaged Property or any other security,
      pursued any rights against any guarantor, or pursued any other rights available
      under the Loan Documents or applicable law. If Borrower consists of more than
      one person or entity, the obligation of those persons or entities to indemnify
      the Indemnitees under this Section 18 shall be joint and several. The
      obligation of Borrower to indemnify the Indemnitees under this Section 18
      shall survive any repayment or discharge of the Indebtedness, any foreclosure
      proceeding, any foreclosure sale, any delivery of any deed in lieu of
      foreclosure, and any release of record of the lien of this Instrument.
      Notwithstanding the foregoing, if Lender has never been a
      mortgagee-in-possession of, or held title to, the Mortgaged Property, Borrower
      shall have no obligation to indemnify the Indemnitees under this Section 18
      after the date of the release of record of the lien of this Instrument by
      payment in full at the Maturity Date or by voluntary prepayment in
      full.

     

    19. PROPERTY
      AND LIABILITY INSURANCE.

     

    (a) Borrower
      shall keep the Improvements insured at all times against such hazards as Lender
      may from time to time require, which insurance shall include but not be limited
      to coverage against loss by fire and allied perils, general boiler and machinery
      coverage, rent loss and extra expense insurance. If Lender so requires, such
      insurance shall also include sinkhole insurance, mine subsidence insurance,
      earthquake insurance, and, if the Mortgaged Property does not conform to
      applicable zoning or land use laws, building ordinance or law coverage. Borrower
      acknowledges and agrees that Lender’s insurance requirements may change from
      time to time throughout the term of the Indebtedness. If any of the Improvements
      is located in an area identified by the Federal Emergency Management Agency
      (or
      any successor to that agency) as an area having special flood hazards,
      Borrower shall insure such Improvements against loss by flood. All insurance
      required pursuant to this Section 19(a) shall be referred to as
“Hazard
      Insurance.”

     

    
      
        
        

      

      
        PAGE
          27

        
          

        

      

      
        
        

      

    

    (b) All
      premiums on Hazard Insurance policies required under
      Section 19(a) shall be paid in the manner provided in Section 7,
      unless Lender has designated in writing another method of payment. All such
      policies shall also be in a form approved by Lender. All policies of property
      damage insurance shall include a non-contributing, non-reporting mortgage clause
      in favor of, and in a form approved by, Lender. Lender shall have the right
      to
      hold the original policies or duplicate original policies of all Hazard
      Insurance required by Section 19(a). Borrower shall promptly deliver to
      Lender a copy of all renewal and other notices received by Borrower with respect
      to the policies and all receipts for paid premiums. At least 5 days prior to
      the
      expiration date of any Hazard Insurance policy, Borrower shall deliver to Lender
      evidence acceptable to Lender that the policy has been renewed. If Borrower
      has
      not delivered the original (or a duplicate original) of a renewal policy
      prior to the expiration date of any Hazard Insurance policy, Borrower shall
      deliver the original (or a duplicate original) of a renewal policy in a
      form satisfactory to Lender within 120 days after the expiration date of the
      original policy.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        PAGE
          28

        
          

        

      

      
        
        

      

    

    (g) Notwithstanding
      any provision to the contrary in this Section 19, as long as no Event of
      Default, or any event which, with the giving of Notice or the passage of time,
      or both, would constitute an Event of Default, has occurred and is
      continuing,

     

    
      	 	
              (i)

            	
              in
                the event of a casualty resulting in damage to the Mortgaged Property
                which will cost $10,000 or less to repair, the Borrower shall have
                the
                sole right to make proof of loss, adjust and compromise the claim
                and
                collect and receive any proceeds directly without the approval or
                prior
                consent of the Lender so long as the insurance proceeds are used
                solely
                for the Restoration of the Mortgaged Property;
                and

            

    

     

    
      	 	
              (ii)

            	
              in
                the event of a casualty resulting in damage to the Mortgaged Property
                which will cost more than $10,000 but less than $50,000 to repair,
                the
                Borrower is authorized to make proof of loss and adjust and compromise
                the
                claim without the prior consent of Lender, and Lender shall hold
                the
                applicable insurance proceeds to be used to reimburse Borrower for
                the
                cost of Restoration of the Mortgaged Property and shall not apply
                such
                proceeds to the payment of sums due under this
                Instrument.

            

    

     

    (h) Lender
      will have the right to exercise its option to apply insurance proceeds to the
      payment of the Indebtedness only if Lender determines that at least one of
      the
      following
      conditions is met:

     

    
      	 	
              (i)

            	
              an
                Event of Default (or any event, which, with the giving of Notice
                or the
                passage of time, or both, would constitute an Event of Default) has
                occurred and is continuing;

            

    

     

    
      	 	
              (ii)

            	
              Lender
                determines, in its discretion, that there will not be sufficient
                funds
                from insurance proceeds, anticipated contributions of Borrower of
                its own
                funds or other sources acceptable to Lender to complete the
                Restoration;

            

    

     

    
      	 	
              (iii)

            	
              Lender
                determines, in its discretion, that the rental income from the Mortgaged
                Property after completion of the Restoration will not be sufficient
                to
                meet all operating costs and other expenses, Imposition Deposits,
                deposits
                to reserves and loan repayment obligations relating to the Mortgaged
                Property; 

            

    

     

    
      	 	
              (iv)

            	
              Lender
                determines, in its discretion, that the Restoration will not be completed
                at least one year before the Maturity Date (or six months before the
                Maturity Date if Lender determines in its discretion that re-leasing
                of
                the Mortgaged Property will be completed within such six-month period);
                or

            

    

     

    
      	 	
              (v)

            	
              Lender
                determines that the Restoration will not be completed within one year
                after the date of the loss or
                casualty.

            

    

     

    
      
        
        

      

      
        PAGE
          29

        
          

        

      

      
        
        

      

    

    

     

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

     

    (j) Unless
      Lender otherwise agrees in writing, any application of any insurance proceeds
      to
      the Indebtedness shall not extend or postpone the due date of any monthly
      installments referred to in the Note, Section 7 of this Instrument or any
      Collateral Agreement, or change the amount of such installments.

     

    (k) Borrower
      agrees to execute such further evidence of assignment of any insurance proceeds
      as Lender may require.

     

    20. CONDEMNATION.

     

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

     

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

     

    21. TRANSFERS
      OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER. [RIGHT TO UNLIMITED
      TRANSFERS -- WITH LENDER APPROVAL].

     

    
      
        
        

      

      
        PAGE
          30

        
          

        

      

      
        
        

      

    

    (a) “Transfer”
      means

     

    
      	 	
              (i) 

            	
              a
                sale, assignment, transfer or other disposition (whether voluntary,
                involuntary or by operation of
                law);

            

    

     

    
      	 	
              (ii) 

            	
              the
                granting, creating or attachment of a lien, encumbrance or security
                interest (whether voluntary, involuntary or by operation of
                law);

            

    

     

    
      	 	
              (iii) 

            	
              the
                issuance or other creation of an ownership interest in a legal entity,
                including a partnership interest, interest in a limited liability
                company
                or corporate stock;

            

    

     

    
      	 	
              (iv) 

            	
              the
                withdrawal, retirement, removal or involuntary resignation of a partner
                in
                a partnership or a member or manager in a limited liability company;
                or

            

    

     

    
      	 	
              (v) 

            	
              the
                merger, dissolution, liquidation, or consolidation of a legal entity
                or
                the reconstitution of one type of legal entity into another type
                of legal
                entity.

            

    

     

    For
      purposes of defining the term “Transfer,” the term “partnership” shall mean a
      general partnership, a limited partnership, a joint venture and a limited
      liability partnership, and the term “partner” shall mean a general partner, a
      limited partner and a joint venturer.

     

    (b) “Transfer”
      does not include

     

    
      	 	
              (i) 

            	
              a
                conveyance of the Mortgaged Property at a judicial or non-judicial
                foreclosure sale under this
                Instrument,

            

    

     

    
      	 	
              (ii) 

            	
              the
                Mortgaged Property becoming part of a bankruptcy estate by operation
                of
                law under the United States Bankruptcy Code,
                or

            

    

     

    
      	 	
              (iii) 

            	
              a
                lien against the Mortgaged Property for local taxes and/or assessments
                not
                then due and payable.

            

    

     

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

     

    
      	 	
              (i)

            	
              a
                Transfer to which Lender has
                consented;

            

    

     

    
      	 	
              (ii)

            	
              a
                Transfer that occurs in accordance with
                Section 21(d);

            

    

     

    
      	 	
              (iii)

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

            

    

     

    
      
        
        

      

      
        PAGE
          31

        
          

        

      

      
        
        

      

    

    
      	 	
              (iv)

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

            

    

     

    
      	 	
              (v)

            	
              the
                creation of a mechanic’s, materialman’s, or judgment lien against the
                Mortgaged Property, which is released of record or otherwise remedied
                to
                Lender’s satisfaction within 60 days of the date of
                creation;

            

    

     

    
      	 	
              (vi)

            	
              if
                Borrower is a housing cooperative, any
                Transfer of the shares in the housing cooperative or any assignment
                of the
                occupancy agreements or leases relating thereto by tenant shareholders
                of
                the housing cooperative; and

            

    

     

    
      	 	
              (vii)

            	
              any
                Transfer of an interest in Borrower or any interest in a Controlling
                Entity (which, if such Controlling Entity were Borrower, would result
                in
                an Event of Default) listed in (A) through (F) below (a “Preapproved
                Transfer”),
                under the terms and conditions listed as items (1) through (7)
                below:

            

    

     

    
      	 	
              (A)

            	
              a
                sale or transfer to one or more of the transferor’s immediate family
                members; or

            

    

    
      	 	
              (B)

            	
              a
                sale or transfer to any trust having as its sole beneficiaries the
                transferor and/or one or more of the transferor’s immediate family
                members; or

            

    

    
      	 	
              (C)

            	
              a
                sale or transfer from a trust to any one or more of its beneficiaries
                who
                are immediate family members of the transferor;
                or

            

    

    
      	 	
              (D)

            	
              the
                substitution or replacement of the trustee of any trust with a trustee
                who
                is an immediate family member of the transferor;
                or

            

    

    
      	 	
              (E)

            	
              a
                sale or transfer to an entity owned and controlled by the transferor
                or
                the transferor’s immediate family members;
                or

            

    

    
      	 	
              (F)

            	
              a
                sale or transfer to an individual or entity that has an existing
                interest
                in the Borrower or in a Controlling
                Entity.

            

    

    

    
      	 	
              (1)

            	
              Borrower
                shall provide Lender with prior written Notice of the proposed Preapproved
                Transfer, which Notice must be accompanied by a non-refundable review
                fee
                in the amount of $3,000.

            

    

     

    
      	 	
              (2)

            	
              For
                the purposes of these Preapproved Transfers, a transferor’s immediate
                family members will be deemed to include a spouse, parent, child
                or
                grandchild of such transferor.

            

    

     

    
      
        
        

      

      
        PAGE
          32

        
          

        

      

      
        
        

      

    

    
      	 	
              (3)

            	
              Either
                directly or indirectly, David L. Johnson shall retain at all times
                a
                managing interest in the Borrower.

            

    

     

    
      	 	
              (4)

            	
              At
                the time of the proposed Preapproved Transfer, no Event of Default
                shall
                have occurred and be continuing and no event or condition shall have
                occurred and be continuing that, with the giving of Notice or the
                passage
                of time, or both, would become an Event of
                Default.

            

    

     

    
      	 	
              (5)

            	
              Lender
                shall be entitled to collect all costs, including the cost of all
                title
                searches, title insurance and recording costs, and all Attorneys’ Fees and
                Costs.

            

    

     

    
      	 	
              (6)

            	
              Lender
                shall not be entitled to collect a transfer fee as a result of these
                Preapproved Transfers.

            

    

     

    
      	 	
              (7)

            	
              In
                the event of a Transfer prohibited by or requiring Lender’s approval under
                this Section 21, this Section (c)(vii) may be modified or
                rendered void by Lender at Lender’s option by Notice to Borrower and the
                transferee(s), as a condition of Lender’s
                consent.

            

    

     

    (d) The
      occurrence of any of the following Transfers shall not constitute an Event
      of
      Default under this Instrument, provided that Borrower has notified Lender in
      writing within 30 days following the occurrence of any of the following,
      and such Transfer does not constitute an Event of Default under any other
      Section of this Instrument:

     

    
      	 	
              (i)

            	
              a
                change of the Borrower’s name, provided that UCC financing statements
                and/or amendments sufficient to continue the perfection of Lender’s
                security interest have been properly filed and copies have been delivered
                to Lender;

            

    

     

    
      	 	
              (ii)

            	
              a
                change of the form of the Borrower not involving a transfer of the
                Borrower’s assets and not resulting in any change in liability of any
                Initial Owner, provided that UCC financing statements and/or amendments
                sufficient to continue the perfection of Lender’s security interest have
                been properly filed and copies have been delivered to
                Lender;

            

    

     

    
      	 	
              (iii)

            	
              the
                merger of the Borrower with another entity when the Borrower is the
                surviving entity;

            

    

     

    
      	 	
              (iv)

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

            

    

     

    
      
        
        

      

      
        PAGE
          33

        
          

        

      

      
        
        

      

    

    
      	 	
              (v)

            	
              the
                grant of an easement, if before the grant Lender determines that
                the
                easement will not materially affect the operation or value of the
                Mortgaged Property or Lender’s interest in the Mortgaged Property, and
                Borrower pays to Lender, upon demand, all costs and expenses, including
                Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing
                Borrower’s request.

            

    

     

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

     

    
      	 	
              (i)

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

            

    

     

    
      	 	
              (ii)

            	
              if
                Borrower is a limited partnership, a Transfer of (A) any general
                partnership interest, or (B) limited partnership interests in
                Borrower that would cause the Initial Owners of Borrower to own less
                than
                a Controlling Interest of all limited partnership interests in
                Borrower;

            

    

     

    
      	 	
              (iii)

            	
              if
                Borrower is a general partnership or a joint venture, a Transfer
                of any
                general partnership or joint venture interest in
                Borrower;

            

    

     

    
      	 	
              (iv)

            	
              if
                Borrower is a limited liability company, (A) a Transfer of any
                membership interest in Borrower which would cause the Initial Owners
                to
                own less than a Controlling Interest of all the membership interests
                in
                Borrower, (B) a Transfer of any membership or other interest of a
                manager in Borrower that results in a change of manager or (C) a
                change in a nonmember manager;

            

    

     

    
      	 	
              (v)

            	
              if
                Borrower is a corporation (A) the Transfer of any voting stock in
                Borrower which would cause the Initial Owners to own less than a
                Controlling Interest of any class of voting stock in Borrower or
                (B) if the outstanding voting stock in Borrower is held by 100 or
                more shareholders, one or more Transfers by a single transferor within
                a
                12-month period affecting an aggregate of 5 percent or more of that
                stock;

            

    

     

    
      	 	
              (vi)

            	
              if
                Borrower is a trust, (A) a Transfer of any beneficial interest in
                Borrower which would cause the Initial Owners to own less than a
                Controlling Interest of all the beneficial interests in Borrower,
                (B) the termination or revocation of the trust, or (C) the
                removal, appointment or substitution of a trustee of
                Borrower;

            

    

     

    
      	 	
              (vii)

            	
              if
                Borrower is a limited liability partnership, (A) a Transfer of any
                partnership interest in Borrower which would cause the Initial Owners
                to
                own less than a Controlling Interest of all partnership interests
                in

            

    

     

    
      
        
        

      

      
        PAGE
          34

        
          

        

      

      
        
        

      

    

    Borrower,
      or (B) a transfer of any partnership or other interest of a managing partner
      in
      Borrower that results in a change of manager; and

     

    
      	 	
              (viii)

            	
              a
                Transfer of any interest in a Controlling Entity which, if such
                Controlling Entity were Borrower, would result in an Event of Default
                under any of Sections 21(e)(i) through
                (vii) above.

            

    

     

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

     

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

     

    
      	 	
              (i)

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

            

    

     

    
      	 	
              (ii)

            	
              the
                absence of any Event of Default;

            

    

     

    
      	 	
              (iii)

            	
              the
                transferee meets all of the eligibility, credit, management and other
                standards (including but not limited to any standards with respect
                to
                previous relationships between Lender and the transferee) customarily
                applied by Lender at the time of the proposed Transfer to the approval
                of
                borrowers in connection with the origination or purchase of similar
                mortgages on multifamily
                properties;

            

    

     

    
      	 	
              (iv)

            	
              the
                transferee’s organization, credit and experience in the management of
                similar properties are deemed by the Lender, in its discretion, to
                be
                appropriate to the overall structure and documentation of the existing
                financing;

            

    

     

    
      	 	
              (v)

            	
              the
                Mortgaged Property, at the time of the proposed Transfer, meets all
                standards as to its physical condition, occupancy, net operating
                income
                and the collection of reserves that are customarily applied by Lender
                at
                the time of the proposed Transfer to the approval of properties in
                connection with the origination or purchase of similar mortgages
                on
                multifamily properties;

            

    

     

    
      	 	
              (vi)

            	
              in
                the case of a Transfer of all or any part of the Mortgaged Property,
                (A) the execution by the transferee of Lender’s then-standard
                assumption agreement that, among other things, requires the transferee
                to
                perform all obligations of Borrower set forth in the Note, this Instrument
                and any other Loan Documents, and may require that the transferee
                comply
                with 

            

    

     

    
      
        
        

      

      
        PAGE
          35

        
          

        

      

      
        
        

      

    

    any
      provisions of this Instrument or any other Loan Document which previously may
      have been waived or modified by Lender, (B) if Lender requires, the
      transferee causes one or more individuals or entities acceptable to Lender
      to
      execute and deliver to Lender a guaranty in a form acceptable to Lender, and
      (C) the transferee executes such additional Collateral Agreements as Lender
      may require;

     

    
      	 	
              (vii)

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

            

    

     

    
      	 	
              (viii)

            	
              Lender’s
                receipt of all of the following:

            

    

     

    
      	 	
              (A)

            	
              a
                review fee in the amount of $3,000;

            

    

    
      	 	
              (B)

            	
              a
                transfer fee in an amount equal to one percent of the unpaid principal
                balance of the Indebtedness immediately before the applicable Transfer;
                and

            

    

    
      	 	
              (C)

            	
              the
                amount of Lender’s out-of-pocket costs (including reasonable Attorneys’
                Fees and Costs) incurred in reviewing the Transfer
                request.

            

    

    

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

     

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

     

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

     

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

     

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

     

    (e) any
      failure to comply with the provisions of Section 20;

     

    (f) any
      Event
      of Default under Section 21;

     

    
      
        
        

      

      
        PAGE
          36

        
          

        

      

      
        
        

      

    

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

     

    (h) any
      failure by Borrower to perform any of its obligations under this Instrument
      (other than those specified in Sections 22(a) through (g)), as and
      when required, which continues for a period of 30 days after Notice of such
      failure by Lender to Borrower. However, if Borrower’s failure to perform its
      obligations as described in this Section 22(h) is of the nature that
      it cannot be cured within the 30 day grace period but reasonably could be
      cured within 90 days, then Borrower shall have additional time as determined
      by
      Lender in its discretion, not to exceed an additional 60 days, in which to
      cure such default, provided that Borrower has diligently commenced to cure
      such
      default during the 30-day grace period and diligently pursues the cure of such
      default. However, no such Notice or grace periods shall apply in the case of
      any
      such failure which could, in Lender’s judgment, absent immediate exercise by
      Lender of a right or remedy under this Instrument, result in harm to Lender,
      impairment of the Note or this Instrument or any other security given under
      any
      other Loan Document;

     

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

     

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

     

    (k) Borrower
      voluntarily files for bankruptcy protection under the United States Bankruptcy
      Code or voluntarily becomes subject to any reorganization, receivership,
      insolvency proceeding or other similar proceeding pursuant to any other federal
      or state law affecting debtor and creditor rights, or an involuntary case is
      commenced against Borrower by any creditor (other than Lender) of Borrower
      pursuant to the United States Bankruptcy Code or other federal or state law
      affecting debtor and creditor rights and is not dismissed or discharged within
      90 days after filing; and

     

    (l) any
      of
      Borrower’s representations and warranties in this Instrument is false or
      misleading in any material respect.

     

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

     

    24. FORBEARANCE.

     

    
      
        
        

      

      
        PAGE
          37

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    27. WAIVER
      OF MARSHALLING.
      Notwithstanding the existence of any other security interests in the Mortgaged
      Property held by Lender or by any other party, Lender shall

     

    
      
        
        

      

      
        PAGE
          38

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    30. GOVERNING
      LAW; CONSENT TO JURISDICTION AND VENUE.

     

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

     

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

     

    
      
        
        

      

      
        PAGE
          39

        
          

        

      

      
        
        

      

    

    nothing
      in this Section 30 is intended to limit Lender’s right to bring any suit,
      action or proceeding relating to matters under this Instrument in any court
      of
      any other jurisdiction.

     

    31. NOTICE.

     

    (a) All
      Notices, demands and other communications (“Notice”) under
      or concerning this Instrument shall be in writing. Each Notice shall be
      addressed to the intended recipient at its address set forth in this Instrument,
      and shall be deemed given on the earliest to occur of (i) the date when the
      Notice is received by the addressee; (ii) the first Business Day after the
      Notice is delivered to a recognized overnight courier service, with arrangements
      made for payment of charges for next Business Day delivery; or (iii) the
      third Business Day after the Notice is deposited in the United States mail
      with
      postage prepaid, certified mail, return receipt requested.

     

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

     

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

     

    32. SALE
      OF NOTE; CHANGE IN SERVICER; LOAN SERVICING.
      The Note
      or a partial interest in the Note (together with this Instrument and the other
      Loan Documents) may be sold one or more times without prior Notice to
      Borrower. A sale may result in a change of the Loan Servicer. There also may
      be
      one or more changes of the Loan Servicer unrelated to a sale of the Note. If
      there is a change of the Loan Servicer, Borrower will be given Notice of the
      change. All actions regarding the servicing of the loan evidenced by the Note,
      including the collection of payments, the giving and receipt of Notice,
      inspections of the Mortgaged Property, inspections of books and records, and
      the
      granting of consents and approvals, may be taken by the Loan Servicer unless
      Borrower receives Notice to the contrary. If Borrower receives conflicting
      Notices regarding the identity of the Loan Servicer or any other subject, any
      such Notice from Lender shall govern.

     

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

     

    
      
        
        

      

      
        PAGE
          40

        
          

        

      

      
        
        

      

    

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

     

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

     

    36. RELATIONSHIP
      OF PARTIES; NO THIRD PARTY BENEFICIARY.

     

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

     

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

     

    37. SEVERABILITY;
      AMENDMENTS.
      The
      invalidity or unenforceability of any provision of this Instrument shall not
      affect the validity or enforceability of any other provision, and all other
      provisions shall remain in full force and effect. This Instrument contains
      the
      entire agreement among the parties as to the rights granted and the obligations
      assumed in this Instrument. This Instrument may not be amended or modified
      except by a writing signed by the party against whom enforcement is
      sought;
      provided, however, that in the event of a
      Transfer prohibited by or requiring Lender’s approval under Section 21, any
      or some or all of the Modifications to Instrument set forth in Exhibit B (if
      any) may be modified or rendered void by Lender at Lender’s option by
      Notice to Borrower and the transferee(s).

     

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

     

    
      
        
        

      

      
        PAGE
          41

        
          

        

      

      
        
        

      

    

    39. DISCLOSURE
      OF INFORMATION.
      Lender
      may furnish information regarding Borrower or the Mortgaged Property to third
      parties with an existing or prospective interest in the servicing, enforcement,
      evaluation, performance, purchase or securitization of the Indebtedness,
      including but not limited to trustees, master servicers, special servicers,
      rating agencies, and organizations maintaining databases on the underwriting
      and
      performance of multifamily mortgage loans. Borrower irrevocably waives any
      and
      all rights it may have under applicable law to prohibit such disclosure,
      including but not limited to any right of privacy.

     

    40. NO
      CHANGE IN FACTS OR CIRCUMSTANCES.
      Borrower
      warrants that (a) all information in the application for the loan submitted
      to Lender (the “Loan Application”) and in all financial statements, rent
      schedules, reports, certificates and other documents submitted in connection
      with the Loan Application are complete and accurate in all material respects;
      and (b) there has been no material adverse change in any fact or
      circumstance that would make any such information incomplete or
      inaccurate.

     

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

     

    42. ADJUSTABLE
      RATE MORTGAGE - THIRD PARTY CAP AGREEMENT “CAP
      COLLATERAL.”

     

    (a) If
      the
      Note provides for interest to accrue at an adjustable or variable interest
      rate
      (other than during the “Extension Period,” as defined in the Note, if
      applicable), then
      the
      definition of “Mortgaged Property” shall include the “Cap
      Collateral.”
The
      “Cap Collateral” shall mean

     

    
      	 	
              (i)

            	
              any
                interest
                rate cap agreement, interest rate swap agreement, or other interest
                rate-hedging contract or agreement
                obtained by Borrower as a requirement of any Loan Document or as
                a
                condition of Lender’s making the Loan (a “Cap
                Agreement”);

            

    

     

    
      	 	
              (ii)

            	
              any
                and all moneys (collectively, “Cap
                Payments”)
                payable pursuant to any Cap Agreement by the interest rate cap provider
                or
                other counterparty to a Cap Agreement or any guarantor of the obligations
                of any such cap provider or counterparty (a “Cap
                Provider”);

            

    

     

    
      	 	
              (iii)

            	
              all
                rights of Borrower under any Cap Agreement and all rights of Borrower
                to
                all Cap Payments, including contract rights and
                general

            

    

     

    
      
        
        

      

      
        PAGE
          42

        
          

        

      

      
        
        

      

    

    intangibles,
      whether existing now or arising after the date of this Instrument;

     

    
      	 	
              (iv)

            	
              all
                rights, liens and security interests or guaranties granted by a Cap
                Provider or any other person to secure or guaranty payment of any
                Cap
                Payment whether existing now or granted after the date of this
                Instrument;

            

    

     

    
      	 	
              (v)

            	
              all
                documents, writings, books, files, records and other documents arising
                from or relating to any of the foregoing, whether existing now or
                created
                after the date of this Instrument;
                and

            

    

     

    
      	 	
              (vi)

            	
              all
                cash and non-cash proceeds and products of (ii) - (v)
                above.

            

    

     

    (b) As
      additional security for Borrower’s obligation under the Loan Documents,
Borrower
      hereby assigns and pledges to Lender all of Borrower’s
      right,
      title and interest in and to the Cap Collateral. Borrower has instructed and
      will instruct each Cap Provider and any guarantor of a Cap Provider’s
      obligations to make Cap Payments directly to Lender or to Loan Servicer on
      behalf of Lender.

     

    (c) So
      long
      as there is no Event of Default, Lender or Loan Servicer will remit to Borrower
      each Cap Payment received by Lender or Loan Servicer with respect to any month
      for which Borrower has paid in full the monthly installment of principal and
      interest or interest only, as applicable, due under the Note. Alternatively,
      at
      Lender’s option so
      long as
      there is no Event of Default, Lender may apply a Cap Payment received by Lender
      or Loan Servicer with respect to any month to the applicable monthly payment
      of
      accrued interest due under the Note if Borrower has paid in full the remaining
      portion of such monthly payment of principal and interest or interest only,
      as
      applicable.

     

    (d) Following
      an Event of Default, in addition to any other rights and remedies Lender may
      have, Lender may retain any Cap Payments and apply them to the Indebtedness
      in
      such order and amounts as Lender determines. Neither
      the existence of a Cap Agreement nor anything in this Instrument shall relieve
      Borrower of its primary obligation to timely pay in full all amounts due under
      the Note and otherwise due on account of the Indebtedness.

     

    (e) If
      the
      Note does not provide for interest to accrue at an adjustable or variable
      interest rate (other than during the Extension Period) then this Section 42
      shall be of no force or effect.

     

    [END
      OF UNIFORM COVENANTS; STATE-SPECIFIC PROVISIONS FOLLOW]

     

    43. ACCELERATION;
      REMEDIES.
      At any
      time during the existence of an Event of Default, Lender shall give any notice
      to Borrower required by applicable law. If no notice is required or if the
      Event
      of Default is not cured as prescribed by applicable law, Lender at its option
      may declare the Indebtedness to be immediately due and payable without further
      demand and may invoke the power of sale and any other remedies permitted by
      applicable law or

    
      
        
        

      

      
        PAGE
          43

        
          

        

      

      
        
        

      

    

    provided
      in this Instrument or in any other Loan Document. Borrower acknowledges that
      the
      power of sale granted in this Instrument may be exercised by Lender without
      prior judicial hearing. Borrower has the right to bring an action to assert
      the
      nonexistence of an Event of Default or any other defense of Borrower to
      acceleration and sale. Lender shall be entitled to collect all costs and
      expenses incurred in pursuing such remedies including attorneys’ fees and costs
      of documentary and title evidence.

    

    If
      Lender
      invokes the power of sale, Lender shall give notice in the manner required
      by
      applicable law to Borrower and any other persons prescribed by applicable law.
      Lender shall also publish the notice of sale, and the Mortgaged Property shall
      be sold, as prescribed by applicable law. Lender may, at its option, sell the
      Mortgaged Property in one or more parcels and in such order as Lender may
      determine. Lender may postpone the sale or change the place of the sale as
      permitted by applicable law by giving notice complying with applicable law.
      Lender or its designee may purchase the Mortgaged Property at any sale. The
      proceeds of the sale shall be applied in the manner prescribed by applicable
      law.

    

    44. RELEASE.
      Upon
      payment of the Indebtedness, Lender shall release this Instrument. Lender shall
      pay reasonable costs incurred in releasing this Instrument.

    

    45. WAIVER
      OF APPRAISEMENT.
      Appraisement of the Mortgaged Property is hereby waived or not waived at
      Lender’s option, which shall be exercised on or before the date on which a
      written judgment in any judicial foreclosure hereof is signed by the
      court.

    

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

    

    

    NOTICE
      TO BORROWER

    

    A
      power of sale has been granted in this Instrument. A power of sale may allow
      the
      Lender to take the Mortgaged Property and sell it without going to court in
      a
      foreclosure action upon the occurrence of an Event of Default under this
      Instrument.

    

    

    

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

    
      
        
        

      

      
        PAGE
          44

        
          

        

      

      
        
        

      

    

    

    

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

    

    |X| Exhibit
      B  Modifications
      to Instrument

    

    [The
      remainder of this page intentionally left blank; signature page
      follows.]

     

     

     

     

     

     

     

     

     

     

     

     

    PAGE
      45

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

    West
      OKC
      HighlandPointe Associates LLC, 

    an
      Oklahoma limited liability company

    

    

    By: /s/
      John W. Alvey, Manager

    John
      W.
      Alvey, Manager

    

    

     

    STATE
      OF
      MISSOURI  
 )

                )
      ss.

    COUNTY
      OF
      CLAY     )

     

    On
      this
2nd
      day of
      January, 2007, before me, the undersigned, a Notary Public of said State, duly
      commissioned and sworn, personally appeared John W. Alvey, personally known
      to
      me to be the person who executed the within instrument as Manager of West OKC
      HighlandPointe Associates LLC, an Oklahoma limited liability company, on behalf
      of the limited liability company, and acknowledged to me that such limited
      liability company executed the same.

     

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

     

    /s/
      Grace
      E. Bales

    Notary
      Public in and for Clay
      County

     

    My
      Commission Expires: August
      24, 2010

     

    

     

    [SEAL]

    GRACE
      E.
      BALES

    Notary
      Public - Notary Seal

    STATE
      OF
      MISSOURI

    Clay
      County

    My
      Commission Expires Aug. 24, 2010

    Commission
      # 06429203

     

     

     

    
Signature
      Page - Highland Pointe Apartments - Security Instrument                                              Page
      S-1

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

      EXHIBIT
        A

      

      [DESCRIPTION
        OF THE LAND]

      

      (Exhibit
        Omitted)

    

    

          

    

    

    

    PAGE
      A-1

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      EXHIBIT
        B

      

      MODIFICATIONS
        TO INSTRUMENT

    

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

    

    1. The
      following new Sections 22(m) and 22(n) shall be including as
      follows:

    

    (m) Failure
      to maintain the Minimum Net Worth Requirement (as defined in the Guaranty)
      or
      provide the annual net worth reporting requirements contained in the Guaranty.
      In addition to any other remedies set forth in this Instrument or in the
      Guaranty, Lender’s remedies for an Event of Default under this Section 22(m)
      shall include, but shall not be limited to, requiring a letter of credit in
      an
      amount deemed reasonable satisfactory to Lender (and otherwise in form and
      substance acceptable to Lender) or a partial prepayment of the Note (in
      accordance with the terms of the Note).

    

    (n) Failure
      of David L. Johnson to maintain a controlling interest in the
      Guarantor.

    

    

    953744v3 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    PAGE
      B-1

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