Document:

exh4_2.htm

    
      

    

    FHLMC
      Loan No. 002732432

    

    MULTIFAMILY
      NOTE

    (MULTISTATE
      – REVISION DATE 11-01-2000)

    
 

    
      	
              US
                $5,250,000.00

            	
              As
                of December 27, 2000

            

    

    

    

    FOR
      VALUE RECEIVED, the undersigned
      ("Borrower") jointly and severally (if more than
      one)  promises to pay to the order of NORTHLAND / MARQUETTE
      CAPITAL GROUP, INC., a Minnesota corporation, the principal sum of Five Million
      Two Hundred Fifty Thousand and no/100 Dollars (US $5,250,000.00) with
      interest on the unpaid principal balance at the annual rate of seven and
      twenty-two one hundredths percent (7.22%).

    

    1.           Defined
      Terms.  As used in this Note, (i) the term
      "Lender" means the holder of this Note, and (ii) the term
      "Indebtedness" means the principal of, interest on, and any
      other amounts due at any time under, this Note, the Security Instrument or
      any
      other Loan Document, including prepayment premiums, late charges, default
      interest, and advances to protect the security of the Security Instrument under
      Section 12 of the Security Instrument.  "Event of Default" and other
      capitalized terms used but not defined in this Note shall have the meanings
      given to such terms in the Security Instrument.

    

    2.           Address
      for Payment.  All payments due under this Note shall be
      payable at 3500 West 80th Street,
      Suite 500,
      Minneapolis, Minnesota, 55431-4435 or such other place as may be designated
      by
      written notice to Borrower from or on behalf of Lender.

    

    3.           Payment
      of Principal and Interest.  Principal and interest shall be
      paid as follows:

    

    (a)           Unless
      disbursement of principal is made by Lender to Borrower on the first day of
      the
      month, interest for the period beginning on the date of disbursement and ending
      on and including the last day of the month in which such disbursement is made
      shall be payable simultaneously with the execution of this
      Note.  Interest under this Note shall be computed on the basis of a
      360-day year consisting of twelve 30-day months.

    

    (b)           
      Consecutive monthly installments of principal and interest, each in the amount
      of Thirty-Five Thousand Seven Hundred Seven and 49/100 Dollars (US $35,707.49),
      shall be payable on the first day of each month beginning on February 1, 2001
      until the entire unpaid principal balance evidenced by this Note is fully
      paid.

    

    (c)           Any
      accrued interest remaining past due for 30 days or more may, at Lender’s
      discretion, be added to and become part of the unpaid principal balance and
      shall bear interest at the rate or rates specified in this Note, and any
      reference below to "accrued interest" shall refer to

    
      
         

      

      
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          1

        
          

        

      

      
         

      

    

    accrued
      interest which has not become part of the unpaid principal
      balance.  Any remaining principal and interest shall be due and
      payable on January 1, 2011 or on any earlier date on which the unpaid principal
      balance of this Note becomes due and payable, by acceleration or otherwise
      (the
      "Maturity Date").  The unpaid principal balance shall
      continue to bear interest after the Maturity Date at the Default Rate set forth
      in this Note until and including the date on which it is paid in
      full.

    

    (d)           Any
      regularly scheduled monthly installment of principal and interest that is
      received by Lender before the date it is due shall be deemed to have been
      received on the due date solely for the purpose of calculating interest
      due.

    

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

    

    5.           Security.  The
      Indebtedness is secured, among other things, by a multifamily mortgage, deed
      to
      secure debt or deed of trust dated as of the date of this Note (the
      "Security Instrument"), and reference is made to the Security
      Instrument for other rights of Lender as to collateral for the
      Indebtedness.

    

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

    

    7.           Late
      Charge.  If any monthly amount payable under this Note or
      under the Security Instrument or any other Loan Document is not received by
      Lender within ten (10) days after the amount is due (unless applicable law
      requires a longer period of time before a late charge may be imposed, in which
      event such longer period shall be substituted), Borrower shall pay to Lender,
      immediately and without demand by Lender, a late charge equal to five percent
      (5%) of such amount (unless applicable law requires a lesser amount be charged,
      in which event such lesser amount shall be substituted).  Borrower
      acknowledges that its failure to make timely payments will cause Lender to
      incur
      additional expenses in servicing and processing the loan evidenced by this
      Note
      (the “Loan”), and that it is extremely difficult and
      impractical to determine those additional expenses.  Borrower agrees
      that the late charge payable pursuant to this Paragraph represents a fair and
      reasonable estimate, taking into account all circumstances existing on the
      date
      of this Note, of the additional expenses Lender will incur by reason of
      such

    
      
         

      

      
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    late
      payment.  The late charge is payable in addition to, and not in lieu
      of, any interest payable at the Default Rate pursuant to Paragraph
      8.

    

    8.           Default
      Rate.  So long as (a) any monthly installment under this Note
      remains past due for thirty (30) days or more, or (b) any other Event of Default
      has occurred and is continuing, interest under this Note shall accrue on the
      unpaid principal balance from the earlier of the due date of the first unpaid
      monthly installment or the occurrence of such other Event of Default, as
      applicable, at a rate (the "Default Rate") equal to the lesser
      of four (4) percentage points above the rate stated in the first paragraph
      of
      this Note and the maximum interest rate which may be collected from Borrower
      under applicable law.  If the unpaid principal balance and all accrued
      interest are not paid in full on the Maturity Date, the unpaid principal balance
      and all accrued interest shall bear interest from the Maturity Date at the
      Default Rate.  Borrower also acknowledges that its failure to make
      timely payments will cause Lender to incur additional expenses in servicing
      and
      processing the Loan, that, during the time that any monthly installment under
      this Note is delinquent for more than thirty (30) days, Lender will incur
      additional costs and expenses arising from its loss of the use of the money
      due
      and from the adverse impact on Lender’s ability to meet its other obligations
      and to take advantage of other investment opportunities, and that it is
      extremely difficult and impractical to determine those additional costs and
      expenses.  Borrower also acknowledges that, during the time that any
      monthly installment under this Note is delinquent for more than thirty (30)
      days
      or any other Event of Default has occurred and is continuing, Lender’s risk of
      nonpayment of this Note will be materially increased and Lender is entitled
      to
      be compensated for such increased risk.  Borrower agrees that the
      increase in the rate of interest payable under this Note to the Default Rate
      represents a fair and reasonable estimate, taking into account all circumstances
      existing on the date of this Note, of the additional costs and expenses Lender
      will incur by reason of the Borrower’s delinquent payment and the additional
      compensation Lender is entitled to receive for the increased risks of nonpayment
      associated with a delinquent loan.

    

    9.           Limits
      on Personal Liability.

    

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

    

    (b)           Borrower
      shall be personally liable to Lender for the repayment of a portion of the
      Indebtedness equal to zero percent (0%) of the original principal balance of
      this Note, plus any other amounts for which Borrower has personal liability
      under this Paragraph 9.

    
      
         

      

      
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    (c)           In
      addition to Borrower’s personal liability under Paragraph 9(b), Borrower shall
      be personally liable to Lender for the repayment of a further portion of the
      Indebtedness equal to any loss or damage suffered by Lender as a result of
      (1)
      failure of Borrower to pay to Lender upon demand after an Event of Default
      all
      Rents to which Lender is entitled under Section 3(a) of the Security Instrument
      and the amount of all security deposits collected by Borrower from tenants
      then
      in residence; (2) failure of Borrower to apply all insurance proceeds and
      condemnation proceeds as required by the Security Instrument; or (3) failure
      of
      Borrower to comply with Section 14(d) or (e) of the Security Instrument relating
      to the delivery of books and records, statements, schedules and
      reports.

    

    (d)           
      For purposes of determining Borrower's personal liability under Paragraph 9(b)
      and Paragraph 9(c), all payments made by Borrower or any guarantor of this
      Note
      with respect to the Indebtedness and all amounts received by Lender from the
      enforcement of its rights under the Security Instrument shall be applied first
      to the portion of the Indebtedness for which Borrower has no personal
      liability.

    

    (e)           Borrower
      shall become personally liable to Lender for the repayment of all of the
      Indebtedness upon the occurrence of any of the following Events of Default:
      (1)
      Borrower’s acquisition of any property or operation of any business not
      permitted by Section 33 of the Security Instrument; (2) a Transfer
      (including, but not limited to, a lien or encumbrance) that is an Event of
      Default under Section 21 of the Security Instrument, other than a Transfer
      consisting solely of the involuntary removal or involuntary withdrawal of a
      general partner in a limited partnership or a manager in a limited liability
      company; or (3) fraud or written material misrepresentation by Borrower or
      any
      officer, director, partner, member or employee of Borrower in connection with
      the application for or creation of the Indebtedness or any request for any
      action or consent by Lender.

    

    (f)           In
      addition to any personal liability for the Indebtedness, Borrower shall be
      personally liable to Lender for (1) the performance of all of Borrower’s
      obligations under Section 18 of the Security Instrument (relating to
      environmental matters); (2) the costs of any audit under Section 14(d) of the
      Security Instrument; and (3) any costs and expenses incurred by Lender in
      connection with the collection of any amount for which Borrower is personally
      liable under this Paragraph 9, including fees and out of pocket expenses of
      attorneys and expert witnesses and the costs of conducting any independent
      audit
      of Borrower's books and records to determine the amount for which Borrower
      has
      personal liability.

    

    (g)           To
      the extent that Borrower has personal liability under this Paragraph 9, Lender
      may exercise its rights against Borrower personally without regard to whether
      Lender has exercised any rights against the Mortgaged Property or any other
      security, or pursued any rights against any guarantor, or pursued any other
      rights available to Lender under this Note, the Security Instrument, any other
      Loan Document or applicable law. For purposes of this Paragraph 9, the term
      "Mortgaged Property" shall not include any funds that (1) have
      been applied by

    
      
         

      

      
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    Borrower
      as required or permitted by the Security Instrument prior to the occurrence
      of
      an Event of Default or (2) Borrower was unable to apply as required or permitted
      by the Security Instrument because of a bankruptcy, receivership, or similar
      judicial proceeding.  To
      the fullest extent permitted by applicable law, in any action to enforce
      Borrower’s personal liability under this Paragraph 9, Borrower waives any right
      to set off the value of the Mortgaged Property against such personal
      liability.

    

    10.           Voluntary
      and Involuntary Prepayments.

    

    (a)           A
      prepayment premium shall be payable in connection with any prepayment (any
      receipt by Lender of principal, other than principal required to be paid in
      monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
      Date set forth in Paragraph 3(c))  under this Note as provided
      below:

    

    (1)           Borrower
      may voluntarily prepay all of the unpaid principal balance of this Note on
      a
      Business Day designated as the date for such prepayment in a written notice
      from
      Borrower to Lender given at least 30 days prior to the date of such
      prepayment.  Such prepayment shall be made by paying (A) the amount of
      principal being prepaid, (B) all accrued interest, (C) all other sums due Lender
      at the time of such prepayment, and (D) the prepayment premium calculated
      pursuant to Paragraph 10(c).  For all purposes including the accrual
      of interest, any prepayment received by Lender on any day other than the last
      calendar day of the month shall be deemed to have been received on the last
      calendar day of such month.  For purposes of this Note, a
      "Business Day" means any day other than a Saturday, Sunday or
      any other day on which Lender is not open for business.  Unless
      expressly provided for in the Loan Documents, Borrower shall not have the option
      to voluntarily prepay less than all of the unpaid principal
      balance.  However, if a partial prepayment is provided for in the Loan
      Documents or is accepted by Lender in Lender’s discretion, a prepayment premium
      calculated pursuant to Paragraph 10(c) shall be due and payable by
      Borrower.

    

    (2)           Upon
      Lender's exercise of any right of acceleration under this Note, Borrower shall
      pay to Lender, in addition to the entire unpaid principal balance of this Note
      outstanding at the time of the acceleration, (A) all accrued interest and all
      other sums due Lender, and (B) the prepayment premium calculated pursuant
      to Paragraph 10(c).

    

    (3)           Any
      application by Lender of any collateral or other security to the repayment
      of
      any portion of the unpaid principal balance of this Note prior to the Maturity
      Date and in the absence of acceleration shall be deemed to be a partial
      prepayment by Borrower, requiring the payment to Lender by Borrower of a
      prepayment premium.

    

    (b)           Notwithstanding
      the provisions of Paragraph 10(a), no prepayment premium shall be payable with
      respect to (A) any prepayment made during the period from one hundred
      eighty (180) days before the scheduled Maturity Date to the scheduled Maturity
      Date, or (B) any

    
      
         

      

      
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    prepayment
      occurring as a result of the application of any insurance proceeds or
      condemnation award under the Security Instrument.

    

    (c)           Any
      prepayment premium payable under this Note shall be computed as
      follows:

    

    (1)           If
      the prepayment is made between the date of this Note and the date that is 114
      months after the first day of the first calendar month following the date of
      this Note (the "Yield Maintenance Period"), the prepayment
      premium shall be whichever is the greater of subparagraphs (i) and (ii)
      below:

    

    (i)           1.0%
      of the unpaid principal balance of this Note; or

    

    (ii)           the
      product obtained by multiplying:

    

    (A)           the
      amount of principal being prepaid,

    by

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

    Reinvestment
      Rate,

    by

    (C)           the
      Present Value Factor.

    

    For
      purposes of subparagraph (ii), the
      following definitions shall apply:

    

    
      	
               

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

            

    

    

    
      	
               

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

            

    

    

    
      	
               

            	
              Assumed
                Reinvestment Rate:  one-twelfth (1/12) of the yield
                rate as of the date 5 Business Days before the Prepayment Date, on
                the
                5.750% U.S. Treasury Security due August 1, 2010, as reported in
The
                Wall Street Journal, expressed as a decimal calculated to five
                digits.  In the event that no yield is published on the
                applicable date for the Treasury Security used to determine the Assumed
                Reinvestment Rate, Lender, in its discretion, shall select the
                non-callable Treasury Security maturing in the same year as the Treasury
                Security specified above with the lowest yield published in The Wall
                Street Journal as of the applicable date.  If the
                publication of such yield rates in The Wall Street Journal is
                discontinued for any reason, Lender shall select a security with
                a
                comparable rate and term to the Treasury Security used to determine
                the
                Assumed Reinvestment
                Rate.  The

            

    

    
      
         

      

      
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    selection
      of an alternate security pursuant to this Paragraph shall be made in Lender’s
      discretion.

    

    
      	
               

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

            

    

    

    

    n
      = number of months
      remaining in Yield Maintenance Period

    

    ARR
=
      Assumed
      Reinvestment Rate

    

    (2)           If
      the prepayment is made after the expiration of the Yield Maintenance Period
      but
      before the period set forth in Paragraph 10(b)(A) above, the prepayment premium
      shall be 1.0% of the unpaid principal balance of this Note.

    

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

    

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

    

    (f)           Borrower
      further acknowledges that the prepayment premium provisions of this Note are
      a
      material part of the consideration for the Loan, and acknowledges that the
      terms
      of this Note are in other respects more favorable to Borrower as a result of
      the
      Borrower's voluntary agreement to the prepayment premium
      provisions.

    

    11.           Costs
      and Expenses.  To the fullest extent allowed by applicable
      law, Borrower shall pay all expenses and costs, including fees and out-of-pocket
      expenses of attorneys

    
      
         

      

      
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    (including
      Lender’s in-house attorneys) and expert witnesses and costs of investigation,
      incurred by Lender as a result of any default under this Note or in connection
      with efforts to collect any amount due under this Note, or to enforce the
      provisions of any of the other Loan Documents, including those incurred in
      post-judgment collection efforts and in any bankruptcy proceeding (including
      any
      action for relief from the automatic stay of any bankruptcy proceeding) or
      judicial or non-judicial foreclosure proceeding.

    

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

    

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

    

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

    

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

    
      
         

      

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

    

    17.           Governing
      Law.  This Note shall be governed by the law of the
      jurisdiction in which the Land is located.

    

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

    

    19.           Notices;
      Written Modifications. All notices, demands and other communications
      required or permitted to be given by Lender to Borrower pursuant to this Note
      shall be given in accordance with Section 31 of the Security
      Instrument.  Any modification or amendment to this Note shall be
      ineffective unless in writing signed by the party sought to be charged with
      such
      modification or amendment; provided, however, that in the event of a Transfer
      under the terms of the Security Instrument, any or some or all of the
      Modification to Multifamily Note may be modified or rendered void by Lender
      at
      Lender’s option by notice to Borrower/transferee.

    

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

    

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

    

    

    ATTACHED
      EXHIBIT.  The
      following Exhibit is attached to this Note:

    

    |
      X
|             Exhibit
      A                                Modifications
      to Multifamily Note

    

    
      
         

      

      
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          9

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      Borrower has signed and delivered this Note under seal or has caused this Note
      to be signed and delivered under seal by its duly authorized representative.
      Borrower intends that this Note shall be deemed to be signed and delivered
      as a
      sealed instrument.

    

    REGENCY
      NORTH ASSOCIATES, L.P.,

    a
      Missouri limited partnership

    

    
      	
               

            	
              By:

            	
              KELCOR,
                INC., a Missouri corporation

            

    

    Its:           General
      Partner

    

    By:  
      /s/ David L. Johnson

    David
      L.
      Johnson, Vice President

    

    

    Borrower’s
      Social Security/Employer ID Number: 

    94-2730297

    

    
      
         

      

      
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          10

        
          

        

      

      
         

      

    

    PAY
      TO
      THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE, THE
      27TH DAY OF
      DECEMBER, 2000.

    

    NORTHLAND / MARQUETTE
      CAPITAL GROUP, INC.,

    a
      Minnesota corporation

    

    

    

    By: _____________________________                                                               

    Paul
      W.
      Cairns

    Vice
      President

    
      
         

      

      
        PAGE
          11

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    

    MODIFICATIONS
      TO MULTIFAMILY NOTE

    

    

    Paragraph
      9(c) is amended to add the following subparagraph (4):

    

    
      	
              (4)  

            	
              failure
                by Borrower to pay the amount of
                any

            

    

    o
      fire, hazard or other
      insurance premiums,

    o
      Taxes,

    x
      water and sewer
      charges,

    x
      ground
      rents,

    x
      assessments or other
      charges

    in
      accordance with the terms of the Security Instrument.

    

     

     

     

     

     

     

     

     

     

     

     

    PAGE
      A-1exh4_3.htm

    
      

    

    Prepared
      by, and after recording return to:

    

    Moss
      & Barnett (TLG)

    A
      Professional Association

    4800
      Wells Fargo Center

    90
      South
      Seventh Street

    Minneapolis,
      MN 55402

    

     

    

     

    

     

    

     

    

     

    

     

    

      MULTIFAMILY
        DEED OF TRUST,

      ASSIGNMENT
        OF RENTS

      AND
        SECURITY AGREEMENT

       

    

    (MISSOURI
      — REVISION DATE 11-01-2000)

     

    FHLMC
      Loan No. 002732432

     

    

     

    

     

    

     

    

     

    

     

    
      
              

                                                                          
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

      MULTIFAMILY
        DEED OF TRUST,

      ASSIGNMENT
        OF RENTS AND

      SECURITY
        AGREEMENT

      (MISSOURI
        — REVISION DATE 11-01-2000)

    THIS
      MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
      “Instrument”) is made as of the 27d’ day of December, 2000,
      among Regency North Associates, L.P., a limited partnership organized and
      existing under the laws of Missouri, whose mailing address is c/o Maxus
      Properties, Inc., 104 Armour Road, North Kansas City, Missouri 64116, as grantor
      (“Borrower”), Assured Quality Title Co., whose mailing address
      is 1001 Walnut, Kansas City, Missouri 64106, as trustee
      (“Trustee”), for the benefit of Northland / Marquette Capital
      Group, Inc., a corporation organized and existing under the laws of Minnesota,
      whose mailing address 3500 West 80th Street, Suite 500, Bloomington, Minnesota
      55431-4435, as beneficiary (“Lender”).

     

    Borrower,
      in consideration of the Indebtedness and the trust created by this Instrument,
      irrevocably grants, bargains, sells, conveys, confirms and assigns to Trustee,
      in trust, with power of sale, the Mortgaged Property, including the Land located
      in Clay County, State of Missouri 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
      January 1, 2011, in the principal amount of $5,250,000.00, and all
      renewals, extensions and modifications of the Indebtedness, and the performance
      of the covenants and agreements of Borrower contained in the Loan
      Documents.

     

    Borrower
      represents and warrants that Borrower is lawfully seized of the Mortgaged
      Property and has the right, power and authority to mortgage, grant, bargain,
      sell, convey, confirm and assign the Mortgaged Property, and that the Mortgaged
      Property is unencumbered. Borrower covenants that Borrower will warrant and
      defend generally the title to the Mortgaged Property against all claims and
      demands, subject to any easements and restrictions listed in a schedule of
      exceptions to coverage in any title insurance policy issued to Lender
      contemporaneously with the execution and recordation of this Instrument and
      insuring Lender’s interest in the Mortgaged Property.

     

    Covenants.  Borrower
      and Lender covenant and agree as follows:

     

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

     

    
      
              

                         
    

        
        

      

      
        PAGE
          1

        
          

        

      

      
        
        

      

    

    

     

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

     

    (b)           “Collateral
      Agreement” means any separate agreement between Borrower and Lender for
      the purpose of establishing replacement reserves for the Mortgaged Property,
      establishing a fund to assure 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.

     

    (c)           “Controlling
      Entity” means an entity which owns, directly or indirectly through one
      or more intermediaries, (A) a general partnership interest or more than 50%
      of the limited partnership interests in Borrower (if Borrower is a partnership
      or joint venture), (B) a manager’s interest in Borrower or more than 50% of
      the ownership or membership interests in Borrower (if Borrower is a limited
      liability company), or (C) more than 50% of any class of voting stock of
      Borrower (if Borrower is a corporation).

     

    (d)           “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.

     

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

     

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

     

    (g)           “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.

     

    
      
              

                                                                             
    

        
        

      

      
        PAGE
          2

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

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

     

    (k)           “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.

     

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

     

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

     

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

     

    (o)           “Leases”
      means all present and future leases, subleases, licenses, concessions or grants
      or other possessory interests now or hereafter in force, whether oral or
      written, covering or affecting the Mortgaged Property, or any portion of the
      Mortgaged Property (including

     

    
      
              

                                                                            
    

        
        

      

      
        PAGE
          3

        
          

        

      

      
        
        

      

    

    proprietary
      leases or occupancy agreements if Borrower is a cooperative housing
      corporation), and all modifications, extensions or renewals.

     

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

     

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

     

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

     

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

     

    
      	
               

            	
              (1)

            	
              the
                Land;

            

    

     

    
      	
               

            	
              (2)

            	
              the
                Improvements;

            

    

     

    
      	
               

            	
              (3)

            	
              the
                Fixtures;

            

    

     

    
      	
               

            	
              (4)

            	
              the
                Personally;

            

    

     

    
      	
               

            	
              (5)

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

            

    

     

    
      	
               

            	
              (6)

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

            

    

     

    
      	
               

            	
              (7)

            	
              all
                awards, payments and other compensation made or to be made by any
                municipal, state or federal authority with respect to the Land,
                the

            

    

     

    
      
              

                                                               
    

        
        

      

      
        PAGE
          4

        
          

        

      

      
        
        

      

    

    Improvements,
      the Fixtures, the Personalty or any other part of the Mortgaged Property,
      including any awards or settlements resulting from condemnation proceedings
      or
      the total or partial taking of the Land, the Improvements, the Fixtures, the
      Personalty or any other part of the Mortgaged Property under the power of
      eminent domain or otherwise and including any conveyance in lieu
      thereof;

     

    
      	
               

            	
              (8)

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

            

    

     

    
      	
               

            	
              (9)

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

            

    

     

    
      	
               

            	
              (10)

            	
              all
                Rents and Leases;

            

    

     

    
      	
               

            	
              (11)

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

            

    

     

    
      	
               

            	
              (12)

            	
              all
                Imposition Deposits;

            

    

     

    
      	
               

            	
              (13)

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

            

    

     

    
      	
               

            	
              (14)

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

            

    

     

    
      	
               

            	
              (15)

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

            

    

     

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

     

    
      
              

                                                                          
    

        
        

      

      
        PAGE
          5

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
              

                                   
    

        
        

      

      
        PAGE
          6

        
          

        

      

      
        
        

      

    

    

     

    2.    UNIFORM
      COMMERCIAL CODE SECURITY AGREEMENT.

     

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

     

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

     

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

     

    (b)           After
      the occurrence of an Event of Default, Borrower authorizes Lender to collect,
      sue for and compromise Rents and directs each tenant of the Mortgaged Property
      to pay all Rents to, or as directed by, Lender. 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

     

    
      
              

                                                     
    

        
        

      

      
        PAGE
          7

        
          

        

      

      
        
        

      

    

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

     

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

     

    (d)           If
      an Event of Default has occurred and is continuing, Lender may, regardless
      of
      the adequacy of Lender’s security or the solvency of Borrower and even in the
      absence of waste, enter upon and take and maintain full control of the Mortgaged
      Property in order to perform all acts that Lender in its discretion determines
      to be necessary or desirable for the operation and maintenance of the Mortgaged
      Property, including the execution, cancellation or modification of Leases,
      the
      collection of all Rents, the making of repairs to the Mortgaged Property and
      the
      execution or termination of contracts providing for the management, operation
      or
      maintenance of the Mortgaged Property, for the purposes of enforcing the
      assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property
      or the security of this Instrument, or for such other purposes as Lender in
      its
      discretion may deem necessary or desirable. Alternatively, if an Event of
      Default has occurred and is continuing, regardless of the adequacy of Lender’s
      security,

     

    
      
              

                                                                      
    

        
        

      

      
        PAGE
          8

        
          

        

      

      
        
        

      

    

    without
      regard to Borrower’s solvency and without the necessity of giving prior notice
      (oral or written) to Borrower, Lender may apply to any court having jurisdiction
      for the appointment of a receiver for the Mortgaged Property to take any or
      all
      of the actions set forth in the preceding sentence. If Lender elects to seek
      the
      appointment of a receiver for the Mortgaged Property at any time after an Event
      of Default has occurred and is continuing, Borrower, by its execution of this
      Instrument, expressly consents to the appointment of such receiver, including
      the appointment of a receiver ex parte if permitted by applicable law. Lender
      or
      the receiver, as the case may be, shall be entitled to receive a reasonable
      fee
      for managing the Mortgaged Property. Immediately upon appointment of a receiver
      or immediately upon the Lender’s entering upon and taking possession and control
      of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged
      Property to Lender or the receiver, as the case may be, and shall deliver to
      Lender or the receiver, as the case may be, all documents, records (including
      records on electronic or magnetic media), accounts, surveys, plans, and
      specifications relating to the Mortgaged Property and all security deposits
      and
      prepaid Rents. In the event Lender takes possession and control of the Mortgaged
      Property, Lender may exclude Borrower and its representatives from the Mortgaged
      Property. Borrower acknowledges and agrees that the exercise by Lender of any
      of
      the rights conferred under this Section 3 shall not be construed to make Lender
      a mortgagee-in-possession of the Mortgaged Property so long as Lender has not
      itself entered into actual possession of the Land and Improvements.

     

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

     

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

     

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

     

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

     

    (a)           As
      part of the consideration for the Indebtedness, Borrower absolutely and
      unconditionally assigns and transfers to Lender all of Borrower’s right, title
      and interest in, to and under the Leases, including Borrower’s right, power and
      authority to modify the terms of any such Lease, or extend or terminate any
      such
      Lease. It is the intention of Borrower to establish a

     

    
      
              

                                                                   
    

        
        

      

      
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          9

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    (d)           Upon
      delivery of notice by Lender to Borrower of Lender’s exercise of Lender’s rights
      under this Section 4 at any time after the occurrence of an Event of
      Default, and without the necessity of Lender entering upon and taking and
      maintaining control of the Mortgaged

     

    
      
              

                                 
    

        
        

      

      
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          10

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    
      
              

                                                        
    

        
        

      

      
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          11

        
          

        

      

      
        
        

      

    

    

     

    7.    DEPOSITS
      FOR
      TAXES, INSURANCE AND OTHER CHARGES.

     

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

     

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

     

    (c)           If
      Lender receives a bill or invoice for an Imposition, Lender shall pay the
      Imposition from the Imposition Deposits held by Lender. Lender shall have no
      obligation to pay any Imposition to the extent it exceeds Imposition Deposits
      then held by Lender. Lender may pay an Imposition according to any bill,
      statement or estimate from the appropriate public office

     

    
      
              

                                                                                   
    

        
        

      

      
        PAGE
          12

        
          

        

      

      
        
        

      

    

    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
      plus one-sixth of such estimate, 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 plus one-sixth of such
      estimate, Borrower shall pay to Lender the amount of the deficiency within
      15
      days after notice from Lender.

     

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

     

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

     

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

     

    10.    COMPLIANCE
      WITH LAWS.  Borrower shall comply with all
      laws, ordinances, regulations and requirements of any Governmental Authority
      and
      all recorded lawful covenants and agreements relating to or affecting the
      Mortgaged Property, including all laws, ordinances, regulations, requirements
      and covenants pertaining to health and safety, construction of improvements
      on
      the Mortgaged Property, fair housing, zoning and land use, and Leases. Borrower
      also shall comply with all applicable laws that pertain to the maintenance
      and
      disposition of tenant security deposits. Borrower shall at all times maintain
      records sufficient to demonstrate compliance with the provisions of this
      Section 10. Borrower shall take appropriate measures to prevent, and shall
      not engage in or knowingly permit, any illegal activities at the Mortgaged
      Property that could endanger tenants or visitors, result in damage to the
      Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise
      materially impair the lien created by this Instrument or Lender’s interest in
      the Mortgaged Property. Borrower represents

     

    
      
              

                                                                                   
    

        
        

      

      
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          13

        
          

        

      

      
        
        

      

    

    and
      warrants to Lender that no portion of the Mortgaged Property has been or will
      be
      purchased with the proceeds of any illegal activity.

     

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

     

    12.    PROTECTION
      OF
      LENDER’S SECURITY.

     

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

     

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

     

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

     

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

     

    14.    BOOKS
      AND
      RECORDS; FINANCIAL REPORTING.

     

    
      
              

                                                                
    

        
        

      

      
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          14

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      	
               

            	
              (4)

            	
              within
                120 days after the end of each fiscal year of Borrower, and at any
                other
                time upon Lender’s request, a statement that identifies all owners of any
                interest in Borrower and any Controlling Entity and the interest
                held by
                each, 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;

            

    

     

    
      
              

                                                                                 
    

        
        

      

      
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          15

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (5)

            	
              upon
                Lender’s request, quarterly income and expense statements for the
                Mortgaged Property;

            

    

     

    
      	
               

            	
              (6)

            	
              upon
                Lender’s request at any time when an Event of Default has occurred and is
                continuing, monthly income and expense statements for the Mortgaged
                Property;

            

    

     

    
      	
               

            	
              (7)

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

            

    

     

    
      	
               

            	
              (8)

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

            

    

     

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

     

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

     

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

     

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

     

    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.

     

    
      
              

                                                                      
    

        
        

      

      
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          16

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

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

     

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

     

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

     

    17.    PRESERVATION,
      MANAGEMENT AND MAINTENANCE OF MORTGAGED
      PROPERTY.  Borrower (a) shall not
      commit waste or permit impairment or deterioration of the Mortgaged Property,
      (b) shall not abandon the Mortgaged Property, (c) 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

     

    
      
              

                                                                             
    

        
        

      

      
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          17

        
          

        

      

      
        
        

      

    

    may
      approve in writing, whether or not insurance proceeds or condemnation awards
      are
      available to cover any costs of such restoration or repair, (d) 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) shall
      provide for professional management of the Mortgaged Property by a residential
      rental property manager satisfactory to Lender under a contract approved by
      Lender in writing, and (f) shall give notice to Lender of and, unless
      otherwise directed in writing by Lender, shall appear in and defend any action
      or proceeding purporting to affect the Mortgaged Property, Lender’s security or
      Lender’s rights under this Instrument. Borrower shall not (and shall not permit
      any tenant or other person to) remove, demolish or alter the Mortgaged Property
      or any part of the Mortgaged Property except in connection with the replacement
      of tangible Personalty.

     

    18.    ENVIRONMENTAL
      HAZARDS.

     

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

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      	
               

            	
              (4)

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

            

    

     

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

     

    (b)           Prohibited
      Activities and Conditions shall not include the safe and lawful use and storage
      of quantities of (1) pre-packaged supplies, cleaning materials and
      petroleum products customarily used in the operation and maintenance of
      comparable multifamily properties, (2)

     

    
      
              

                                                                                   
    

        
        

      

      
        PAGE
          18

        
          

        

      

      
        
        

      

    

    cleaning
      materials, personal grooming items and other items sold in pre-packaged
      containers for consumer use and used by tenants and occupants of residential
      dwelling units in the Mortgaged Property; and (3) petroleum products used
      in the operation and maintenance of motor vehicles from time to time located
      on
      the Mortgaged Property’s parking areas, so long as all of the foregoing are
      used, stored, handled, transported and disposed of in compliance with Hazardous
      Materials Laws.

     

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

     

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

     

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

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      
              

                          
    

        
        

      

      
        PAGE
          19

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (4)

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

            

    

     

    
      	
               

            	
              (5)

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

            

    

     

    
      	
               

            	
              (6)

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

            

    

     

    
      	
               

            	
              (7)

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

            

    

     

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

     

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

     

    
      	
               

            	
              (1)

            	
              Borrower’s
                discovery of any Prohibited Activity or
                Condition;

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      
              

                                                                           
    

        
        

      

      
        PAGE
          20

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

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

     

    
      
              

                                                                    
    

        
        

      

      
        PAGE
          21

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      	
               

            	
              (4)

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

            

    

     

    
      	
               

            	
              (5)

            	
              the
                actual or alleged violation of any Hazardous Materials
                Law.

            

    

     

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

     

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

     

    (m)           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:

     

    
      
              

                                                                                 
    

        
        

      

      
        PAGE
          22

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (1)

            	
              any
                amendment or modification of any Loan
                Document;

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

            	
              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;

            

    

     

    
      	
               

            	
              (4)

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

            

    

     

    
      	
               

            	
              (5)

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

            

    

     

    
      	
               

            	
              (6)

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

            

    

     

    
      	
               

            	
              (7)

            	
              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:

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    (o)           In
      any circumstances in which the indemnity under this Section 18 applies, Lender
      may employ its own legal counsel and consultants to prosecute, defend or
      negotiate any claim or legal or administrative proceeding and Lender, with
      the
      prior written consent of Borrower (which

     

    
      
              

                                                                              
    

        
        

      

      
        PAGE
          23

        
          

        

      

      
        
        

      

    

    shall
      not
      be unreasonably withheld, delayed or conditioned) may settle or compromise
      any
      action or legal or administrative proceeding. Borrower shall reimburse Lender
      upon demand for all costs and expenses incurred by Lender, including all costs
      of settlements entered into in good faith, and the fees and out of pocket
      expenses of such attorneys and consultants.

     

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

     

    19.    PROPERTY
      AND
      LIABILITY INSURANCE.

     

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

     

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

     

    
      
              

                                                                                  
    

        
        

      

      
        PAGE
          24

        
          

        

      

      
        
        

      

    

    

     

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

     

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

     

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

     

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

     

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

     

    (h)           If
      the Mortgaged Property is sold at a foreclosure sale or Lender acquires title
      to
      the Mortgaged Property, Lender shall automatically succeed to all rights of
      Borrower in and to

     

    
      
              

                                                                             
    

        
        

      

      
        PAGE
          25

        
          

        

      

      
        
        

      

    

    any
      insurance policies and unearned insurance premiums and in and to the proceeds
      resulting from any damage to the Mortgaged Property prior to such sale or
      acquisition.

     

    20.    CONDEMNATION.

     

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

     

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

     

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

     

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

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

            	
              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
                51% of all limited partnership interests in
                Borrower;

            

    

     

    
      
              

                                                                              
    

        
        

      

      
        PAGE
          26

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      	
               

            	
              (4)

            	
              if
                Borrower is a limited liability company, a Transfer of (A) any
                membership interest in Borrower which would cause the Initial Owners
                to
                own less than 51% of all the membership interests in Borrower, or
                (B) any membership or other interest of a manager in
                Borrower;

            

    

     

    
      	
               

            	
              (5)

            	
              if
                Borrower is a corporation, (A) the Transfer of any voting stock in
                Borrower which would cause the Initial Owners to own less than 51%
                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% or more of that
                stock;

            

    

     

    
      	
               

            	
              (6)

            	
              if
                Borrower is a trust, (A) a Transfer of any beneficial interest in
                Borrower which would cause the Initial Owners to own less than 51%
                of all
                the beneficial interests in Borrower, or (B) the termination or
                revocation of the trust, or (C) the removal, appointment or
                substitution of a trustee of Borrower;
                and

            

    

     

    
      	
               

            	
              (7)

            	
              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(a)(1) through (6)
                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.

     

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

     

    
      	
               

            	
              (1)

            	
              a
                Transfer to which Lender has
                consented;

            

    

     

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      
              

                                                                                   
    

        
        

      

      
        PAGE
          27

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (4)

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

            

    

     

    
      	
               

            	
              (5)

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

            

    

     

    
      	
               

            	
              (6)

            	
              the
                creation of a mechanic’s, materialman’s, or judgment lien against the
                Mortgaged Property which is released of record or otherwise remedied
                to
                Lender’s satisfaction within 30 days of the date of
                creation.

            

    

     

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

     

    
      	
               

            	
              (1)

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

            

    

     

    
      	
               

            	
              (2)

            	
              the
                absence of any Event of Default;

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      	
               

            	
              (4)

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

            

    

     

    
      	
               

            	
              (5)

            	
              in
                the case of a Transfer of all or any part of the Mortgaged Property,
                (A) the execution by the transferee of an assumption agreement that
                is acceptable to Lender and that, among other things, requires the
                transferee to perform all obligations of Borrower set forth in the
                Note,
                this

            

    

     

    
      
              

                                                                               
    

        
        

      

      
        PAGE
          28

        
          

        

      

      
        
        

      

    

    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 by Lender, and (B) if a guaranty has been executed and
      delivered in connection with the Note, this Instrument or any of the other
      Loan
      Documents, 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;

     

    
      	
               

            	
              (6)

            	
              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

            

    

     

    
      	
               

            	
              (7)

            	
              Lender’s
                receipt of all of the following:

            

    

     

    
      	
               

            	
              (A)

            	
              a
                review fee in the amount of $2,000;

            

    

     

    
      	
               

            	
              (B)

            	
              a
                transfer fee in an amount equal to one percent (1%) 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) 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 (A) the application for or creation of the Indebtedness,
      (B) any financial statement, rent roll, or other report or information
      provided to Lender during the term of the Indebtedness, or (C) any request
      for Lender’s consent to any proposed action, including a request for
      disbursement of funds under any Collateral Agreement;

     

    
      
              

                                                                                 
    

        
        

      

      
        PAGE
          29

        
          

        

      

      
        
        

      

    

    

     

    (e)           any
      Event of Default under Section 21;

     

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

     

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

     

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

     

    (i)           any
      exercise by the holder of any 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;
      and

     

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

     

    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:

     

    
      
              

                                    
    

        
        

      

      
        PAGE
          30

        
          

        

      

      
        
        

      

    

    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 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

     

    
      
              

                                                                                  
    

        
        

      

      
        PAGE
          31

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    30.    GOVERNING
      LAW; CONSENT TO JURISDICTION AND VENUE.

     

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

     

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

     

    
      
              

                                                                                  
    

        
        

      

      
        PAGE
          32

        
          

        

      

      
        
        

      

    

    

     

    31.    NOTICE.

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
              

                                                                                   
    

        
        

      

      
        PAGE
          33

        
          

        

      

      
        
        

      

    

    

     

    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.    RELATIONSIIIP
      OF PARTIES; NO THIRD PARTY BENEFICIARY.

     

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

     

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

     

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

     

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

     

    39.    LOAN
      SERVICING.  All actions regarding the
      servicing of the loan evidenced by the Note, including the collection of
      payments, the giving and receipt of notice, inspections of the Property,
      inspections of books and records, and the granting of consents and approvals,
      may be taken by the Loan Servicer unless Borrower receives notice to the
      contrary. If Borrower

     

    
      
              

                                                                                   
    

        
        

      

      
        PAGE
          34

        
          

        

      

      
        
        

      

    

    receives
      conflicting notices regarding the identity of the Loan Servicer or any other
      subject, any such notice from Lender shall govern.

     

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

     

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

     

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

     

    43.    ACCELERATION;
      REMEDIES.  At any time during the
      existence of an Event of Default, Lender, at Lender’s option, may declare the
      Indebtedness to be immediately due and payable without further demand, and
      may
      request Trustee to exercise the power of sale and Lender may exercise 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 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, Lender or Trustee shall mail copies of the notice
      of
      sale to Borrower and to other persons prescribed by applicable law in the manner
      provided by applicable law. Trustee may sell the Mortgaged Property at the
      time
      and place and under the terms designated in the notice of sale in one or more
      parcels and in such order as Trustee may determine. Trustee may postpone sale
      of
      all or any parcel of the Mortgaged Property to any later

     

    
      
              

                                                                                 
    

        
        

      

      
        PAGE
          35

        
          

        

      

      
        
        

      

    

    time
      on
      the same date 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 contained in those recitals.
      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 in the amount
      allowed by applicable law, attorneys’ fees and costs of title evidence;
      (b) to the Indebtedness in such order as Lender, in Lender’s discretion,
      directs; and (c) the excess, if any, to the person or persons legally
      entitled to it.

     

    Lender
      shall have the right on one or more occasions to institute one or more actions
      or proceedings at law or in equity to enforce the rights and remedies of Lender
      under this Instrument.

     

    Trustee
      hereby lets the Mortgaged Property to Borrower until a sale is held under the
      foregoing provisions or until the occurrence of an Event of Default, upon the
      following terms and conditions: Borrower, and all persons claiming or possessing
      the Mortgaged Property or any part thereof by, through or under Borrower, shall
      pay rent therefore during said term at the rate of one cent (1¢) per month,
      payable monthly upon demand, and shall surrender immediate peaceable possession
      of the Mortgaged Property and any and every part thereof sold under the
      foregoing power of sale to the purchaser at such sale, without notice or demand
      therefore, and shall and will at once, without notice, surrender possession
      of
      the Mortgaged Property and every part thereof in the event Lender shall take
      charge and enter the Mortgaged Property as provided in this
      Instrument.

     

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

     

    45.    FINANCING
      STATEMENT.  As provided in Section 2, this
      Instrument constitutes a financing statement with respect to any part of the
      Mortgaged Property which is or may become a Fixture and for the purposes of
      such
      financing statement: (a) the Debtor shall be Borrower and the Secured Party
      shall be Lender; (b) the addresses of Borrower as Debtor and of Lender as
      Secured Party are as specified above in the first paragraph of this Instrument;
      (c) the name of the record owner is Borrower; (d) the types or items
      of collateral consist of any part of the Mortgaged Property which is or may
      become a Fixture; and (e) the social security number or the federal
      employer identification number of Borrower as Debtor is 94-2730297.

     

    46.    APPOINTMENT
      OF RECEIVER.  Section 3(b) and Section
      4(d) are amended by (i) deleting the following phrase, each time it
      appears: “Lender entering upon and taking and

     

    
      
              

                                                                                   
    

        
        

      

      
        PAGE
          36

        
          

        

      

      
        
        

      

    

    maintaining
      control of the Mortgaged Property,” and (ii) inserting the following new
      phrase in its place: “Lender entering upon and taking and maintaining control or
      possession of the Mortgaged Property or any equivalent action.”

     

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

     

    48.    SUCCESSOR
      TRUSTEE.  Lender, at Lender’s option, with
      or without cause, may from time to time remove Trustee and appoint a successor
      trustee by an instrument recorded in the city or 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
      in
      this Instrument and by applicable law. For purposes of this Instrument, the
      term
“Trustee” means the person identified as Trustee in the first paragraph of this
      Instrument and any successor trustee appointed by Lender pursuant to this
      Section or otherwise appointed as permitted by law.

     

    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

     

    
      
              

                                                                          
    

        
        

      

      
        PAGE
          37

        
          

        

      

      
        
        

      

    

    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.

     

    REGENCY
      NORTH ASSOCIATES, LP., a 

    Missouri
      limited partnership

    

    
      	
               

            	
              By:

            	
              KELCOR,
                INC., a Missouri 

              corporation

            

    

    
      	
               

            	
              Its:

            	
              General
                Partner

            

    

    

    

    By:    
/s/
      David L.
      Johnson

          
      David L. Johnson, Vice President

    

     

    STATE
      OF
      MISSOURI                       )

    )
      ss.

    COUNTY
      OF   Clay                             )

     

    On
      this
20th  day
      of December, 2000, before me, a Notary Public in and for said County and State,
      personally appeared David L. Johnson, to me personally known, who being by
      me
      duly sworn (or affirmed), did say that he is the Vice President of KelCor,
      Inc.,
      a Missouri corporation, the General Partner of Regency North Associates, L.P.,
      a
      Missouri limited partnership, and that said instrument was signed on behalf
      of
      said corporation by authority of its board of directors as general partner
      of
      said limited partnership, and said person acknowledged said instrument to be
      the
      free act and deed of said corporation on behalf of said limited
      partnership.

     

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

    

    

    

    /s/
      Grace E. Bales

    Notary
      Public

    

    My
      Commission Expires:

    

    Aug.
      24, 2002

    
      	 	
               (seal)

            
	 	
              GRACE
                E. BALES

            
	 	
              Notary
                Public – Notary Seal

            
	 	
              STATE
                OF MISSOURI

            
	 	
              Clay
                County

            
	 	
              My
                Commission Expires Aug. 24. 2002

            

    

    

    

    
      
              

                                                                        
    

        
        

      

      
        PAGE
          38

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    [DESCRIPTION
      OF THE LAND]

     

    Tracts
      I
      and II, REGENCY NORTH, a subdivision in Kansas City, Clay County,
      Missouri.

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
              

                                                                            
    

        
        

      

      
        PAGE
          A-1

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

     

    MODIFICATIONS
      TO INSTRUMENT

     

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

    
      	
              1.

            	
              Borrower
                covenants and agrees that as long as the Indebtedness is outstanding,
                (i) David L. Johnson must own at least fifty-one percent (51%)
                of MJS Associates, Inc., and (ii) MJS Associates, Inc. shall have a
                minimum net worth of One Million Five Hundred Thousand and No/100
                Dollars
                ($1,500,000.00) (the “Guarantor Requirements”). Failure to maintain the
                Guarantor Requirements shall be an additional Event of Default under
                this
                Instrument.

            

    

     

    
      	
              2.

            	
              The
                second sentence in paragraph 4(f) shall be modified to read as
                follows:

            

    

     

    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, which consent shall
      not
      be unreasonably withheld or delayed.

     

    
      	
              3.

            	
              Section
                7 is modified to add the following
                subsection:

            

    

     

    
      	
               

            	
              (f)

            	
              Notwithstanding
                the provisions of Subsection 7(a), Lender will not require Borrower
                to
                deposit with Lender amounts sufficient to accumulate with Lender
                the
                entire sum required to pay the

            

    

     

     ̈           fire,
      hazard or other insurance premiums,

     

     ̈           Taxes,

     

    x           water
      and sewer charges,

     

    x           ground
      rents,

     

    x           assessments
      or other charges

     

    Borrower
      must provide Lender with proof of payment of all such Impositions for which
      Lender is not collecting Imposition Deposits on or before the date such
      Impositions are due or on the date this Instrument requires such Impositions
      to
      be paid. In the event that Borrower does not timely pay any of the Impositions,
      or fails to provide Lender with proof of such payment, or at any other time
      in
      Lender’s discretion, Lender may require Borrower to deposit with Lender the
      Imposition Deposits as provided in Subsection 7(a).

     

    
      	
              4.

            	
              Section
                21(b) is supplemented and modified by adding the following
                provision:

            

    

     

    
      
              

                                   
    

        
        

      

      
        PAGE
          B-1

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (7)

            	
              A
                Transfer of the Mortgaged Property to a single asset entity (The
                “Preapproved Entity”) under the following
                conditions:

            

    

     

    
      	
               

            	
              (A)

            	
              Borrower
                shall provide Lender with 45 days advance written notice of the proposed
                transfer.

            

    

     

    
      	
               

            	
              (B)

            	
              The
                Preapproved Entity shall be a limited liability company whose managing
                member must be Maxus Realty Trust, Inc. (“Maxus”) and whose sole member
                shall be Maxus or an entity to which Maxus has contributed or otherwise
                transferred all or substantially all (which shall be not less than
                95%) of
                its assets and of which Maxus owns directly or indirectly, a controlling
                interest (the “Maxus Controlled
                Entity”).

            

    

     

    
      	
               

            	
              (C)

            	
              The
                management of Maxus and any Maxus Controlled Entity must be experienced
                in
                the ownership and management of property similar to the Mortgaged
                Property, as determined by Lender.

            

    

     

    
      	
               

            	
              (D)

            	
              Immediately
                after the transfer, David L. Johnson must be and remain an executive
                officer and trustee of Maxus.

            

    

     

    
      	
               

            	
              (E)

            	
              The
                loan-to-value ratio with respect to the Mortgaged Property (calculated
                as
                a percentage), as determined by Lender does not exceed eighty (80%)
                after
                taking into consideration any principal paydown made in connection
                with
                Maxus or any Maxus Controlled Entity. Such loan to value ratio shall
                be
                determined in Lender’s sole discretion based upon Lender’s then current
                underwriting standards and based upon Lender’s internal
                valuations.

            

    

     

    
      	
               

            	
              (F)

            	
              At
                least forty-five (45) days prior to such Transfer, Borrower must
                provide
                Lender with all of the material provisions of such Transfer including,
                without limitation, the proposed date of such Transfer, the name
                and
                address of Maxus or any applicable Maxus Controlled Entity, pro forma
                financial statements for Maxus and any Maxus Controlled Entity, any
                offering prospectus of Maxus issued within five years of the date
                of the
                Transfer, and the purchase price which is specified for the Mortgaged
                Property.

            

    

     

    
      	
               

            	
              (G)

            	
              The
                sole member of the Preapproved Entity shall be Maxus or a Maxus Controlled
                Entity.

            

    

     

    
      	
               

            	
              (H)

            	
              Lender
                has reviewed and approved the documents transferring Borrower’s interest
                in the Mortgaged Property to the Preapproved
                Entity.

            

    

     

    
      
              

                               
    

        
        

      

      
        PAGE
          B-2

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (I)

            	
              Lender
                has reviewed and approved the documents creating and governing the
                Preapproved Entity, including Maxus and any Maxus Controlled
                Entity.

            

    

     

    
      	
               

            	
              (J)

            	
              The
                Preapproved Entity executes Lender’s standard Assumption Agreement which
                requires the Preapproved Entity to perform all obligations of Borrower
                set
                forth in the Note, this Instrument and in any other Loan
                Document.

            

    

     

    
      	
               

            	
              (K)

            	
              At
                the time of the Transfer, no Event of Default shall have occurred
                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.

            

    

     

    
      	
               

            	
              (L)

            	
              Borrower
                pays to Lender upon demand by Lender, the cost of all title searches,
                title insurance and recording costs, and all fees and out of pocket
                costs
                of Lender’s legal counsel related to the Transfer and at the time it
                requests Lender’s consent, Borrower pays a review fee in the amount of
                $2,000 (which fee shall not be
                refundable).

            

    

     

    
      	
               

            	
              (M)

            	
              Immediately
                after the Transfer, Borrower provides Lender with i) a tide
                endorsement to Lender’s mortgagee’s title policy insuring the lien of the
                Security Instrument changing the name of the Borrower and evidencing
                that
                there are no intervening liens from the date of the title policy
                until the
                Transfer; ii) a certified copy of the recorded assumption agreement;
                and iii) a certified copy of the recorded transfer
                deed.

            

    

     

    
      	
               

            	
              (N)

            	
              Each
                Guarantor (if applicable) reaffirms in writing its respective obligations
                under any Guaranty and acknowledges and confirms that the Guaranty
                remains
                in full force and effect and that each Guarantor guarantees the
                Preapproved Entity’s obligations under the Note, this Instrument and the
                other Loan Documents.

            

    

     

    The
      modifications set forth in this Section 21(b)(7) shall be null and void in
      the
      event title to the Mortgaged Property is vested in an entity other than the
      Borrower at the time of execution of this Instrument.

     

    
      	
              5.

            	
              The
                following subparagraph (d) shall be added to Section 21 of the Security
                Instrument:

            

    

     

    
      	
               

            	
              (d)

            	
              Provided
                that Borrower has transferred the Property to the Preapproved Entity
                pursuant to Section 21(b)(7) of this Instrument, Lender shall consent
                to
                the substitution (the “Substitution”) of the Mortgaged Property for
                another multifamily apartment rental property (the “Substituted Property”)
                owned by the Preapproved Entity, which shall not result in an adjustment
                to the rate at which the
                Indebtedness

            

    

     

    
      
              

                   
    

        
        

      

      
        PAGE
          B-3

        
          

        

      

      
        
        

      

    

    secured
      by this Instrument bears interest provided that the Preapproved Entity has
      satisfied each of the following requirements:

     

    
      	
               

            	
              (1)

            	
              not
                less than sixty (60) days prior to the requested Substitution, the
                Preapproved Entity shall deliver to Lender written notice of the
                requested
                Substitution, which shall include a detailed description of the
                Substituted Property and the non-refundable review fee in the amount
                set
                forth in subsection 21(d)(10)
                below;

            

    

     

    
      	
               

            	
              (2)

            	
              there
                shall not be more than one Substitution in any 12-month period, and
                not
                more than 2 Substitutions during the term of the loan evidenced by
                the
                Note;

            

    

     

    
      	
               

            	
              (3)

            	
              there
                shall exist no Event of Default uncured within any applicable grace
                period;

            

    

     

    
      	
               

            	
              (4)

            	
              the
                loan to value ratio with respect to the Substituted Property at the
                time
                of the proposed Substitution is not greater than the lesser of (i)
                the
                loan to value ratio of the Mortgaged Property which exists as of
                the date
                hereof, or (ii) the then current loan to value ratio of the Mortgaged
                Property at the time of any such Substitution based on an MAI appraisal
                (prepared by an appraiser acceptable to Lender and paid for by the
                Preapproved Entity) at the time of any such Substitution. (As used
                herein,
                “loan to value ratio” means the ratio of (A) the outstanding
                principal balance of the Indebtedness, and , if applicable, any other
                indebtedness secured by a lien on the Mortgaged Property to (B) the
                value of the Substituted Property or the Mortgaged Property, as
                applicable, as determined by Lender in its sole discretion, expressed
                as a
                percentage);

            

    

     

    
      	
               

            	
              (5)

            	
              the
                debt service coverage ratio with respect to the Substituted Property
                for
                the last twelve full months preceding the proposed Substitution is
                not
                less than the greater of (i) the debt service coverage ratio for the
                Mortgaged Property which exists as of the date hereof, or (ii) the
                then current debt service coverage ratio for the Mortgaged Property
                at the
                time of any such Substitution. (As used herein, the term “debt service
                coverage ratio” means the ratio of (A) the annual net operating
                income from the Substituted Property’s or the Mortgaged Property’s
                operations, as applicable, during the preceding twelve month period
                which
                is available for repayment of debt, after deducting reasonable and
                customary operating expenses, to (B) the annual principal and
                interest payable under the Note and with respect to any indebtedness
                secured by a lien on the Mortgaged Property, as determined by Lender
                in
                its sole discretion);

            

    

     

    
      
              

                                                                                 
    

        
        

      

      
        PAGE
          B-4

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (6)

            	
              the
                appraised value of the Substituted Property shall be equal to or
                greater
                than the greater of (i) the appraised value of the Mortgaged Property
                which exists as of the date of the closing of the loan evidenced
                by the
                Note, or (ii) the appraised value of the Mortgaged Property at the
                time of the Substitution based on the MAI appraisal described in
                Subsection 21(d)(4) above, as determined by Lender in its sole
                discretion;

            

    

     

    
      	
               

            	
              (7)

            	
              no
                Substitution shall be permitted prior to the date which is one year
                from
                the date of this Instrument nor after the date which is one year
                prior to
                the stated maturity of the Indebtedness as set forth in the
                Note;

            

    

     

    
      	
               

            	
              (8)

            	
              Lender
                shall have received an environmental report on the Substituted Property
                which is acceptable to Lender, in Lender’s sole discretion, and shows that
                no Phase II environmental report is
                required;

            

    

     

    
      	
               

            	
              (9)

            	
              Lender
                shall have received an engineering report on the Substituted Property
                which is acceptable to Lender, in Lender’s sole
                discretion;

            

    

     

    
      	
               

            	
              (10)

            	
              Lender
                shall have received a review fee equal to the greater of $10,000
                or ten
                (10) basis points multiplied by the unpaid principal balance of the
                Note,
                and the Preapproved Entity shall pay to Lender the amount of Lender’s
                out-of-pocket costs (including, without limitation, reasonable attorneys’
                fees and the costs of engineering reports, appraisals and environmental
                reports) incurred in reviewing the Substitution request and implementing
                the Substitution;

            

    

     

    
      	
               

            	
              (11)

            	
              Lender
                shall have received a application fee equal to ten (10) basis points
                multiplied by the unpaid principal balance of the
                Note,

            

    

     

    
      	
               

            	
              (12)

            	
              Lender
                shall have received a new currently dated mortgagee’s title insurance
                policy in the form and containing the exceptions acceptable to Lender
                according to its standards for title insurance policies in place
                at the
                time of the Substitution, insuring the first lien mortgage secured
                by the
                Substituted Property;

            

    

     

    
      	
               

            	
              (13)

            	
              Lender
                shall have received a currently dated survey of the Substituted Property,
                acceptable to Lender in accordance with its standards and requirements
                for
                surveys in place at the time of the
                substitution;

            

    

     

    
      	
               

            	
              (14)

            	
              the
                physical condition, location, market condition, and other aspects
                of the
                Substituted Property, shall be substantially comparable to the Mortgaged
                Property as determined by Lender in its sole and absolute discretion
                [in
                addition to local market factors and conditions, market condition
                shall
                also

            

    

     

    
      
              

                                                                                
    

        
        

      

      
        PAGE
          B-5

        
          

        

      

      
        
        

      

    

    include,
      but not be limited to, Lender’s portfolio concentrations in such
      market];

     

    
      	
               

            	
              (15)

            	
              if
                the Substitution is approved, (i) the Preapproved entity shall have
                executed and delivered to Lender for recordation an amendment to
                this
                Instrument in form and substance acceptable to Lender in its discretion,
                or an entirely new Instrument in form and substance acceptable to
                Lender,
                substituting the Substituted Property for the Mortgaged Property;
                and
                (ii) the Preapproved Entity shall have executed and delivered such
                additional documentation, including without limitation new Uniform
                Commercial Code Financing Statements, as Lender may reasonably require
                to
                grant Lender a perfected first lien and security interest in the
                Substituted Property and to otherwise implement the Substitution
                in
                accordance with this Section;

            

    

     

    
      	
               

            	
              (16)

            	
              upon
                completion of the Substitution, at the expense of the Preapproved
                Entity,
                the Mortgaged Property will be released from the lien of this -
                Instrument; provided that any document effecting such release or
                satisfaction must expressly provide that the Indebtedness has not
                been
                paid in full and that the recording of the release or satisfaction
                is not
                intended to create any presumption to the
                contrary;

            

    

     

    
      	
               

            	
              (17)

            	
              The
                modifications set forth in this Section 21(d) shall be null and void
                in
                the event title to the Mortgaged Property is vested in any other
                party
                other than the Preapproved Entity.

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    PAGE
      B-6

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