Document:

Prepared by, and after recording

Exhibit 10.150

 

Prepared
by, and after recording 

return
to: 

Amy
B. Connelly, Esq.

Krooth
& Altman LLP

1850
M Street, NW, Suite 400

Washington,
DC 20036

 

 

 

FHLMC
Loan No. 534364608

 

 

 

 

 

 

 

 

                                              
MULTIFAMILY DEED OF TRUST,

                                                      
ASSIGNMENT OF RENTS 

                                                 
AND SECURITY AGREEMENT

                                                         
(Including Fixture Filing)

 

                                     
(TENNESSEE – REVISION DATE 10-18-2007)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                     
Maximum Principal Indebtedness for Tennessee

                                            
Recording Tax Purposes is $19,350,000.

                                              
MULTIFAMILY DEED OF TRUST,

                                                 
ASSIGNMENT OF RENTS AND

                                                      
SECURITY AGREEMENT 

                                       (TENNESSEE
– REVISION DATE 10-18-2007)

 

 

THIS
MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"Instrument") is made as of this 19th day of February, 2009,
CCP IV KNOLLWOOD, LLC, a limited liability company organized and existing
under the laws of Delaware, whose address is Stanford Place 3, 4582 South Ulster
Street Parkway, Suite 1100, Denver, Colorado 80237, as grantor
("Borrower"), to Jerome S. Grand, as trustee, a resident of Davidson
County, Tennessee  ("Trustee"), for the benefit of KEYCORP REAL
ESTATE CAPITAL MARKETS, INC., a corporation organized and existing under the
laws of Ohio, whose address is 911 Main Street, Suite 1500, Kansas City,
Missouri 64105, as beneficiary ("Lender").  Borrower's
organizational identification number, if applicable, is 4005331.

 

This
Instrument covers property which is or may become so affixed to real property as
to become fixtures and also constitutes a fixture filing under § 47-9-502 of
Tennessee Code Annotated.  NOTICE PURSUANT TO § 47-28-104 OF TENNESSEE CODE
ANNOTATED.  This Instrument secures obligatory advances for commercial
purposes as such terms are defined in §§ 47-28-103 and 47-28-104 of Tennessee
Code Annotated.

 

Borrower,
in consideration of the Indebtedness and the trust created by this Instrument,
irrevocably grants, conveys, bargains, sells, confirms and assigns to Trustee,
in trust, with power of sale, the Mortgaged Property, including the Land located
in Davidson County, State of Tennessee and described in Exhibit A attached to
this Instrument.

 

TO
SECURE TO LENDER the repayment of the Indebtedness evidenced by Borrower's
Multifamily Note payable to Lender dated as of the date of this Instrument, and
maturing on March 1, 2019 (the "Maturity Date"), in the principal amount
of $19,350,000, 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 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 02-15-2008

 

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:

 

           
(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,
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 or over the Borrower.

 

(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).

 

           
(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.

 

           
(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;

 

                       
(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; 

 

                       
(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), and 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); 

 

                       
(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, and, if Borrower is a cooperative
housing corporation or association, maintenance fees, charges or assessments
payable by shareholders or residents under proprietary leases or occupancy
agreements, whether now due, past due, or to become due.

 

           
(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.

 

           
(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 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 appointment of a receiver ex parte if
permitted by applicable law.  If Borrower is a housing cooperative
corporation or association, Borrower hereby agrees that if a receiver is
appointed, the order appointing the receiver may contain a provision requiring
the receiver 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, it being acknowledged and
agreed that the Indebtedness is an obligation of the Borrower and must be paid
out of maintenance charges payable by the Borrower's tenant shareholders under
their proprietary leases or occupancy agreements.  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
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 years, and shall not include options to purchase.  

 

           
(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.

 

           
(h)        If Borrower is a cooperative
housing corporation or association, notwithstanding
anything to the contrary contained in this subsection or in Section 21, so long
as Borrower remains a cooperative housing corporation or association and is not
in breach of any covenant of this Instrument, Lender hereby consents to:

 

(i)         the
execution of leases of apartments for a term in excess of two years from
Borrower to a tenant shareholder of Borrower, so long as such leases, including
proprietary leases, are and will remain subordinate to the lien of this
Instrument; and

 

(ii)        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.

 

           
5.         PAYMENT OF INDEBTEDNESS;
PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM.  Borrower shall
pay the Indebtedness when due in accordance with the terms of the Note and the
other Loan Documents and shall perform, observe and comply with all other
provisions of the Note and the other Loan Documents.  Borrower shall pay a
prepayment premium in connection with certain prepayments of the Indebtedness,
including a payment made after Lender's exercise of any right of acceleration of
the Indebtedness, as provided in the Note.

 

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

 

           
7.         DEPOSITS FOR TAXES, INSURANCE
AND OTHER CHARGES.  

 

           
(a)        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.

 

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

[Deferred]       
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 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. 

 

           
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 AND ORGANIZATIONAL
DOCUMENTS.  

 

           
(a)        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. 

 

           
(b)        Borrower shall at all times
maintain records sufficient to demonstrate compliance with the provisions of
this Section 10.  

 

           
(c)        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. 

 

           
(d)        Borrower shall at all times comply
with all laws, regulations and requirements of any Governmental Authority
relating to Borrower's formation, continued existence and good standing in the
Property Jurisdiction.  Borrower shall at all times comply with its
organizational documents, including but not limited to its partnership agreement
(if Borrower is a partnership), its by-laws (if Borrower is a corporation or
housing cooperative corporation or association) or its operating agreement (if
Borrower is an limited liability company, joint venture or tenancy-in-common
).  If Borrower is a housing cooperative corporation or association,
Borrower shall at all times maintain its status as a "cooperative housing
corporation" as such term is defined in Section 216(b) of the Internal revenue
Code of 1986, as amended, or any successor statute thereto.

 

           
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. 
Notwithstanding anything contained in this Section to the contrary, if Borrower
is a housing cooperative corporation or association, Lender acknowledges and
consents to Borrower's use of the Mortgaged Property as a housing
cooperative.

 

           
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 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, (v) payment of amounts which Borrower has failed to pay
under Sections 15 and 17, and (vi) advances made by Lender 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").

 

           
(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) areresolved 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 governmental authorities
regarding 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, 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 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 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.

 

           
(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 or association, 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.

 

(h)        If Borrower is
a housing cooperative corporation or association, until the Indebtedness is paid
in full Borrower shall not reduce the maintenance fees, charges or assessments
payable by shareholders or residents under proprietary leases or occupancy
agreements below a level which is sufficient to pay all expenses of the
Borrower, including, without limitation, all operating and other expenses for
the Mortgaged Property and all payments due pursuant to the terms of the Note
and any Loan Documents.  

 

           
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; or

 

                       
(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):

 

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

 

                       
(ii)        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; 

 

                       
(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 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, 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:

 

                       
(i)         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;

                       

                       
(ii)        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, windstorm and
allied perils, general boiler and machinery coverage, and business interruption
including loss of rental value insurance for the Mortgaged Property with 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.  In the event any updated reports
or other documentation are reasonably required by Lender in order to determine
whether such additional insurance is necessary or prudent, Borrower shall pay
for all such documentation at its sole cost and expense.  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."  All policies of Hazard Insurance
must include a non-contributing, non-reporting mortgagee clause in favor of, and
in a form approved by, Lender.  

 

           
(b)        All premiums on insurance policies
required under this Section 19 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.  Borrower shall deliver to Lender a legible copy of each insurance
policy (or duplicate original) and 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 insurance policy, Borrower shall deliver to Lender
evidence acceptable to Lender that the policy has been renewed.  If
Borrower has not delivered a legible copy of each renewal policy (or a duplicate
original) prior to the expiration date of any insurance policy, Borrower
shall deliver a legible copy of each renewal policy (or a duplicate
original) 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.  All policies for general
liability insurance must contain a standard additional insured provision, in
favor of, and in a form approved by, Lender.

 

           
(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.

 

(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.

 

           
(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].

 

           
(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;

 

(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 corporation or association, the Transfer of more than 49 percent of the shares in the
housing cooperative or the assignment of more than 49 percent of the occupancy
agreements or leases relating thereto by tenant shareholders of the housing
cooperative or association to other tenant shareholders; and 

 

(vii)     
anyTransfer 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
$________ 

 

(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.

 

(3)     Either directly or
indirectly, __________ 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

 

(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 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 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 by Borrower to comply
with the provisions of Section 20;

 

           
(f)         any Event of Default under
Section 21;

 

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

 

(l)        
any representations and warranties by Borrower in this Instrument which 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.

 

           
(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 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, 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.

 

           
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."

 

           
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, as well as
governmental regulatory agencies having regulatory authority over Lender. 
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, or subsequent
advances under Section 12, are used to pay, satisfy or discharge a Prior Lien,
such loan proceeds or advances 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 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, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand and Lender shall have the
STATUTORY POWER OF SALE and any other remedies permitted by applicable law or
provided in this Instrument or in any other Loan Document.  Borrower
acknowledges that the power of sale granted in this Instrument may be exercised
by Lender through the Trustee without prior judicial hearing.  Borrower has
the right to bring an action to assert the non-existence of an Event of Default
or any other defense of Borrower to acceleration and sale.  Lender shall be
entitled to collect all costs and expenses incurred in pursuing such remedies,
including attorneys' fees, costs of documentary evidence, abstracts and title
reports.

 

If
Lender invokes the power of sale, Trustee shall give notice of sale by public
advertisement for the time and in the manner provided by the laws of Tennessee,
and Lender or Trustee shall mail a copy of the notice of sale to Borrower in the
manner provided in Section 31 of this Instrument.  Trustee, without demand
on Borrower, shall sell the Mortgaged Property at the time and under the terms
designated in the notice of sale at public auction to the highest bidder, in one
or more parcels and in such order as Trustee may determine.  Trustee may
postpone sale of all or any part of the Mortgaged Property by public
announcement at the time and place of any previously scheduled sale. 
Lender or Lender's designee may purchase the Mortgaged Property at any sale.

 

Trustee
shall deliver to the purchaser at the sale, within a reasonable time after the
sale, a deed conveying the Mortgaged Property so sold without any covenant or
warranty, express or implied.  The recitals in Trustee's deed shall be
prima facie evidence of the truth of the statements made therein.  Trustee
shall apply the proceeds of the sale in the following order: (a) to all costs
and expenses of the sale, including Trustee's fees not to exceed 5% of the gross
sales price, attorneys' fees and costs of title evidence; (b) to the
Indebtedness in such order as Lender, in Lender's sole discretion, directs; and
(c) the excess, if any, to the person or persons legally entitled thereto.

 

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

 

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

 

46.      
NO CONSENT TO SENIOR LIENS.  Lender has not consented and will not
consent to any contract or to any work or to the furnishing of any materials
which might be deemed to create a lien or liens superior to the lien of this
Instrument, either under § 66-11-108 of Tennessee Code Annotated, or
otherwise.

 

47.      
WAIVER OF TRUSTEE’S BOND.  Borrower waives the necessity of the Trustee
appointed hereunder, or any successor in trust, making oath or giving bond.

 

48.      
WAIVER OF HOMESTEAD, DOWER, CURTESY AND REDEMPTION.   Borrower
waives all right of homestead exemption in and equitable and statutory
redemption of the Mortgaged Property, and Borrower relinquishes all right of
dower and curtesy in the Mortgaged Property.

 

49.      
WAIVER OF TRIAL BY JURY.  BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN
THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY
EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL. 

 

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

 

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

 

|X|       
Exhibit
B                     
Modifications to Instrument

 

 

 

[REST OF PAGE INTENTIONALLY LEFT BLANK]

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. 

 

CCP
IV KNOLLWOOD, LLC,

a
Delaware limited liability company

 

By:      
CCP IV Associates, Ltd.,

           
a Texas limited partnership,

           
Sole Member

 

           
By:       CCP/IV Residential GP, L.L.C.,

                       
a South Carolina limited liability company,

                       
General Partner

 

                       
By:       Consolidated Capital Properties IV,
LP,

                                   
a Delaware limited partnership,

                                   
Manager

 

                                   
By:       Concap Equities, Inc.,

                                               
a Delaware corporation,

                                               
General Partner

 

 

                                               
By:       /s/Patti K. Fielding

                                                           
Patti K. Fielding

                                                           
Executive Vice President

                                                           
and Treasurerex4h.htm

    Execution
Copy

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SBC
COMMUNICATIONS INC.

    

    as Issuer
and Registrant of Securities

    

    AND

    

    THE BANK
OF NEW YORK

    

    Trustee

    

    

    

    

    ____________________

    

    

    

    INDENTURE

    

    

    

    Dated as
of November 1, 1994

    

    

    

    ___________________

    

    

    Providing
for Issuance of Securities in Series

    

    
      
        
          

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    INDENTURE dated as of November 1, 1994
between SBC COMMUNICATIONS INC., a Delaware corporation ("SBC"), and THE BANK OF
NEW YORK, a New York banking company duly organized and validly existing under
the laws of the State of New York ("Trustee").

    

    RECITALS
OF SBC

    

    SBC has duly authorized the execution
and delivery of this Indenture for the issuance from time to time of its
unsecured debentures, notes or other evidences of indebtedness ("Securities") as
herein provided.

    

    All things necessary to make this
Indenture a valid agreement of SBC, in accordance with its terms, have been
done.

    

    For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed as follows for the equal and ratable benefit of
the Holders of the Securities:

    

    

    ARTICLE
1

    

    DEFINITIONS
AND INCORPORATION BY REFERENCE

    

    SECTION
1.01  Definitions.

    

    "Affiliate" means any person directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, SBC.

    

    "Agent" means any Paying Agent,
Registrar, or co-Registrar.

    

    "Authorized Newspaper" means a
newspaper of general circulation, in an official language of the country of
publication or in the English language, customarily published on days other than
Legal Holidays, as defined in Section 10.07, in such
country.  Whenever successive weekly publications in an Authorized
Newspaper are required hereunder, they may be made (unless otherwise expressly
provided herein) on the same or different days of the week and in the same or
different Authorized Newspapers.

    

    "Board of Directors" means the Board of
Directors of SBC, or any duly authorized committee thereof.

    

    "Board Resolution" means a copy of a
resolution of the Board of Directors, certified by the Secretary or an Assistant
Secretary of SBC to have been duly adopted by the Board of Directors and to be
in full force and effect.

    

    "Default" means any event which is, or
after notice or passage of time would be, an Event of Default.

    

    "Depository" means, with respect to the
Securities of any Series issuable or issued in whole or in part in the form of
one or more Global Securities, the person designated as Depository by SBC
pursuant to Section 2.02.

    

    "Global Security" means a Security in
the form prescribed in Section 2.02 evidencing all or part of a Series of
Securities, issued to the Depository for such series or its nominee, and
registered in the name of such Depository or nominee.

    

    "Holder" or "Securityholder" means the
bearer of an Unregistered Security or of a coupon appertaining thereto or the
person in whose name a Registered Security is registered on the Registrar's
books.

    

    "Indenture" means this Indenture as
amended or supplemented from time to time including, for all purposes of this
instrument and any such amendment or supplement, the provisions of the TIA that
are deemed to be a part of and govern this instrument and any such amendment or
supplement, respectively.  The term "Indenture" shall also include the
forms and terms of a particular Series of Securities established as contemplated
hereunder.

    

    "Officer" means the Chairman of the
Board of Directors, any Vice Chairman of the Board of Directors, the President,
any Vice-President, the Treasurer or the Secretary of SBC.

    

    "Officers' Certificate" means a
certificate signed by two Officers or by any Officer and an Assistant Treasurer
or an Assistant Secretary of SBC.

    

    "Opinion of Counsel" means a written
opinion of legal counsel who is acceptable to SBC and the
Trustee.  Counsel may be an employee of or counsel to SBC or the
Trustee.

    

    "Order" means an order in the name of
SBC signed by two Officers or by any Officer and an Assistant Treasurer or an
Assistant Secretary of SBC.

    

    "Original Issue Discount Security"
means any Security which provides for an amount less than the stated principal
amount thereof to be due and payable upon declaration of acceleration of the
maturity thereof pursuant to Section 6.02.

    

    "Principal" of a debt security means
the principal of the security plus, when appropriate, the premium, if any, on
the security.

    

    "Registered Security" means any
Security issued hereunder and registered by the Registrar.

    

    "Responsible Officer", when used with
respect to the Trustee, shall mean the chairman or any vice-chairman of the
board of directors or trustees, the chairman or any vice-chairman of the
executive committee of the board of directors or trustees, the president, any
vice-president, the treasurer, the secretary, any trust officer, any second or
assistant vice-president or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with a particular subject.

    

    "SBC" means the party named as such in
this Indenture until a successor replaces it pursuant to the applicable
provisions hereof and thereafter means the successor.

    

    "SEC" means the Securities and Exchange
Commission.

    

    "Series" or "Series of Securities"
means a series of Securities.

    

    "Securities" means the debentures,
notes or other obligations of SBC issued, authenticated and delivered under this
Indenture.

    

    "Subsidiary" means a corporation more
than 50% of the outstanding voting stock of which is owned, directly or
indirectly, by SBC or by one or more other of its Subsidiaries, or by SBC and
one or more other of its Subsidiaries.  For the purposes of this
definition, "voting stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.

    

    "TIA" means the Trust Indenture Act of
1939 as in effect on the date of this Indenture provided, however, that in the
event the Trust Indenture Act of 1939 is amended after such date, "TIA" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.  

    

    "Trustee" means the party named as such
in this Indenture until a successor replaces it pursuant to the applicable
provisions hereof and thereafter means the successor and if, at any time, there
is more than one Trustee, "Trustee" as used with respect to the Securities of
any Series shall mean the Trustee with respect to that Series.

    

    "U.S. person" means a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or a political
subdivision thereof, or an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source.

    

    "United States" means the United States
of America (including the States and the District of Columbia), its territories,
its possessions and all other areas subject to its jurisdiction.

    

    "Unregistered Security" means any
Security issued hereunder which is not a Registered Security.

    

    "Yield to Maturity" means the yield to
maturity, calculated by SBC at the time of issuance of a Series of Securities
or, if applicable, at the most recent determination of interest on such Series
in accordance with accepted financial practice.

    

    SECTION
1.02   Other Definitions.

     

     

    
      	 Term 	 Section
	 "Bankruptcy
      Law"	 6.01
	 "Custodian"	 6.01
	 "Event of
      Default"	 6.01
	 "Legal
      Holiday"	 10.07
	 "Paying
      Agent"	 2.04
	 "Registrar"	 2.04
	 "U.S.
      Government Obligations"	 8.01

    

    

    SECTION
1.03   Incorporation by Reference of Trust Indenture
Act.

    

    Whenever this Indenture refers to a
provision of the TIA, the provision is incorporated by reference in and made a
part of this Indenture.  The following TIA terms used in this
Indenture have the following meanings:

    

    "Commission" means the
SEC.

    

    "indenture
securities" means the Securities.

    

    "indenture to be qualified" means this
Indenture.

    "indenture
trustee" or "institutional trustee" means the Trustee.

    

    "obligor"
on the indenture securities means SBC.

    

    All other terms used in this Indenture
that are defined by the TIA, defined by TIA reference to another statute or
defined by SEC rule under the TIA have the meanings assigned to them
therein.

    

    SECTION
1.04   Rules of Construction.

    

    Unless the context otherwise
requires:

    

    (1)  a term has the meaning
assigned to it;

    

    (2)  an accounting term not
otherwise defined has the meaning assigned to it in accordance with accounting
principles generally accepted in the United States of America.

    

    (3)  "or" is not exclusive;
and

    

    (4)  words in the singular
include the plural, and words in the plural include the singular.

    

    

    ARTICLE
2

    

    THE
SECURITIES

    

    SECTION
2.01   Issuable in Series.

    

    The aggregate principal amount of
Securities which may be authenticated and delivered under this Indenture is
unlimited.  The Securities may be issued in one or more
Series.  There may be Registered Securities and Unregistered
Securities within a Series and the Unregistered Securities may be subject to
such restrictions, and contain such legends, as may be required by United States
laws and regulations.  Except as provided in the foregoing sentence or
as otherwise provided by or pursuant to the Board Resolution referred to in
Section 2.02, all Securities of a Series shall be identical in all
respects.  Securities of different Series may differ in any respect;
provided that all Series of Securities shall be equally and ratably entitled to
the benefits of this Indenture.

    

    SECTION
2.02   Establishment of Terms and Form of Series of
Securities.

    

    (a)  At or prior to the
issuance of any Series of Securities, the following shall be established either
by or pursuant to a Board Resolution, and set forth in an Officers' Certificate,
or by an indenture supplemental hereto:

    

    (1)  the title of the
Securities of the Series (which title shall distinguish the Securities of the
Series from the Securities of all other Series and from all other securities
issued by SBC);

    

    (2)  any limit upon the
aggregate principal amount of the Securities of the Series which may be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the Series pursuant to Section 2.08,
2.09, 2.12, 3.06 or 9.05);

    

    (3)  the date or dates on
which the principal of the Securities of the Series is payable;

    

    (4)  the rate or rates at
which the Securities of the Series shall bear interest, if any, or the method of
calculating such rate or rates of interest, the date or dates from which such
interest shall accrue, the dates on which such interest shall be payable and,
with respect to Registered Securities, the record date for the interest payable
on any interest payment date;

    

    (5)  the place or places
where the principal of and interest on Registered and any Unregistered
Securities of the Series shall be payable;

    

    (6)  the period or periods
within which, the price or prices at which, and the terms and conditions upon
which, Securities of the Series may be redeemed, in whole or in part, at the
option of SBC;

    

    (7)  the obligation, if any,
of SBC to redeem or purchase Securities of the Series pursuant to any sinking
fund or analogous provisions or upon the happening of a specified event or at
the option of a Holder thereof and the period or periods within which, the price
or prices at which, and the terms and conditions upon which, Securities of the
Series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation;

    

    (8)  if in other than
denominations of $1,000 and any integral multiple thereof, the denominations in
which Securities of the Series shall be issuable;

    

    (9)  if other than the
principal amount thereof, the portion of the principal amount of Securities of
the Series which shall be payable upon declaration or acceleration of the
maturity thereof pursuant to Section 6.02;

    

    (10)  whether Securities of
the Series shall be issuable as Registered Securities or Unregistered Securities
(with or without interest coupons), or both, and any restrictions applicable to
the offering, sale or delivery of Unregistered Securities and whether, and the
terms upon which, Unregistered Securities of a Series may be exchanged for
Registered Securities of the same Series and vice versa;

    

    (11)  whether and under what
circumstances SBC will pay additional amounts on the Securities of that Series
held by a person who is not a U.S. person in respect of taxes or similar charges
withheld or deducted and, if so, whether SBC will have the option to redeem such
Securities rather than pay such additional amounts;

    

    (12)  the currency or
currencies, including composite currencies, in which payment of the principal of
and interest on the Securities of the Series shall be payable (if other than the
currency of the United States of America);

    

    (13)  if the amount or
payments of principal of or interest on the Securities of the Series may be
determined with reference to an index, the manner in which such amounts shall be
determined;

    

    (14)  the obligation, if any,
of SBC to permit the conversion or exchange of the Securities of the Series into
other securities (whether or not issued by, or the obligation of, SBC), and the
terms and conditions upon which such conversion or exchange shall be effected
(including, without limitation, the initial conversion or exchange price or
rate, the conversion or exchange period and any other provisions in addition to
or in lieu of those set forth in this Indenture relative to such
obligation;

    

    (15)  whether the Securities
of the Series shall be issuable in whole or in part in the form of one or more
Global Securities and, in such case, the Depository for such Global Security or
Securities, which Depository shall be a clearing agency registered under the
Securities Exchange Act of 1934, as amended;

    

    (16)  any other terms of the
Series (which terms shall not be inconsistent with the provisions of this
Indenture), including any terms which may be required by or advisable under
United States laws or regulations or advisable in connection with the marketing
of Securities of that Series;

    

    (17)  the form of the
Securities (or forms thereof if Unregistered and Registered Securities shall be
issuable in such Series, including such legends as may be required by United
States laws or regulations, the form of any coupons or temporary global Security
which may be issued and the forms of any certificates which may be required
hereunder or under United States laws or regulations in connection with the
offering, sale, delivery or exchange of Unregistered Securities);
and

    

    (18)  the CUSIP number, if
any.

    

    (b)  If the terms and form or
forms of any Series of Securities are established by or pursuant to a Board
Resolution, SBC shall deliver a copy of such Board Resolution to the Trustee at
or prior to the issuance of such Series with (1) the form or forms of Security
which have been approved attached thereto, or (2) if such Board Resolution
authorized Officers to approve the terms and form or forms of the Securities, an
Officers' Certificate approving the terms and form or forms of Security with
such form or forms of Securities attached thereto.

    

    SECTION
2.03   Execution, Authentication and Delivery.

    

    (a)  Securities shall be
executed on behalf of SBC by its Chairman of the Board of Directors or a
Vice-Chairman of the Board of Directors or its President or a Vice-President,
and its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary.  Signatures shall be manual or facsimile.  SBC's
seal shall be reproduced on the Securities and may, but need not, be
attested.  The coupons of Unregistered Securities shall bear the
facsimile signature of the Treasurer or an Assistant Treasurer of
SBC.

    

    (b)  If an Officer, an
Assistant Treasurer or an Assistant Secretary of SBC whose signature is on a
Security or coupon no longer holds that office at the time the Security is
authenticated, the Security or coupon shall be valid nevertheless.

    

    (c)  A Security shall not be
valid until authenticated by the manual signature of the Trustee or an
authenticating agent and no coupon shall be valid until the Security to which it
appertains has been so authenticated.  Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.  Each Registered Security shall be dated the date of its
authentication, and each Unregistered Security shall be dated as provided in
connection with the establishment of the Series thereof.

    

    (d)  The Trustee shall at any
time, and from time to time, authenticate and deliver Securities of any Series
executed and delivered by SBC for original issue in an aggregate principal
amount not in excess of the principal amount authorized for such Series, upon
receipt by the Trustee of (i) an Order for the authentication and delivery of
such Securities, (ii) if the terms and form or forms of the Securities of such
Series have been established by or pursuant to a Board Resolution as permitted
by Section 2.02, a copy of such Board Resolution and any Officers' Certificate
that may be required pursuant to Section 2.02(b), and (iii) an Opinion of
Counsel stating,

    

    (1)  if the form of such
Securities has been established by or pursuant to a Board Resolution as
permitted by Section 2.02, that such form has been established in conformity
with the provisions of this Indenture;

    

    (2)  if the terms of such
Securities have been established by or pursuant to a Board Resolution as
permitted by Section 2.02, that such terms have been established in conformity
with the provisions of this Indenture; and

    

    (3)  that such Securities,
when authenticated and delivered by the Trustee and issued by SBC in the manner
and subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of SBC entitled to the benefits
of the Indenture.

    

    Notwithstanding the provisions of
Section 2.02 and of the preceding paragraph, if all Securities of a Series are
not to be originally issued at one time, it shall not be necessary to deliver
the Officers' Certificate otherwise required pursuant to Section 2.02(b) or the
Company Order and Opinion of Counsel otherwise required pursuant to such
preceding paragraph at or prior to the time of authentication of each Security
of such Series if such documents are delivered at or prior to the time of
authentication upon original issuance of the first Security of such series to be
issued.

    

    If the terms and form or forms of such
Securities have been established by or pursuant to a Board Resolution as
permitted by Section 2.02, the Trustee shall not be required to authenticate
such Securities if the issue of such Securities pursuant to this Indenture will
adversely affect the Trustee's own rights, duties or immunities under the
Securities and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.

    

    Notwithstanding the foregoing, until
SBC has delivered an Officers' Certificate to the Trustee and the Registrar
stating that, as a result of the action described, SBC would not suffer adverse
consequences under the provisions of United States law or regulations in effect
at the time of the delivery of Unregistered Securities, (i) delivery of
Unregistered Securities by the Trustee or Registrar will be made only outside
the United States and (ii) Unregistered Securities will be released by the
Trustee or Registrar in definitive form to the person entitled to physical
delivery thereof only upon presentation of a certificate in the form prescribed
by SBC.

    

    (e)  If SBC shall establish
pursuant to Section 2.02 that the Securities of a Series are to be issued in
whole or in part in the form of one or more Global Securities, then SBC shall
execute and the Trustee shall, in accordance with this Section and SBC's Order
with respect to such Series, authenticate and deliver one or more Global
Securities that (i) shall represent and shall be denominated in an amount equal
to the aggregate principal amount of outstanding Securities of such series to be
represented by one or more Global Securities; (ii) shall be registered in the
name of the Depository for such Global Security or Securities or the nominee of
such Depository, (iii) shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instruction and (iv) shall bear a legend
substantially to the following effect:  "This Security is a Global
Security within the meaning of the Indenture hereinafter referred to and is
registered in the name of a Depository or a nominee of a
Depository.  Unless and until it is exchanged in whole or in part for
Securities in definitive form in accordance with the provisions of the Indenture
and the terms of the Securities, this Security may not be transferred except as
a whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository."

    

    Each depository designated pursuant to
Section 2.02 for a Global Security must, at the time of its designation and at
all times while it serves as Depository, be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, and any other applicable
statute or regulation.

    

    (f)  The Trustee may appoint
an authenticating agent to authenticate Securities.  An authenticating
agent may authenticate Securities whenever the Trustee may do
so.  Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent.  An authenticating agent has
the same rights as an Agent to deal with SBC or an Affiliate
thereof.

    

    SECTION
2.04   Registrar and Paying Agent.

    

    SBC shall maintain in the Borough of
Manhattan, The City of New York, State of New York, an office or agency where
Registered Securities may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where (subject to Sections
2.05(c) and 2.08(b)) Securities may be presented for payment or for exchange
("Paying Agent").  With respect to any Series of Securities issued in
whole or in part as Unregistered Securities, SBC shall maintain one or more
Paying Agents located outside the United States and shall maintain such Paying
Agents for a period of two years after the principal of such Unregistered
Securities has become due and payable.  During any period thereafter
for which it is necessary in order to conform to United States tax law or
regulations, SBC will maintain a Paying Agent outside the United States to which
the Unregistered Securities or coupons appertaining thereto may be presented for
payment and will provide the necessary funds therefor to such Paying Agent upon
reasonable notice.  The Registrar shall keep a register with respect
to each Series of Securities issued in whole or in part as Registered Securities
and to their transfer and exchange.  SBC may appoint one or more
co-Registrars acceptable to the Trustee and one or more additional Paying Agents
for each Series of Securities and SBC may terminate the appointment of any
co-Registrar or Paying Agent at any time upon written notice.  The
term "Registrar" includes any co-Registrar.  The term "Paying Agent"
includes any additional Paying Agent.  SBC shall notify the Trustee of
the name and address of any Agent not a party to this Indenture.  If
SBC fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such.

    

    SBC initially appoints the Trustee as
Registrar and Paying Agent.

    

    SECTION
2.05   Payment on Securities.

    

    (a)  Subject to the following
provisions, SBC will pay to the Trustee the amounts, in such coin or currency as
is at the time legal tender for the payment of public or private debt, in the
manner, at the times and for the purposes set forth herein and in the text of
the Securities for each Series, and SBC hereby authorizes and directs the
Trustee from funds so paid to it to make or cause to be made payment of the
principal of and interest, if any, on the Securities and coupons of each Series
as set forth herein and in the text of such Securities and
coupons.  The Trustee will arrange directly with any Paying Agents for
the payment, or the Trustee will make payment, from funds furnished by SBC, of
the principal and interest, if any, on the Securities and coupons of each Series
by check drawn upon a bank in The City of New York.

    

    (b)  Interest, if any, on
Registered Securities of a Series shall be paid on each interest payment date
for such Series to the Holder thereof at the close of business on the relevant
record dates specified in the Securities of such Series.  SBC may pay
such interest by check mailed to such Holder's address as it appears on the
register for Securities of such Series.  Principal of Registered
Securities shall be payable only against presentation and surrender thereof at
the office of the Paying Agent in New York, New York, unless SBC shall have
otherwise instructed the Trustee in writing.

    

    (c)  To the extent provided
in the Securities of a Series, (i) interest, if any, on Unregistered Securities
shall be paid only against presentation and surrender of the coupons for such
interest installments as are evidenced thereby as they mature and (ii) original
issue discount (as defined in Section 1273 of the Internal Revenue Code of 1986,
as amended), if any, on Unregistered Securities shall be paid only against
presentation and surrender of such Securities, in either case at the office of a
Paying Agent located outside of the United States, unless SBC shall have
otherwise instructed the Trustee in writing.  Principal of
Unregistered Securities shall be paid only against presentation and surrender
thereof as provided in the Securities of a Series.  If at the time a
payment of principal of or interest, if any, or original issue discount, if any,
on an Unregistered Security or coupon shall become due the payment of the full
amount so payable at the office or offices of all the Paying Agents outside the
United States is illegal or effectively precluded because of the imposition of
exchange controls or other similar restrictions on the payment of such amount in
the United States currency, then SBC may instruct the Trustee to make such
payments at the office of a Paying Agent located in the United States, provided
that provision for such payment in the United States would not cause such
Unregistered Security to be treated as a "registration-required obligation"
under United States law and regulations.

    

    SECTION
2.06   Paying Agent to Hold Money in Trust.

    

    SBC will require each Paying Agent for
any Series of Securities other than the Trustee to agree in writing that it will
hold all sums held by it for the payment of principal of and interest on
Securities of that Series in trust for the benefit of the persons entitled
thereto until such sums are paid to such persons or otherwise disposed of as
herein provided, and that the Paying Agent will notify promptly the Trustee of
any default by SBC in making any such payment.  While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee.  If SBC acts as Paying Agent, it shall segregate the
money held by it for the payment of principal of and interest on any Series of
Securities and hold such money as a separate trust fund.  SBC at any
time may require a Paying Agent to pay all money held by it to the
Trustee.  Upon so doing the Paying Agent shall have no further
liability for the money so paid.

    

    SECTION
2.07   Securityholder Lists; Ownership of
Securities.

    

    (a)  The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
received by or furnished to it of the names and addresses of Holders of
Securities.  If the Trustee is not the Registrar or if Unregistered
Securities are outstanding under the Indenture, SBC shall furnish to the Trustee
semiannually on or before the last day of June and December in each year, and at
such other times as the Trustee may request in writing, a list, in such form and
as of such date as the Trustee may reasonably require, containing all the
information in the possession or control of the Registrar, any co-Registrar, SBC
or any of its Paying Agents other than the Trustee as to the names and addresses
of Holders of Securities.

    

    (b)  Ownership of Registered
Securities of a Series shall be proved by the register for such Series kept by
the Registrar.  Ownership of Unregistered Securities may be proved by
the production of such Unregistered Securities or by a certificate or affidavit
executed by the person holding such Unregistered Securities or by a depository
with whom such Unregistered Securities were deposited, if the certificate or
affidavit is satisfactory to the Trustee.  SBC, the Trustee, and any
agent of SBC may treat the bearer of any Unregistered Security or coupon and the
person in whose name a Registered Security is registered as the absolute owner
thereof for all purposes.

    

    (c)  Notwithstanding the
foregoing, with respect to any Global Security, nothing herein shall prevent
SBC, the Trustee or any agent of SBC or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by a Depository or
impair, as between a Depository and holders of beneficial interests in any
Global Security, the operation of customary practices governing the exercise of
the rights of the Depository as Holder of such Global Security.  None
of SBC, the Trustee, any Paying agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

    

    SECTION
2.08   Registration of Transfer and Exchange.

    

    (a)  When Registered
Securities of a Series are presented to the Registrar with a request to register
their transfer or to exchange them for an equal principal amount of Registered
Securities of the same Series and of like tenor of other authorized
denominations, the Registrar shall register the transfer or make the exchange if
its customary requirements for such transactions are met.

    

    (b)  If both Registered and
Unregistered Securities are authorized for a Series of Securities and the terms
of such Securities permit, Unregistered Securities may be exchanged for an equal
principal amount of Registered or Unregistered Securities of the same Series and
of like tenor in any authorized denominations upon delivery to the Registrar (or
a Paying Agent, if the exchange is for Unregistered Securities) of the
Unregistered Security with all unmatured coupons and all matured coupons in
default appertaining thereto and if all other requirements of the Registrar (or
such Paying Agent) and such Securities for such exchange are met.

    

    Notwithstanding the foregoing, the
exchange of Unregistered Securities for Registered Securities will be subject to
the satisfaction of the provisions of United States law and regulations in
effect at the time of such exchange, and no exchange will be made until SBC has
notified the Trustee and the Registrar that, as a result of such exchange, SBC
would not suffer adverse consequences under such law or
regulations.

    

    (c)  To permit registrations
of transfers and exchanges, the Trustee shall authenticate Securities upon
surrender of Securities for registration of transfer or for exchange as provided
in this Section.  SBC will not make any charge for any registration of
transfer or exchange but may require the payment by the party requesting such
registration of transfer or exchange of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith, but not for any
exchange pursuant to Section 2.12, 3.06 or 9.05.

    

    (d)  Neither SBC nor the
Registrar shall be required (i) to issue, register the transfer of or exchange
Securities of any Series for the period beginning at the opening of business 15
days immediately preceding the selection of any such Securities to be redeemed
and ending at the close of business on the day of first publication of the
relevant notice of redemption or, if there is no publication, the mailing of the
relevant notice of redemption, or (ii) to register the transfer of or exchange
Securities of any Series selected, called or being called for redemption as a
whole or the portion being redeemed of any such Securities selected, called or
being called for redemption in part.

    

    (e)  Unregistered Securities
or any coupons appertaining thereto shall be transferable by
delivery.

    

    (f)  Notwithstanding the
foregoing, any Global Security shall be exchangeable pursuant to this Section
2.08 for Securities registered in the names of Persons other than the Depository
for such Security or its nominee only if (i) such Depository notifies SBC that
it is unwilling or unable to continue as Depository for such Global Security or
if at any time such Depository ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, (ii) SBC executes and delivers
to the Trustee an Order that such Global Security shall be so exchangeable or
(iii) there shall have occurred and be continuing an Event of Default with
respect to the Securities.  Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Securities
registered in such names as such Depository shall direct.

    

    Notwithstanding any other provision in
this Indenture, a Global Security may not be transferred except as a whole by
the Depository with respect to such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository.

    

    (g)  If at any time the
Depository for the Securities of a Series notifies SBC that it is unwilling or
unable to continue as Depository for the Securities of such Series or if at any
time the Depository for the Securities of such Series shall no longer be
eligible under Section 2.03, SBC shall appoint a successor Depository with
respect to the Securities of such Series. If a successor Depository for the
Securities of such Series is not appointed by SBC within 90 days after SBC
receives such notice or becomes aware of such ineligibility, SBC's election
pursuant to Section 2.02(15) shall no longer be effective with respect to the
Securities of such series and SBC will execute, and the Trustee, upon receipt of
the Order for the authentication and delivery of definitive Securities of such
Series, will authenticate and deliver, Securities of such Series in definitive
form in an aggregate principal amount equal to the principal amount of the
Global Security or Securities representing such Series in exchange for such
Global Security or Securities.

    

    SBC may at any time and in its sole
discretion determine that the Securities of any series issued in the form of one
or more Global Securities shall no longer be represented by such Global Security
or Securities.  In such event SBC will execute, and the Trustee, upon
receipt of the Order for the authentication and delivery of the definitive
Securities of such Series, will authenticate and deliver, Securities of such
Series in definitive form and in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such Series
in exchange for such Global Security or Securities.

    

    If (a) there shall have occurred and be
continuing an Event of Default (as defined in Section 6.01) or an event which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default with respect to a Series of Securities issued in the form of one or
more Global Securities, or (b) if specified by SBC pursuant to Section 2.02 with
respect to a Series of Securities, the Depository for such Series of Securities
may surrender a Global Security for such Series of Securities in exchange in
whole or in part for Securities of such Series in definitive
form.  Thereupon, SBC shall execute, and the Trustee shall
authenticate and deliver, without service closing charge:

    

    (i)  to each person specified
by such Depository a new Security or Securities of the same series, of any
authorized denomination as requested by such person in aggregate principal
amount equal to and in exchange for such person's beneficial interest in the
Global Security; and

    

            (ii)  to
such Depository a new Global Security in a denomination equal to the difference,
if any, between the principal amount of the surrendered Global Security and the
aggregate principal amount of Securities delivered to Holders
thereof.

    

    In any exchange provided for in any of
the preceding three paragraphs, SBC will execute and the Trustee will
authenticate and deliver Securities in definitive registered form in authorized
denominations.

    

    Upon the exchange of a Global Security
for Securities in definitive form, such Global Security shall be canceled by the
Trustee.  Registered Securities issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depository for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee.

    

    SECTION
2.09   Replacement Securities.

    

    (a)  If a mutilated Security
or a Security with a mutilated coupon appertaining to it is surrendered to the
Trustee, SBC shall issue and the Trustee shall authenticate and deliver in
exchange therefor a replacement Registered Security, if such surrendered
security was a Registered Security, or a replacement Unregistered Security with
coupons corresponding to the coupons appertaining to the surrendered Security,
if such surrendered Security was an Unregistered Security, of the same Series
and of like tenor, if the Trustee's requirements are met.

    

    (b)  If the Holder of a
Security claims that the Security or any coupon appertaining thereto has been
lost, destroyed or wrongfully taken, SBC shall issue (and the Trustee shall
authenticate) a replacement Registered Security of like tenor, if such Holder's
claim pertains to a Registered Security, or a replacement Unregistered Security
of like tenor with coupons corresponding to the coupons appertaining to the
lost, destroyed or wrongfully taken Unregistered Security or the Unregistered
Security to which such lost, destroyed or wrongfully taken coupon appertains, if
such Holder's claim pertains to an Unregistered Security, of the same Series and
of like tenor, if the Trustee's requirements are met; provided, however, that
the Trustee or SBC may require any such Holder to provide to the Trustee and SBC
security or indemnity sufficient in the judgment of SBC and the Trustee to
protect SBC, the Trustee, any Agent or any authenticating agent from any loss
which any of them may suffer if a Security or any coupon appertaining thereto is
replaced.  SBC may charge the party requesting a replacement Security
for its expenses in replacing a Security.

    

    (c)  Every replacement
Security is an additional obligation of SBC.

    

    (d)  The provisions of this
Section are exclusive and shall preclude (to the extent lawful) all other
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities or coupons.

    

    SECTION
2.10   Outstanding Securities.

    

    (a)  Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.

    

    (b)  If a Security is
replaced pursuant to Section 2.09, it ceases to be outstanding until the Trustee
receives proof satisfactory to it that the replaced Security is held by a bona
fide purchaser.

    

    (c)  If a Paying Agent (other
than SBC) holds on a redemption date or maturity date money sufficient to pay
all amounts due on Securities of any Series on that date, then on and after that
date all Securities of such Series due on such date cease to be outstanding and
interest on them ceases to accrue, provided that if the Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made.

    

    (d)  A Security does not
cease to be outstanding because SBC or an Affiliate holds the
Security.

    

    (e)  In determining whether
the Holders of the requisite principal amount of Securities of any Series have
concurred in any direction, waiver or consent, (i) the principal amount of an
Original Issue Discount Security  that shall be deemed to be
outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the maturity
thereof pursuant to Section 6.02 and (ii) the principal amount of a Security
denominated in a foreign currency or currencies shall be the U.S. dollar
equivalent, determined on the date of original issuance of such Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the date of original issuance of such Security of the
amount determined as provided in (i) above) of such Security.

    

    SECTION
2.11   Treasury Securities.

    

    In determining whether the Holders of
the requisite principal amount of Securities of any Series have concurred in any
direction, waiver or consent, Securities of such Series owned by SBC or an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities of such Series which the Trustee knows are so owned
shall be so disregarded.  Securities of such Series owned by SBC or
which have been pledged in good faith may be considered by the Trustee if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right to so
act with respect to such Securities and that the pledgee is not SBC or an
Affiliate.

    

    SECTION
2.12   Temporary Securities.

    

    (a)  Until definitive
Registered Securities of any Series are ready for delivery, SBC may prepare and
execute and the Trustee shall authenticate temporary Registered Securities of
such Series.  Temporary Registered Securities of any Series shall be
substantially in the form of definitive Registered Securities of such Series but
may have variations that SBC considers appropriate for temporary
Securities.  Every temporary Registered Security shall be executed by
SBC and authenticated by the Trustee, and registered by the Registrar, upon the
same conditions, and with like effect, as a definitive Registered
Security.  Without unreasonable delay, SBC shall prepare and the
Trustee shall authenticate definitive Registered Securities of the same Series
and of like tenor in exchange for temporary Registered Securities.

    

    (b)  Until definitive
Unregistered Securities of any Series are ready for delivery, SBC may prepare
and execute and the Trustee shall authenticate one or more temporary
Unregistered Securities, which may have coupons attached or which may be in the
form of a single temporary global Unregistered Security of that Series without
coupons.  The temporary Unregistered Security or Securities of any
Series shall be substantially in the form approved by or pursuant to a Board
Resolution and shall be delivered to one of the Paying Agents located outside
the United States or to such other person or persons as SBC shall direct against
such certifications as SBC may from time to time prescribe.  The
temporary Unregistered Security or Securities of a Series shall be executed by
SBC and authenticated by the Trustee upon the same conditions, and with like
effect, as a definitive Unregistered Security of such Series, except as provided
herein or in the Board Resolution or supplemental indenture relating
thereto.  A temporary Unregistered Security or Securities shall be
exchangeable for definitive Unregistered Securities of like tenor at the time
and on the conditions, if any, specified in the temporary Security.

    

    Upon any exchange of a part of a
temporary Unregistered Security of a Series for definitive Unregistered
Securities of such Series and of like tenor, the temporary Unregistered Security
shall be endorsed by the Trustee or Paying Agent to reflect the reduction of its
principal amount by an amount equal to the aggregate principal amount of the
definitive Unregistered Securities of such Series and of like tenor so exchanged
and endorsed.

    

    SECTION
2.13   Cancellation.

    

    SBC at any time may deliver Securities
and coupons to the Trustee for cancellation.  The Registrar and the
Paying Agent shall forward to the Trustee any Securities and coupons surrendered
to them for registration of transfer, for exchange or for
payment.  The Trustee shall cancel all Securities and coupons
surrendered for registration of transfer, exchange, payment or cancellation and
may dispose of cancelled Securities and coupons as SBC directs; provided,
however, that any Unregistered Securities of a Series delivered to the Trustee
for exchange prior to maturity shall be retained by the Trustee for reissue as
provided herein or in the Securities of such Series.  SBC may not
issue new Securities to replace Securities that it has paid or delivered to the
Trustee for cancellation, provided that the Trustee shall not be required to
destroy cancelled Securities but may be required to deliver such Securities to
SBC upon demand.

    

    SECTION
2.14  Defaulted Interest.

    

    If SBC defaults on a payment of
interest on a Series of Securities, SBC shall pay the defaulted interest as
provided in such Securities or in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed and acceptable to the Trustee.  With respect to Registered
Securities, the Trustee may pay the defaulted interest, plus any interest
payable on the defaulted interest, to the Holders of such Registered Securities
on a subsequent special record date.  SBC shall fix the record date
and the payment date.  At least 15 days before the record date SBC
shall mail to such Holders a notice that states the record date, the payment
date and the amount of interest to be paid.

    

    SECTION
2.15  CUSIP Numbers.

    

    SBC in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.

    

    

    ARTICLE
3

    

    REDEMPTION

    

    SECTION
3.01   Notice to Trustee.

    

    SBC may, with respect to any Series of
Securities, reserve the right to redeem and pay such Series of Securities or any
part thereof, or may covenant to redeem and pay the Series of Securities or any
part thereof, before maturity at such time and on such terms as provided for in
such Securities.  If a Series of Securities is redeemable and SBC
wants or is obligated to redeem all or part of the Series of Securities pursuant
to the terms of such Securities, it shall notify the Trustee of the redemption
date and the principal amount of the Series of Securities to be
redeemed.  SBC shall give such notice at least 75 days before the
redemption date (or such shorter notice as may be acceptable to the
Trustee).

    

    SECTION
3.02   Selection of Securities to be Redeemed.

    

    If less than all the Securities of a
Series are to be redeemed, the Trustee, not more than 75 days prior to the
redemption date, shall select the Securities of the Series to be redeemed pro
rata or by lot or in such other manner as the Trustee shall deem fair and
appropriate.  The Trustee shall make the selection from Securities of
the Series that are outstanding and that have not previously been called for
redemption.  Securities of the Series and portions of them selected by
the Trustee shall be in amounts of $1,000 or integral multiples of $1,000 or,
with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.02(a)(8), in amounts equal to the minimum principal
denomination for each such Series and integral multiples
thereof.  Provisions of this Indenture that apply to Securities of
that Series called for redemption also apply to portions of Securities of that
Series called for redemption.  The Trustee shall promptly notify SBC
in writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.

    

    SECTION
3.03  Notice of Redemption.

    

    (a)  At least 30 days but not
more than 60 days before a redemption date, SBC shall mail a notice of
redemption by first-class mail to each Holder of Registered Securities that are
to be redeemed.

    

    (b)  If Unregistered
Securities are to be redeemed, notice of redemption shall be published in an
Authorized Newspaper in each of The City of New York, London and, if such
Securities to be redeemed are listed on the Luxembourg Stock Exchange,
Luxembourg twice in different calendar weeks, the first publication to be not
less than 30 nor more than 60 days before the redemption date.

    

    (c)  All notices shall
identify the Series of Securities to be redeemed and shall state:

    

    (1)  the redemption date;

    

    (2)  the redemption price;

     

    (3)  if less than all the
outstanding Securities of a Series are to be redeemed, the identification (and,
in the case of partial redemption, the principal amounts) of the particular
Securities to be redeemed;

    

    (4)  the name and address of
the Paying Agent;

    

    (5)  that Securities of the
Series called for redemption and all unmatured coupons, if any, appertaining
thereto must be surrendered to the Paying Agent to collect the redemption price;
and

    

    (6)  that interest on
Securities of the Series called for redemption ceases to accrue on and after the
redemption date.

    

    At SBC's request, the Trustee shall
give the notice of redemption in SBC's name and at its expense.

    

    SECTION
3.04   Effect of Notice of Redemption.

    

    Once notice of redemption is mailed or
published, Securities of a Series called for redemption become due and payable
on the redemption date at the redemption price.  Upon surrender to the
Paying Agent of such Securities together with all unmatured coupons, if any,
appertaining thereto, such Securities shall be paid at the redemption price plus
accrued interest to the redemption date, but installments of interest due on or
prior to the redemption date will be payable, in the case of Unregistered
Securities, to the bearers of the coupons for such interest upon surrender
thereof and, in the case of Registered Securities, to the Holders of such
Securities of record at the close of business on the relevant record
dates.

    

    SECTION
3.05   Deposit of Redemption Price.

    

    On or before the redemption date, SBC
shall deposit with the Trustee money sufficient to pay the redemption price of
and (unless the redemption date shall be an interest payment date) interest
accrued to the redemption date on all Securities to be redeemed on that
date.

    

    SECTION
3.06   Securities Redeemed in Part.

    

    Upon surrender of a Security that is
redeemed in part, SBC shall issue and the Trustee shall authenticate for the
Holder of that Security a new Security or Securities of the same Series and like
tenor and the same form in authorized denominations equal in aggregate principal
amount to the unredeemed portion of the Security surrendered.  If a
Global Security is so surrendered, such new Security so issued shall be a new
Global Security.

    

    ARTICLE
4

    

    COVENANTS

    

    SECTION
4.01   Payment of Securities.

    

    SBC shall pay or cause to be paid the
principal of and interest on the Securities on the dates and in the manner
provided herein and in the Securities.

    

    SBC shall pay interest on overdue
principal of a Security of any Series at the rate of interest (or, in the case
of Original Issue Discount Securities, Yield to Maturity) borne by the
Securities of that Series, and, to the extent lawful, it shall pay interest on
overdue installments of interest at the same rate.

    

    SECTION
4.02   Reports by SBC.

    

    SBC agrees:

    

    (a)  to file with the
Trustee, within 15 days after SBC is required to file the same with the SEC,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC may from time to
time by rules and regulations prescribe) which SBC may be required to file with
the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934, as amended; or, if SBC is not required to file information, documents
or reports pursuant to either of such sections, then to file with the Trustee
and the SEC, in accordance with rules and regulations prescribed from time to
time by the SEC, such of the supplementary and periodic information, documents
and reports which may be required pursuant to section 13 of the Securities
Exchange Act of 1934, as amended, in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations;

    

    (b)  to file with the Trustee
and the SEC, in accordance with the rules and regulations prescribed from time
to time by the SEC, such additional information, documents, and reports with
respect to compliance by SBC with the conditions and covenants provided for in
this Indenture as may be required from time to time by such rules and
regulations; and

    

    (c)  to transmit by mail to
all Holders of Registered Securities, as the names and addresses of such Holders
appear on the register for each Series of Securities, to such Holders of
Unregistered Securities as have, within the two years preceding such
transmission, filed their names and addresses with the Trustee for that purpose
and to all Holders of Securities whose names and addresses have been furnished
to the Trustee pursuant to Section 2.07, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the SBC pursuant to subsections (a) and (b) of this
Section 4.02 as may be required by rules and regulations prescribed from time to
time by the SEC.

    

    SECTION
4.03  Statement as to Compliance.

    

    SBC will deliver to the Trustee
annually, commencing March 1, 1998, a certificate, from its principal executive
officer, principal financial officer or principal accounting officer, stating
whether or not to the best knowledge of the signer thereof the Company is in
compliance (without regard to periods of grace or notice requirements) with all
conditions and covenants under this Indenture, and if SBC shall not be in
compliance, specifying such non-compliance and the nature and status thereof of
which such signer may have knowledge.

    

    SECTION
4.04  Calculation of Original Issue Discount.

    

    SBC shall file with the Trustee
promptly at the end of each calendar year a written notice specifying the amount
of original issue discount (including daily rates and accrual periods) accrued
on outstanding Securities as of the end of such year.

    

    

    ARTICLE
5

    

    SUCCESSORS

    

    

    SECTION
5.01   When SBC May Merge, etc.

    

     SBC may not consolidate with, or
merge into, or be merged into, or transfer or lease its properties and assets
substantially as an entirety to, any person, unless the person is a corporation
organized under the laws of the United States, any State thereof or the District
of Columbia, the person assumes by supplemental indenture all the obligations of
SBC under this Indenture and the Securities and any coupons appertaining
thereto, shall have provided for conversion or exchange rights in accordance
with the terms of any Securities contemplating conversion or exchange pursuant
to Section 2.01(a)(14),  and,
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing.  The surviving, transferee or lessee corporation
shall be the successor to SBC and SBC, except in the case of a lease, shall be
relieved of all obligations under this Indenture and the
Securities.

    

    

    ARTICLE
6

    

    DEFAULTS
AND REMEDIES

    

    SECTIONS
6.01   Events of Default.

    

    An "Event of Default" occurs with
respect to the Securities of any Series if:

    

    (1)  SBC defaults in the
payment of interest on any Security of that Series when the same becomes due and
payable and the Default continues for a period of 90 days;

    

    (2)  SBC defaults in the
payment of the principal of any Security of that Series when the same becomes
due and payable at maturity, upon redemption or otherwise;

    

    (3)  SBC fails to comply with
any of its other agreements in the Securities of that Series, or in any
supplemental indenture under which the Securities of that Series may have been
issued or in the Indenture (other than an agreement included solely for the
benefit of Series of Securities other than that Series) and the Default
continues for the period and after the notice specified below;

    

    (4)  SBC pursuant to or
within the meaning of any Bankruptcy Law:

    

    (A)  commences a voluntary
case,

    

    (B)  consents to the entry of
an order for relief against it in an involuntary case,

    

    (C)  consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or

    

    (D)  makes a general
assignment for the benefit of its creditors; or

    

    (5)  a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law
that:

    

    (A)  is for relief against
SBC in an involuntary case,

    

    (B)  appoints a Custodian of
SBC or for all or substantially all of its property, or

    

    (C)  orders the liquidation
of SBC, and the order or decree remains unstayed and in effect for 60
days.

    

    The term "Bankruptcy Law" means Title
11, U.S. Code or any similar federal or state law for the relief of
debtors.  The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.

    

    A Default under clause (3) is not an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of all the outstanding Securities of that Series notify SBC (and the
Trustee in the case of notification by such Holders) of the Default and SBC does
not cure the Default within 90 days after receipt of the notice.  The
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default".

    

    Upon receipt by the Trustee of any
Notice of Default pursuant to this Section 6.01 with respect to Securities of a
Series all or part of which is represented by a Global Security, a record date
shall be established for determining Holders of outstanding Securities of such
Series entitled to join in such Notice of Default, which record date shall be at
the close of business on the day the Trustee receives such Notice of
Default.  The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such Notice of
Default, whether or not such Holders remain Holders after such record date;
provided, that
unless Holders of at least 10% in principal amount of the outstanding Securities
of such Series, or their proxies, shall have joined in such Notice of Default
prior to the day which is 90 days after such record date, such Notice of Default
shall automatically and without further action by any Holder be canceled and of
no further effect.  Nothing in this paragraph shall prevent a Holder,
or a proxy of a Holder, from giving, after expiration of such 90-day period, a
new Notice of Default identical to a Notice of Default which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section
6.01.

    

    SECTION
6.02   Acceleration.

    

    If an Event of Default occurs with
respect to the Securities of any Series and is continuing, the Trustee, by
notice to SBC, or the Holders of at least 25% in principal amount of all of the
outstanding Securities of that Series, by notice to SBC and the Trustee, may
declare the principal (or, if any of the Securities of that Series are Original
Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified in the terms thereof) of, and any accrued
interest on, all the Securities of that Series to be due and
payable.  Upon such declaration, such principal (or, in the case of
Original Issue Discount Securities, such specified amount) and any accrued
interest shall be due and payable immediately.  The Holders of a
majority in principal amount of all of the Securities of that Series, by notice
to SBC and the Trustee, may rescind such acceleration and its consequences if
the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest that have become due solely because of the
acceleration.

    

    Upon receipt by the Trustee of any
declaration of acceleration, or rescission thereof, with respect to Securities
of a Series all or part of which is represented by a Global Security, the
Trustee shall establish a record date for determining Holders of outstanding
Securities of such Series entitled to join in such declaration of acceleration,
or rescission, as the case may be, which record date shall be at the close of
business on the date the Trustee receives such declaration of acceleration, or
rescission, as the case may be.  The Holders on such record date, or
their duly designated proxies, and only such persons, shall be entitled to join
in such declaration of acceleration, or rescission, as the case may be, whether
or not such Holders remain Holders after such record date; provided, that unless
such declaration of acceleration, or rescission, as the case may be, shall have
become effective by virtue of the requisite percentage having been obtained
prior to the day which is 90 days after such record date, such declaration of
acceleration, or rescission, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further
effect.  Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new
declaration of acceleration, or rescission thereof, as the case may be, that is
identical to a declaration of acceleration, or rescission thereof, which has
been canceled pursuant to the proviso to the preceding sentence, in which even a
new record date shall be established pursuant to the provisions of this Section
6.02.

    

    SECTION
6.03   Other Remedies Available to Trustee.

    

    (a)  If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy to collect
the payment of principal of and interest on the Securities of the Series that is
in Default or to enforce the performance of any provision of the Securities of
that Series or this Indenture.

    

    (b)  The Trustee may maintain
a proceeding even if it does not possess any of the Securities or does not
produce any of them in the proceeding.  A delay or omission by the
Trustee or any Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default.  To the extent permitted by
law no remedy is exclusive of any other remedy and all available remedies are
cumulative.

    

    SECTION
6.04   Waiver of Existing Defaults.

    

    The Holders of a majority in principal
amount of any Series of Securities by notice to the Trustee may waive an
existing Default with respect to that Series and its consequences except a
Default in the payment of principal of or interest on any Security.

    

    SBC may, but shall not be obligated to,
fix a record date for the purpose of determining the Persons entitled to waive
any past default hereunder.  If a record date is fixed, the Holders on
such record date, or their duly designated proxies, and only such Persons, shall
be entitled to waive any default hereunder, whether or not such Holders remain
Holders after such record date; provided, that unless
such majority in principal amount shall have waived such default prior to the
date which is 90 days after such record date, any such waiver previously given
shall automatically and without further action by any Holder be canceled and of
no further effect.

    

    SECTION
6.05   Control by Majority.

    

    The Holders of a majority in principal
amount of the Securities of each Series affected (with each such Series voting
as a class) may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it with respect to Securities of that Series.  However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or that is unduly prejudicial to the rights of the Securityholders of
that Series.

    

    Upon receipt by the Trustee of any such
direction with respect to Securities of a Series all or part of which is
represented by a Global Security, the Trustee shall establish a record date for
determining Holders of outstanding Securities of such Series entitled to join in
such direction, which record date shall be at the close of business on the day
the Trustee receives such direction.  The Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
join in such direction, whether or not such Holders remain Holders after such
record date; provided, that unless
such majority in principal amount shall have been obtained prior to the day
which is 90 days after such record date, such direction shall automatically and
without further action by any Holder be canceled and of no further
effect.  Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new
direction identical to a direction which has been canceled pursuant to the
proviso to the preceding sentence, in which event a new record date shall be
established pursuant to the provisions of this Section 6.05.

    

    SECTION
6.06   Limitation on Suits by Securityholders.

    

    A Securityholder may pursue a remedy
with respect to this Indenture or the Securities of any Series only
if:

    

    (1)  the Holder gives to the
Trustee written notice of a continuing Event of Default with respect to
Securities of that Series;

    

    (2)  the Holders of at least
25% in principal amount of the Securities of that Series make a written request
to the Trustee to pursue the remedy;

    

    (3)  such Holder or Holders
offer to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense to be, or which may be, incurred by the Trustee in pursuing
the remedy;

    

    (4)  the Trustee does not
comply with the request within 60 days after receipt of the request and the
offer of indemnity; and

    

    (5)  during such 60-day
period, the Holders of a majority in principal amount of the Securities of that
Series do not give the Trustee a direction inconsistent with the
request.

    

    A Securityholder of any Series may not
use this Indenture to prejudice the rights of another Securityholder of that
Series or any other Series or to obtain a preference or priority over another
Securityholder of that Series or any other Series.

    

    SECTION
6.07   Rights of Holders to Receive Payment.

    

    Notwithstanding any other provision of
this Indenture, the right of any Holder of a Security to receive payment of
principal of and (subject to Section 2.14) interest on the Security (whether at
maturity or upon redemption), on or after the respective due dates expressed in
the Security, the right of any Holder of a Security of a Series the terms of
which provide for conversion or exchange as contemplated in Section 2.01(a)(14)
to have the Security be converted or exchanged as so provided, and the right of
any Holder of a coupon to receive payment of (subject to Section 2.14) interest
due as provided in such coupon, or to bring suit for the enforcement of any such
payment on or after such respective dates or any such conversion or exchange
right, shall not be impaired or affected without the consent of such
Holder.

    

    SECTION
6.08   Collection Suits by Trustee.

    

    If an Event of Default specified in
Section 6.01(1) or (2) occurs with respect to Securities of any Series and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against SBC for the whole amount of the principal of and
interest on Securities of that Series remaining unpaid.

    

    SECTION.
6.09   Trustee May File Proofs of Claim.

    

    The Trustee may file such proofs of
claim and other papers or documents as may be necessary or advisable, and take
any and all actions authorized under the TIA, in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relating to
SBC (or any other obligor upon the Securities), its creditors or its
property.

    

    SECTION
6.10   Priorities.

    

    If the Trustee collects any money
pursuant to this Article, it shall pay out the money in the following
order:

    

    FIRST:  to the Trustee for
amounts due under Section 7.07;

    

    SECOND:  to Holders of
Securities in respect of which or for the benefit of which such money has been
collected for amounts due and unpaid on such Securities for principal and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and interest,
respectively; and

    

    THIRD:  to SBC.

    

    The Trustee may fix a record date (with
respect to Registered Securities) and payment date for any such payment to
Holders of Securities.

    

    SECTION
6.11   Undertaking for Costs.

    

    In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable attorneys'
fees, against any party litigant in the suit, in the manner and to the extent
provided in the TIA.  This Section does not apply to a suit by SBC,
the Trustee, a Holder pursuant to Section 6.07, or a Holder or Holders of more
than 10% in principal amount of the Securities of any Series.

    

    

    ARTICLE
7

    

    TRUSTEE

    

    SECTION
7.01   Duties of Trustee.

    

    (a) The duties and responsibilities of
the Trustee shall be as provided by the TIA.  If an Event of Default
has occurred and is continuing, the Trustee shall exercise such of its rights
and powers under this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.

    

    (b)  Except during the
continuance of an Event of Default:

    

    (1)  Subject to the
provisions of the TIA, the Trustee need perform only those duties that are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.

    

    (2)  In the absence of bad
faith on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture.  However, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein).

    

    (c)  The Trustee may not be
relieved from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:

    

    (1)  This paragraph does not
limit the effect of paragraph (b) of this Section.

    

    (2)  The Trustee shall not be
liable for any error of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in ascertaining the pertinent
facts.

    

    (3)  The Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
6.05.

    

    (d)  Every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b) and (c) of this Section.

    

    (e)  The Trustee may refuse
to perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.

    

    (f)  The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
with SBC.  Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.

    

    (g)  Except as expressly
provided herein, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

    

    SECTION
7.02   Rights of Trustee.

    

    (a)  The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person.  The Trustee need not investigate any fact or
matter stated in the document.

    (b)  Before the Trustee acts
or refrains from acting, it may consult with counsel of its selection after
consultation with SBC or require an Officers' Certificate or an Opinion of
Counsel.  The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on a Board Resolution, an Officers'
Certificate, an Opinion of Counsel or the advice of counsel selected in
consultation with SBC.

    

    (c)  The Trustee may act
through agents and shall not be responsible for the misconduct or negligence of
any agent appointed with due care.

    

    (d)  The Trustee shall not be
liable for any action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers.

    

    (e)  The Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.

    

    SECTION
7.03   Individual Rights of Trustee.

    

    The Trustee in its individual or any
other capacity may become the owner or pledgee of Securities and may otherwise
deal with SBC or an Affiliate with the same rights it would have if it were not
Trustee.  Any Agent may do the same with like
rights.  However, the Trustee is subject to Sections 7.10 and
7.11.

    

    SECTION
7.04   Trustee's Disclaimer.

    

    The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, shall not be
accountable for SBC's use of the proceeds from the Securities and shall not be
responsible for any statement in the Securities other than its certificate of
authentication.

    

    SECTION
7.05   Notice of Defaults.

    

    If a Default occurs and is continuing
with respect to the Securities of any Series and if it is known to the Trustee,
the Trustee shall mail to each Holder of a Security of that Series entitled to
receive reports pursuant to Section 4.02(c) (and, if Unregistered Securities of
that Series are outstanding, shall cause to be published at least once in an
Authorized Newspaper in each of The City of New York, London and, if Securities
of that Series are listed on the Luxembourg Stock Exchange, Luxembourg) notice
of the Default as and to the extent provided by the TIA.  Except in
the case of a Default in payment on the Securities of any Series, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding such notice is in the
interests of Securityholders of that Series.

    

    SECTION
7.06   Reports by Trustee to Holders.

    

    (a)  Within 60 days after
each anniversary date of the first issue of a Series of Securities, the Trustee
shall mail to each Securityholder of that Series entitled to receive reports
pursuant to Section 4.02(c) a brief report, dated as of such date, that complies
with TIA Section 313(a).  The Trustee also shall comply with TIA
Section 313(b)(2).

    

    (b)  At the time that it
mails such a report to Securityholders of any Series, the Trustee shall file a
copy of that report with the SEC and with each stock exchange on which the
Securities of that Series are listed.  SBC shall provide written
notice to the Trustee when the Securities of any Series are listed on any stock
exchange.

    

    SECTION
7.07   Compensation and Indemnity.

    

    (a)  SBC shall pay to the
Trustee from time to time such compensation as SBC and the Trustee shall from
time to time agree in writing for all services rendered by the Trustee
hereunder.  The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust.  SBC shall reimburse
the Trustee upon request for all reasonable out-of-pocket expenses incurred by
it in connection with the performance of its duties under this
Indenture.  Such expenses shall include the reasonable compensation
and out-of-pocket expenses of the Trustee's agents and counsel.

    

    (b)  SBC shall indemnify each
of the Trustee or any successor Trustee for, and hold the Trustee harmless
against, any and all loss, damage, claims, liability or expense, including taxes
(other than taxes based upon, measured by or determined by the income of the
Trustee), arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of the Trustee's powers or duties hereunder, except to the
extent that such loss, damage, claim, liability or expense is due to the
Trustee's own negligence or bad faith.  The Trustee shall notify SBC
promptly of any claim for which it may seek indemnity.  SBC shall
defend the claim and the Trustee shall cooperate in the defense.  The
Trustee may have separate counsel and SBC shall pay the reasonable fees and
expenses of such counsel.  SBC need not pay for any settlement made
without its consent.

    

    (c)  SBC need not reimburse
any expense or indemnify against any loss or liability incurred by the Trustee
through its negligence or bad faith.

    

    (d)  To secure the payment
obligations of SBC pursuant to this Section, the Trustee shall have a lien prior
to the Securities of any Series on all money or property held or collected by
the Trustee, except that held in trust to pay principal of and interest on
particular Securities of a Series.

    

    (e)  If the Trustee incurs
expenses or renders services after an Event of Default specified in Section
6.01(4) or (5) occurs, such expenses and the compensation for such services are
intended to constitute expenses of administration under any Bankruptcy
Law.

    

    (f)  The provisions of this
Section 7.07 shall survive termination of this Indenture and the resignation or
removal of the Trustee.

    

    SECTION
7.08   Replacement of Trustee.

    

    (a)  The resignation or
removal of the Trustee and the appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in this Section.

    

    (b)  The Trustee may resign
with respect to the Securities of any Series by so notifying SBC.  The
Holders of a majority in principal amount of the Securities of any Series may
remove the Trustee with respect to that Series by so notifying the Trustee and
SBC.  SBC may remove the Trustee with respect to Securities of any
Series if:

    

    (1)  the Trustee fails to comply with Section 7.10;

    

    (2)  the Trustee is adjudged a bankrupt or an
insolvent;

    

    (3)  a receiver or public
officer takes charge of the Trustee or its property; or

    

    (4)  the Trustee becomes
incapable of acting.

    

    (c)  If the Trustee resigns
or is removed or if a vacancy exists in the office of Trustee for any reason
with respect to Securities of any Series, SBC shall promptly appoint a successor
Trustee for such Series.  Within one year after a successor Trustee
with respect to the Securities of any Series takes office the Holders of a
majority in principal amount of Securities of that Series may appoint a
successor Trustee with respect to the Securities of that Series to replace the
successor Trustee appointed by SBC.

    

    (d)  If a successor Trustee
with respect to the Securities of any Series does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, SBC or
the Holders of at least 10% in principal amount of the Securities of the
applicable Series may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
Series.

    

    (e)  If the Trustee with
respect to the Securities of any Series fails to comply with Section 7.10, any
Securityholder of the applicable Series may petition any court of competent
jurisdiction for the removal of such Trustee and the appointment of a successor
Trustee.

    

    (f)  A successor Trustee
shall deliver a written acceptance of its appointment to the retiring Trustee
and SBC.  Thereupon, the resignation or removal of the retiring
Trustee for any Series of Securities shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the retiring Trustee
with respect to all Series of Securities for which the successor Trustee is to
be acting as Trustee under this Indenture.  The retiring Trustee shall
promptly transfer all property held by it as Trustee with respect to such Series
of Securities to the successor Trustee subject to the lien provided for in
Section 7.07.  SBC shall give notice of each appointment of a
successor Trustee for any Series of Securities by mailing written notice of such
event by first-class mail to the Holders of Securities of such Series entitled
to receive reports pursuant to Section 4.03(c) and, if any Unregistered
Securities are outstanding, by publishing notice of such event once in an
Authorized Newspaper in each of The City of New York, London, and, if Securities
of that Series are listed on the Luxembourg Stock Exchange,
Luxembourg.

    

    (g)  All provisions of this
Section 7.08 except subparagraphs (b)(1), (e) and (h) and the words "subject to
the lien provided for in Section 7.07" in subparagraph (f) shall apply also to
any Paying Agent located outside the United States and its possessions and
required by Section 2.04.

    

    (h)  In case of the
appointment hereunder of a successor Trustee with respect to the Securities of
one or more (but not all) Series, SBC, the retiring Trustee and such successor
Trustee shall execute and deliver a supplemental indenture wherein such
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, such successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those Series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those Series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee.

    

    SECTION
7.09   Successor Trustee, Agents by Merger, etc.

    

    If the Trustee or any Agent
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business assets to, another corporation, the
successor corporation, without any further act, shall be the successor Trustee
or Agent, as the case may be.

    

    SECTION
7.10   Eligibility; Disqualification.

    

    This Indenture shall always have a
Trustee with respect to each Series of Securities which satisfies the
requirements of TIA Section 310(a)(1).  The Trustee shall always have
a combined capital and surplus of at least $100,000,000, as set forth in its
most recent published annual report of condition.  If the Trustee has
or shall acquire a conflicting interest within the meaning of the TIA, the
Trustee shall either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the TIA and this
Indenture.  To the extent permitted by the TIA, the Trustee shall not
be deemed to have a conflicting interest by virtue of being a trustee under this
Indenture with respect to Securities of more than one Series or a trustee under
all indentures now or hereafter existing pursuant to which indenture securities
have been issued on which SBC is an obligor and which may be excluded under the
proviso of TIA Section 310(b)(1).

    

    SECTION
7.11   Preferential Collection of Claims Against
SBC.

    

    If and when the Trustee shall be or
become a creditor of SBC (or any other obligor upon the Securities), the Trustee
shall be subject to the provisions of the TIA regarding the collection of claims
against SBC (or any such other obligor).

    

    ARTICLE
8

    

    DISCHARGE
OF INDENTURE

    

    SECTION
8.01   Termination of SBC's Obligations.

    

    (a)  SBC reserves the right
to terminate all of its obligations under (i) this Indenture and the Securities,
or (ii) the Securities of any Series if SBC irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations sufficient to pay, when due,
the principal of and any interest on all the Securities or all the Securities of
that Series, as the case may be, to maturity or redemption and if all other
conditions set forth in the Securities of that Series are
met.  However, SBC's obligations in Sections 2.04, 2.05, 2.06, 2.07,
2.08, 2.09, 2.15, 4.01, 7.07, 7.08, 8.03 and 8.04 shall survive until the
Securities are no longer outstanding.  Thereafter SBC's obligations in
Sections 7.07, 8.03 and 8.04 shall survive.  Unless otherwise provided
in the terms of Securities of a Series that are convertible or exchangeable as
contemplated in Section 2.01(a)(14), SBC shall not be entitled to terminate its
obligations under the Securities of that Series pursuant to this Section
8.01.

    

    (b)  Before or after a
deposit SBC may make arrangements satisfactory to the Trustee for the redemption
of Securities at a future date in accordance with Article 3.

    

    (c)  After a deposit by SBC
in accordance with this Section in respect of the Securities of a Series, the
Trustee upon request shall acknowledge in writing the discharge of SBC's
obligations under the Securities of the Series in respect of which the deposit
has been made and this Indenture with respect to the Securities of that Series
except for those surviving obligations specified above.

    

    (d)  In order to have money
available on a payment date to pay principal of and interest on the Securities
of any Series, the U.S. Government Obligations shall be payable as to principal
or interest on or before such payment date in such amounts as will provide the
necessary money.

    

    (e)  "U.S. Government
Obligations" means:

    

    (i)  direct obligations of
the United States of America for the payment of which the full faith and credit
of the United States of America are pledged; or

    

    (ii)  obligations of a person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America pursuant to authority granted by the Congress of the
United States of America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America;

    

    provided,
however, that U.S. Government Obligations shall not be callable at the issuer's
option.

    

    SECTION
8.02   Application of Trust Money.

    

    The Trustee shall hold in trust all
money or U.S. Government Obligations deposited with it pursuant to Section
8.01.  It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities of each
Series in respect of which the deposit shall have been made.

    

    SECTION
8.03   Repayment to SBC.

    

    (a)  The Trustee and the
Paying Agent shall promptly pay to SBC upon request any excess money or
securities held by them at any time.

    

    (b)  The Trustee and the
Paying Agent shall pay to SBC upon request any money held by them for the
payment of principal or interest that remains unclaimed for two years after such
principal or interest became due.  After payment to SBC,
Securityholders entitled to the money must look to SBC for payment as general
creditors unless an applicable abandoned property law designates another
person.

    

    SECTION
8.04   Indemnity for Government Obligations.

    

    SBC shall pay and shall indemnify the
Trustee and each Securityholder of each Series in respect of which the deposit
shall have been made against any tax, fee or other charge imposed on or assessed
against deposited U.S. Government Obligations or the principal and interest
received on such obligations.

    

    

    ARTICLE
9

    

    AMENDMENTS
AND WAIVERS

    

    SECTION
9.01   Without Consent of Holders.

    

    SBC and the Trustee may enter into one
or more supplemental indentures without consent of any Securityholder for any of
the following purposes:

    

    (1)  to cure any ambiguity,
defect or inconsistency herein or in the Securities of any Series;

    

    (2)  to provide for the
issuance of and establish the form and terms and conditions of Securities of any
Series as provided in Section 2.02, and to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or any Series of Securities;

    

    (3)  to secure the Securities
pursuant to Section 4.02;

    

    (4)  to comply with Section
5.01 or 5.02;

    

    (5)  to provide for
uncertificated Securities in addition to or in place of certificated
Securities;

    

    (6)  to add to the rights of
the Holders of any Series of Securities or to surrender any right or power
herein conferred on SBC;

    

    (7)  to make provision with
respect to the conversion or exchange rights of Holders pursuant to the
requirements of the terms of Securities of a Series that is convertible or
exchangeable as contemplated in Section 2.01(a)(14); or

    

    (8)  to make any change that
does not adversely affect the rights of any Securityholder.

    

    SECTION
9.02   With Consent of Holders.

    

    (a)  With the written consent
of the Holders of a majority in principal amount of the outstanding Securities
of each Series affected by such supplemental indenture (with each Series voting
as a class), SBC and the Trustee may enter into a supplemental indenture to add
any provisions to or to change or eliminate any provisions of this Indenture or
of any supplemental indenture or to modify, in each case in any manner not
covered by Section 9.01, the rights of the Securityholders of each such
Series.  The Holders of a majority in principal amount of the
outstanding Securities of each Series affected by such waiver (with each Series
voting as a class), by notice to the Trustee, may waive compliance by SBC with
any provision of this Indenture, any supplemental indenture or the Securities of
any such Series except a Default in the payment of the principal of or interest
on a Security.  However, without the consent of each Securityholder
affected, an amendment or waiver may not:

    

    (1)  reduce the amount of
Securities whose Holders must consent to an amendment or waiver;

    

    (2)  reduce the rate of or
change the time for payment of interest on any Security;

    

    (3)  reduce the principal of
or change the fixed maturity of any Security;

    

    (4)  waive a Default in the
payment of the principal of or interest on any Security;

    

    (5)  make any Security
payable in currency other than that stated in the Security;

    

    (6)  adversely affect the
right to convert or exchange, as provided in the terms thereof, any Security
that is convertible or exchangeable as contemplated in Section 2.01(a)(14);
or

    

    (7)  make any change in
Section 6.04, 6.07 or 9.02(a) (third sentence).

    

    (b)  SBC may, but shall not
be obligated to, fix a record date for the purpose of determining the Persons
entitled to consent to any indenture supplemental hereto.  If a record
date is fixed, the Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to consent to such
supplemental indenture, whether or not such Holders remain Holders after such
record date; provided, that unless
such consent shall have become effective by virtue of the requisite percentage
having been obtained prior to the date which is 90 days after such record date,
any such consent previously given shall automatically and without further action
by any Holder be canceled and of no further effect.

    

    (c)  It is not necessary
under this Section 9.02 for the Security- holders to consent to the particular
form of any proposed supplemental indenture, but it is sufficient if they
consent to the substance thereof.

    

    (d)  Promptly after the
execution by SBC and the Trustee of any supplemental indenture pursuant to the
provisions of this Section 9.02, SBC shall transmit by mail a notice, setting
forth in general terms the substance of such supplemental indenture, to all
Holders of Registered Securities, as the names and addresses of such Holders
appear on the register for each Series of Securities, and to such Holders of
Unregistered Securities as are entitled to receive reports pursuant to Section
4.02(c).  Any failure of SBC to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.

    

    SECTION
9.03   Compliance with Trust Indenture Act.

    

    Every amendment to this Indenture or
the Securities of one or more Series shall be set forth in a supplemental
indenture that complies with the TIA as then in effect.

    

    SECTION
9.04   Revocation and Effect of Consents.

    

    Until an amendment or waiver becomes
effective, a consent to it by a Holder of a Security is a continuing consent by
the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security.  However, any
such Holder or subsequent Holder may revoke the consent as to his Security or
portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective.  After an
amendment or waiver becomes effective, it shall bind every Securityholder of
each Series affected by such amendment or waiver.

    

    SECTION
9.05   Notation on or Exchange of Securities.

    

    The Trustee may place an appropriate
notation about an amendment or waiver on any Security of any Series thereafter
authenticated.  SBC in exchange for Securities of that Series may
issue and the Trustee shall authenticate new Securities of that Series that
reflect the amendment or waiver.

    

    SECTION
9.06   Trustee Protected.

    

    The Trustee need not sign any
supplemental indenture that is reasonably likely to adversely affect its
rights.

    

    SECTION
9.07  Execution of Supplemental Indentures.

    

    In executing, or accepting the
additional trusts created by, any supplemental indenture permitted by this
Article or the modification thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture.

    

    

    ARTICLE
10

    

    MISCELLANEOUS

    

    SECTION
10.01   Trust Indenture Act Controls.

    

    If any provision of this Indenture
limits, qualifies or conflicts with another provision of the TIA that is
required under the TIA to be a part of and govern this Indenture, the latter
provision shall control.  If any provision of this Indenture modifies
or excludes any provision of the TIA which may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.

    

    SECTION
10.02   Notices.

    

    (a)  Any notice or
communication by SBC or the Trustee to the other is duly given if in writing and
delivered in person or mailed by first-class mail:

    

    if to SBC to:

    

    SBC Communications Inc.

    175 E. Houston Street

    San Antonio, Texas
78205-4105

    
       

      Attention:Assistant
Treasurer-Corporate Finance

    

     

     

    if to the Trustee to:

    

    The Bank of New York

    101 Barclay Street

    Floor 21 West

    New York, New
York  10286

    

    Attention:  Corporate Trust
Administration

    

    (b)  SBC or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.

    

    (c)  Any notice or
communication to Holders of Securities entitled to receive reports pursuant to
Section 4.02(c) shall be mailed by first-class mail to the addresses for Holders
of Registered Securities shown on the register kept by the Registrar and to
addresses filed with the Trustee for other Holders.  Failure to so
mail a notice or communication or any defect in such notice or communication
shall not affect its sufficiency with respect to other Holders of Securities of
that or any other Series entitled to receive notice.

    

    (d)  If a notice or
communication is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it.

    

    (e)  If SBC mails a notice or
communication to Securityholders, it shall mail a copy to the Trustee and to
each Agent at the same time.

    

    (f)  If it shall be
impractical in the opinion of the Trustee or SBC to make any publication of any
notice required hereby in an Authorized Newspaper, any publication or other
notice in lieu thereof which is made or given with the approval of the Trustee
shall constitute a sufficient publication of such notice.

    

    (g)  All other notices or
communications will be in writing.

    

    (h)  All notices or other
communications given to the Trustee shall be effective when actually received by
the Trustee.

    

    SECTION
10.03   Communication by Holders with Other Holders.

    

    The rights of Holders to communicate
with other Holders with respect to their rights under this Indenture or under
the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided by the TIA.

    

    SECTION
10.04   Certificate and Opinion as to Conditions
Precedent.

    

    Upon any request or application by SBC
to the Trustee to take any action under this Indenture, SBC shall furnish to the
Trustee:

    

    (1)  an Officers' Certificate
stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with; and

    

    (2)  an Opinion of Counsel
stating that, in the opinion of such counsel, all such conditions precedent have
been complied with.

    

    SECTION
10.05   Statements Required in Certificate or
Opinion.

    

    Each certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Indenture shall comply with the requirements of the TIA and shall
include:

    

    (1)  a statement that the
person making such certificate or opinion has read such covenant or condition
and related definitions;

    

    (2)  a brief statement as to
the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are
based;

    

    (3)  a statement that, in the
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

    

    (4)  a statement as to
whether or not, in the opinion of such person, such condition or covenant has
been complied with.

    

    SECTION
10.06   Rules by Trustee and Agents.

    

    The Trustee may make reasonable rules
for action by or a meeting of Securityholders of one or more
Series.  The Paying Agent or Registrar may make reasonable rules and
set reasonable requirements for its functions.

    

    SECTION
10.07   Legal Holidays.

    

    A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be
open.  If a payment date or a date for conversion or exchange is a
Legal Holiday at a place of payment, conversion or exchange, then such payment,
conversion or exchange may be made at such place on the next succeeding day this
is not a Legal Holiday with the same force and effect as if made on such date,
and no interest shall accrue for the intervening period.

    

    SECTION
10.08   Governing Law.

    

    The laws of the State of New York shall
govern this Indenture, the Securities and any coupons appertaining thereto
without regard to principles of conflicts of laws.

    

    SECTION
10.09   No Adverse Interpretation of Other
Agreements.

    

    This Indenture may not be used to
interpret another indenture, loan or debt agreement of SBC or any
Affiliate.  No such indenture, loan or debt agreement may be used to
interpret this Indenture.

    

    SECTION
10.10   No Recourse Against Others.

    

    No director, officer, employee or
stockholder, as such, of SBC shall have any liability for any obligation of SBC
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation.  Each
Securityholder by accepting a Security waives and releases all such
liability.  The waiver and release are part of the consideration for
the issue of the Securities.

    

    SECTION
10.11  Acts of Holders.

    

    (a)  Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to SBC.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of Holders signing such instrument or instruments.  Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor of
the Trustee and SBC, if made in the manner provided in this
Section.

    

    (b)  The fact and date of the
execution by any Person of any such instrument or writing may be provided by the
affidavit of a witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the
execution thereof.  Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority.  The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.

    

    (c)  The ownership of
Unregistered Securities may be proved by the production of such Unregistered
Securities or by a certificate executed by any trust company, bank, banker or
other depository, wherever situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person has on deposit with such depository, or exhibited to it, the Unregistered
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Unregistered Securities, if such
certificate or affidavit is deemed by the Trustee to be
satisfactory.  The Trustee and SBC may assume that such ownership of
any Unregistered Security continues until (i) another such certificate or
affidavit bearing a later date issued in respect of the same Unregistered
Security is produced, (ii) such Unregistered Security is produced to the Trustee
by some other Person, (iii) such Unregistered Security is surrendered in
exchange for a Registered Security or (iv) such Unregistered Security is no
longer outstanding.  The ownership of Unregistered Securities may also
be proved in any other manner which the Trustee deems sufficient.

    

    (d)  The ownership of
Registered Securities shall be proved by the Registrar.

    

    (e)  Any request, demand,
authorization, direction, notice, consent, waiver or other Act of the Holder of
any Security shall bind every future Holder of the same Security and the holder
of every Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or SBC in reliance thereon, whether or not
notation of such action is made upon such Security.

    

    SECTION
10.12   Execution in Counterparts.

    

    This Indenture may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one instrument.

    

    

    SBC COMMUNICATIONS INC.

    

    
      
         

        
          
            	 	 By:  
      /s/ Donald E.
      Kiernan
	
                     

                  	
                       Title: 
      Senior Vice President,  

                  

          

          
            	
                    
                         

                    

                  	
                    Treasuer
      and Chief

                  	
                    
                       

                    

                  

          

          
            	
                    
                              
      

                    

                  	
                    Financial
      Officer   

                  	
                       

                  

          

        

      

      

 

    

    

    (SEAL)

    

    ATTEST:

    

    

    /s/Wayne
Wirtz

    Title:  Assistant
Secretary

    

    THE BANK OF NEW YORK

     

     

    
      
        
          
            
              	 	 By:  
      /s/ Remo
Reale
	
                       

                    	
                         Title: 
      Assistant Vice President

                    

            

            
              	
                      
                           

                      

                    	
                       

                    	
                      
                         

                      

                    

            

            
              	
                      
                                
      

                      

                    	
                       

                    	
                         

                    

            

          

        

        
 

      

    

    (SEAL)

    

    ATTEST:

    

    

    /s/Mary
LaGumina

    Title:
Assistant Vice President

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