Document:

Prepared by, and after recording

Exhibit 10 DDD

Prepared
by, and after recording

return
to: 

Amy
B. Connelly, Esq.

Krooth
& Altman LLP

1850
M Street, NW, Suite 400

Washington,
DC 20036

 

 

 

 

 

 

 

 

 

 

 

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS 

AND SECURITY AGREEMENT AND FIXTURE FILING

 

(TEXAS)

           
TABLE OF CONTENTS

 

                                                                                                                                                 
PAGE

 

1.        
DEFINITIONS.....................................................................................................................
2

2.        
UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT....................................... 6

3.         ASSIGNMENT OF
RENTS; APPOINTMENT OF RECEIVER; LENDER
IN
POSSESSION.......................................................................................................................7

4.        
ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.. 9

5.         PAYMENT OF
INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT
PREMIUM..............................................................................................
11

6.        
EXCULPATION................................................................................................................
11

7.        
DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES................................
12

8.        
COLLATERAL
AGREEMENTS.......................................................................................
13

9.        
APPLICATION OF
PAYMENTS.....................................................................................
13

10.      
COMPLIANCE WITH
LAWS..........................................................................................
13

11.      
USE OF
PROPERTY.........................................................................................................
14

12.      
PROTECTION OF LENDER'S
SECURITY......................................................................
14

13.      
INSPECTION....................................................................................................................
14

14.      
BOOKS AND RECORDS; FINANCIAL
REPORTING................................................... 15

15.      
TAXES; OPERATING
EXPENSES...................................................................................
16

16.      
LIENS;
ENCUMBRANCES..............................................................................................
17

17.       PRESERVATION, MANAGEMENT AND
MAINTENANCE OF
MORTGAGED
PROPERTY........................................................................................................................17

18.      
ENVIRONMENTAL
HAZARDS......................................................................................
18

19.      
PROPERTY AND LIABILITY
INSURANCE................................................................... 24

20.      
CONDEMNATION...........................................................................................................
25

21.       TRANSFERS OF THE
MORTGAGED PROPERTY OR INTERESTS IN BORROWER. 26

22.      
EVENTS OF
DEFAULT....................................................................................................
29

23.      
REMEDIES
CUMULATIVE..............................................................................................
31

24.      
FORBEARANCE...............................................................................................................
31

25.      
[INTENTIONALLY DELETED]........................................................................................
31

26.      
WAIVER OF STATUTE OF
LIMITATIONS....................................................................
31

27.      
WAIVER OF
MARSHALLING.........................................................................................
31

28.      
FURTHER
ASSURANCES...............................................................................................
32

29.      
ESTOPPEL
CERTIFICATE...............................................................................................
32

30.      
GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE............................ 32

31.      
NOTICE.............................................................................................................................
33

32.      
SALE OF NOTE; CHANGE IN
SERVICER..................................................................... 33

33.      
SINGLE ASSET
BORROWER..........................................................................................
33

34.      
SUCCESSORS AND ASSIGNS
BOUND........................................................................ 34

35.      
JOINT AND SEVERAL
LIABILITY.................................................................................
34

36.      
RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY............................
34

37.      
SEVERABILITY;
AMENDMENTS...................................................................................
34

38.      
CONSTRUCTION............................................................................................................
34

39.      
LOAN
SERVICING..........................................................................................................
35

40.      
DISCLOSURE OF
INFORMATION................................................................................
35

41.      
NO CHANGE IN FACTS OR
CIRCUMSTANCES......................................................... 35

42.      
SUBROGATION...............................................................................................................
35

43.      
ACCELERATION;
REMEDIES........................................................................................
35

44.      
RELEASE...........................................................................................................................
39

45.      
TRUSTEE...........................................................................................................................
39

46.      
VENDOR’S LIEN; RENEWAL AND EXTENSION........................................................
40

47.      
NO FIDUCIARY DUTY....................................................................................................
40

48.      
FIXTURE FILING.............................................................................................................
40

49.      
ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF RENTS..................... 40

50.      
LOAN CHARGES.............................................................................................................
40

51.      
PROPERTY AND LIABILITY INSURANCE — DELIVERY OF POLICY TO LENDER. 41

52.      
ENTIRE AGREEMENT.....................................................................................................
41

53.      
WAIVER OF TRIAL BY JURY.........................................................................................
42

 

 

 

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS

SECURITY AGREEMENT AND FIXTURE FILING 

 

 

           
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”) is dated as of the 31st day of March, 2009, by
AIMCO COVINGTON POINTE, L.P.,a limited partnership organized and existing
under the laws of Delaware, whose address is Stanford Place 3, 4582 South
Ulster Street Parkway, Suite 1100, Denver, Colorado 80237,  as trustor (“Borrower”), to J.
Paxton, Esq., as trustee (“Trustee”), for the benefit of KeyCorp Real Estate Capital Markets,
Inc., a corporation organized
and existing under the laws of Ohio, whose address is 911 Main Street,
Suite 1500, Kansas City, Missouri 64105,
as beneficiary (“Lender”).

 

           
Borrower, in consideration of the Indebtedness and the trust created by this
Instrument, irrevocably grants, conveys and assigns to Trustee, in trust, with
power of sale, the Mortgaged Property, including the Land located in Dallas
County, State of Texas and described in Exhibit A attached to this
Instrument.  To have and to hold the Mortgaged Property unto Trustee,
Trustee’s successor in trust and Trustee’s assigns forever.

 

           
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 February 1, 2016, in the principal amount of $1,500,000, and all
renewals, extensions and modifications of the Indebtedness, and the performance
of the covenants and agreements of Borrower contained in the Loan
Documents.

 

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

 

Covenants. 
Borrower and Lender covenant and agree as follows:

 

           
1.        
DEFINITIONS.

 

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

 

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

 

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

 

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

 

           
(d)        "Event of Default" means
the occurrence of any event listed in Section 22. 

 

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

 

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

 

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

 

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

 

           
(i)         "Impositions" and
"Imposition Deposits" are defined in Section 7(a).

 

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

 

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

 

           
(l)         [Intentionally
omitted]

 

           
(m)       "Key Principal" means the natural
person(s) or entity identified as such at the foot of this Instrument, and any
person or entity who becomes a Key Principal after the date of this Instrument
and is identified as such in an amendment or supplement to this
Instrument.

 

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

 

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

 

           
(p)        "Lender" means the entity
identified as "Lender" in the first paragraph of this Instrument and its
successors and assigns, or any subsequent holder of the Note.

 

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

 

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

 

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

 

                       
(1)        the Land;

 

                       
(2)        the Improvements;

 

                       
(3)        the Fixtures;

 

                       
(4)        the Personalty;

 

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

 

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

 

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

 

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

 

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

 

                       
(10)      all Rents and Leases;

 

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

 

                       
(12)      all Imposition Deposits; 

 

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

 

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

 

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

 

           
(t)         "Note" means the
Multifamily Note described on page 1 of this Instrument, including the
Acknowledgment and Agreement of Key Principal to Personal Liability for
Exceptions to Non-Recourse Liability (if any), and all schedules, riders,
allonges and addenda, as such Multifamily Note may be amended from time to time.

 

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

 

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

 

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

 

           
(x)        "Rents" means all rents
(whether from residential or non-residential space), revenues and other income
of the Land or the Improvements, including subsidy payments received from any
sources (including, but not limited to payments under any Housing Assistance
Payments Contract), parking fees, laundry and vending machine income and fees
and charges for food, health care and other services provided at the Mortgaged
Property, whether now due, past due, or to become due, and deposits forfeited by
tenants. 

 

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

 

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

 

           
2.         UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT. 

 

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

 

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

 

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

 

           
(b)        After the occurrence of an Event
of Default, Borrower authorizes Lender to collect, sue for and compromise Rents
and directs each tenant of the Mortgaged Property to pay all Rents to, or as
directed by, Lender, and Borrower shall, upon Borrower's receipt of any Rents
from any sources (including, but not limited to subsidy payments under any
Housing Assistance Payments Contract), pay the total amount of such receipts to
the Lender.  However, until the occurrence of an Event of Default, Lender
hereby grants to Borrower a revocable license to collect and receive all Rents,
to hold all Rents in trust for the benefit of Lender and to apply all Rents to
pay the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, and to pay the current costs and expenses of
managing, operating and maintaining the Mortgaged Property, including utilities,
Taxes and insurance premiums (to the extent not included in Imposition
Deposits), tenant improvements and other capital expenditures.  So long as
no Event of Default has occurred and is continuing, the Rents remaining after
application pursuant to the preceding sentence may be retained by Borrower free
and clear of, and released from, Lender's rights with respect to Rents under
this Instrument.  From and after the occurrence of an Event of Default, and
without the necessity of Lender entering upon and taking and maintaining control
of the Mortgaged Property directly, or by a receiver, Borrower's license to
collect Rents shall automatically terminate and Lender shall without notice be
entitled to all Rents as they become due and payable, including Rents then due
and unpaid.  Borrower shall pay to Lender upon demand all Rents to which
Lender is entitled.  At any time after the occurrence of an Event of
Default, 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; provided, however, that the giving of any such notice by
Lender shall not affect, in any way, Lender’s entitlement to the Rents as of the
date on which the Event of Default occurs.  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, 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 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 the occurrence of an Event
of Default, 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)        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, by a
receiver, or by any other manner or proceeding permitted by the laws of the
Property Jurisdiction, Lender immediately shall have all rights, powers and
authority granted to Borrower under any Lease, including the right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease.

 

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

 

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

 

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

 

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

 

           
Borrower shall pay the Indebtedness when due in accordance with the terms of the
Note and the other Loan Documents and shall perform, observe and comply with all
other provisions of the Note and the other Loan Documents.  Borrower shall
pay a prepayment premium in connection with certain prepayments of the
Indebtedness, including a payment made after Lender's exercise of any right of
acceleration of the Indebtedness, as provided in the Note.

 

           
6.        
EXCULPATION.  

 

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

 

           
7.        
DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

 

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

 

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

 

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

 

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

 

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

 

           
8.        
COLLATERAL AGREEMENTS.  

 

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

 

           
9.        
APPLICATION OF PAYMENTS.  

 

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

 

           
10.       COMPLIANCE WITH
LAWS.  

 

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

 

           
11.       USE OF
PROPERTY.  

 

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

 

           
12.       PROTECTION OF
LENDER'S SECURITY.

 

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

 

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

 

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

 

           
13.      
INSPECTION.  

 

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

 

           
14.         
BOOKS AND RECORDS; FINANCIAL REPORTING.

 

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

 

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

 

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

 

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

 

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

 

                       
(4)        within 120 days after the end of
each fiscal year of Borrower, and at any other time upon Lender's request, a
statement that identifies all owners of any interest in Borrower and the
interest held by each, if Borrower is a corporation, all officers and directors
of Borrower, and if Borrower is a limited liability company, all managers who
are not members;

 

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

 

                       
(6)        upon Lender's request, a balance
sheet, a statement of income and expenses for Borrower and a statement of
changes in financial position of Borrower for Borrower's most recent fiscal
year; and

 

                       
(7)        if required by Lender, a statement
of income and expense for the Mortgaged Property for the prior month or
quarter.

 

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

 

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

 

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

 

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

 

           
(g)        If an Event of Default has
occurred and Lender has not previously required Borrower to furnish a quarterly
statement of income and expense for the Mortgaged Property, Lender may require
Borrower to furnish such a statement within 45 days after the end of each fiscal
quarter of Borrower following such Event of Default.

 

           
15.       TAXES; OPERATING
EXPENSES.

 

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

 

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

 

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

 

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

 

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

 

           
16.       LIENS;
ENCUMBRANCES.  

 

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

 

           
17.       PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

 

           
(a) Borrower (1) shall not commit waste or permit impairment or deterioration of
the Mortgaged Property, (2) shall not abandon the Mortgaged Property, (3) shall
restore or repair promptly, in a good and workmanlike manner, any damaged part
of the Mortgaged Property to the equivalent of its original condition, or such
other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair, (4) shall keep the Mortgaged Property in good repair,
including the replacement of Personalty and Fixtures with items of equal or
better function and quality, (5) shall provide for professional management of
the Mortgaged Property by a residential rental property manager satisfactory to
Lender under a contract approved by Lender in writing, and (6) shall give notice
to Lender of and, unless otherwise directed in writing by Lender, shall appear
in and defend any action or proceeding purporting to affect the Mortgaged
Property, Lender's security or Lender's rights under this Instrument. 
Borrower shall not (and shall not permit any tenant or other person to) remove,
demolish or alter the Mortgaged Property or any part of the Mortgaged Property
except in connection with the replacement of tangible Personalty. 

 

           
(b)        If, in connection with the making
of the loan evidenced by the Note or at any later date, Lender waives in writing
the requirement of Section 17(a)(5) above that Borrower enter into a written
contract for management of the Mortgaged Property and if, after the date of this
Instrument, Borrower intends to change the management of the Mortgaged Property,
Lender shall have the right to approve such new property manager and the written
contract for the management of the Mortgaged Property and require that Borrower
and such new property manager enter into an Assignment of Management Agreement
on a form approved by Lender.  If required by Lender (whether before or
after an Event of Default), Borrower will cause any Affiliate of Borrower to
whom fees are payable for the management of the Mortgaged Property to enter into
an agreement with Lender, in a form approved by Lender, providing for
subordination of those fees and such other provisions as Lender may
require.  "Affiliate of Borrower" means any corporation, partnership, joint
venture, limited liability company, limited liability partnership, trust or
individual controlled by, under common control with, or which controls Borrower
(the term "control" for these purposes shall mean the ability, whether by the
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to make management decisions
on behalf of, or independently to select the managing partner of, a partnership,
or otherwise to have the power independently to remove and then select a
majority of those individuals exercising managerial authority over an entity,
and control shall be conclusively presumed in the case of the ownership of 50%
or more of the equity interests).  

 

           
18.       ENVIRONMENTAL
HAZARDS. 

 

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

 

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

 

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

 

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

 

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

 

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

 

           
(b)        Prohibited Activities and
Conditions shall not include the safe and lawful use and storage of quantities
of (1) pre-packaged supplies, cleaning materials and petroleum products
customarily used in the operation and maintenance of comparable multifamily
properties, (2) cleaning materials, personal grooming items and other items sold
in pre-packaged containers for consumer use and used by tenants and occupants of
residential dwelling units in the Mortgaged Property; and (3) petroleum products
used in the operation and maintenance of motor vehicles from time to time
located on the Mortgaged Property's parking areas, so long as all of the
foregoing are used, stored, handled, transported and disposed of in compliance
with Hazardous Materials Laws. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

                       

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

 

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

 

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

 

                       
(1)        Borrower's discovery of any
Prohibited Activity or Condition; 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

                       
(3)        the existence or alleged existence
of any Prohibited Activity or Condition;

 

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

 

                       
(5)        the actual or alleged violation of
any Hazardous Materials Law.  

 

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

 

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

 

           
(m)       Lender agrees that the indemnity under
this Section 18 shall be limited to the assets of Borrower and Lender shall not
seek to recover any deficiency from any natural persons who are general partners
of Borrower.

 

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

 

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

                       

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

                       

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

 

           
(o)        In any circumstances in which the
indemnity under this Section 18 applies, Lender may employ its own legal
counsel and consultants to prosecute, defend or negotiate any claim or legal or
administrative proceeding and Lender, with the prior written consent of Borrower
(which shall not be unreasonably withheld, delayed or conditioned), may settle
or compromise any action or legal or administrative proceeding.  Borrower
shall reimburse Lender upon demand for all costs and expenses incurred by
Lender, including all costs of settlements entered into in good faith, and the
fees and out-of-pocket expenses of such attorneys and consultants. 

 

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

 

           
19.       PROPERTY AND
LIABILITY INSURANCE.

 

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

 

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

 

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

 

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

 

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

 

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

 

           
(g)        Lender shall not exercise its
option to apply insurance proceeds to the payment of the Indebtedness if all of
the following conditions are met:  (1) no Event of Default (or any event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default) has occurred and is continuing; (2) Lender
determines, in its discretion, that there will be sufficient funds to complete
the Restoration; (3) Lender determines, in its discretion, that the rental
income from the Mortgaged Property after completion of the Restoration will be
sufficient to meet all operating costs and other expenses, Imposition Deposits,
deposits to reserves and loan repayment obligations relating to the Mortgaged
Property; (4) Lender determines, in its discretion, that the Restoration will be
completed before the earlier of (A) one year before the maturity date of the
Note or (B) one year after the date of the loss or casualty; and (5) upon
Lender's request, Borrower provides Lender evidence of the availability during
and after the Restoration of the insurance required to be maintained by Borrower
pursuant to this Section 19.

 

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

           

           
20.       CONDEMNATION.

 

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

 

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

 

           
21.       TRANSFERS OF THE
MORTGAGED PROPERTY OR INTERESTS IN BORROWER. 

 

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

 

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

 

                       
(2)        a Transfer of a Controlling
Interest in Borrower;

 

                       
(3)        a Transfer of a Controlling
Interest in any entity which owns, directly or indirectly through one or more
intermediate entities, a Controlling Interest in Borrower;

 

                       
(4)        a Transfer of all or any part of
Key Principal's ownership interests (other than limited partnership interests)
in Borrower, or in any other entity which owns, directly or indirectly through
one or more intermediate entities, an ownership interest in Borrower;

 

                       
(5)        if Key Principal is an entity, (A)
a Transfer of a Controlling Interest in Key Principal, or (B) a Transfer of a
Controlling Interest in any entity which owns, directly or indirectly through
one or more intermediate entities, a Controlling Interest in Key Principal;

 

                       
(6)        if Borrower or Key Principal is a
trust, the termination or revocation of such trust; and

 

                       
(7)        a conversion of Borrower from one
type of legal entity into another type of legal entity, whether or not there is
a Transfer.

 

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

 

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

 

                       
(1)        a Transfer to which Lender has
consented;

 

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

 

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

 

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

 

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

 

                       
(6)        the creation of a tax lien or a
mechanic's, materialman's or judgment lien against the Mortgaged Property which
is bonded off, released of record or otherwise remedied to Lender's satisfaction
within 30 days of the date of creation.

 

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

 

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

 

                       
(2)        the absence of any Event of
Default;

 

                       
(3)        the transferee meets all of the
eligibility, credit, management and other standards (including any standards
with respect to previous relationships between Lender and the transferee and the
organization of the transferee) customarily applied by Lender at the time of the
proposed Transfer to the approval of borrowers in connection with the
origination or purchase of similar mortgages, deeds of trust or deeds to secure
debt on multifamily properties;

 

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

 

                       
(5)        in the case of a Transfer of all
or any part of the Mortgaged Property, direct or indirect ownership interests in
Borrower or Key Principal (if an entity), if transferor or any other person has
obligations under any Loan Document, the execution by the transferee or one or
more individuals or entities acceptable to Lender of an assumption agreement
(including, if applicable, an Acknowledgement and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability) that is acceptable
to Lender and that, among other things, requires the transferee to perform all
obligations of transferor or such person set forth in such Loan Document, and
may require that the transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been waived by
Lender;

 

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

 

                       
(7)        Lender's receipt of all of the
following:

 

                                   
(A)       a non-refundable review fee in the
amount of $3,000 and a transfer fee equal to 1 percent of the outstanding
Indebtedness immediately prior to the Transfer.

 

                                   
(B)       In addition, Borrower shall be required
to reimburse Lender for all of Lender's out-of-pocket costs (including
reasonable attorneys' fees) incurred in reviewing the Transfer request, to the
extent such expenses exceed $3,000.

 

           
(d)        For purposes of this Section, the
following terms shall have the meanings set forth below:

 

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

 

                       
(2)        A Transfer of a "Controlling
Interest" shall mean, with respect to any entity, the following:

 

                                   
(i)         if such entity is a general
partnership or a joint venture, a Transfer of any general partnership interest
or joint venture interest which would cause the Initial Owners to own less than
51% of all general partnership or joint venture interests in such
entity;

 

                                   
(ii)        if such entity is a limited
partnership, a Transfer of any general partnership interest;

 

                                   
(iii)       if such entity is a limited liability
company or a limited liability partnership, a Transfer of any membership or
other ownership interest which would cause the Initial Owners to own less than
51% of all membership or other ownership interests in such entity;

 

                                   
(iv)       if such entity is a corporation (other
than a Publicly-Held Corporation) with only one class of voting stock, a
Transfer of any voting stock which would cause the Initial Owners to own less
than 51% of voting stock in such corporation;

 

                                   
(v)        if such entity is a corporation
(other than a Publicly-Held Corporation) with more than one class of voting
stock, a Transfer of any voting stock which would cause the Initial Owners to
own less than a sufficient number of shares of voting stock having the power to
elect the majority of directors of such corporation; and

 

                                   
(vi)       if such entity is a trust, the removal,
appointment or substitution of a trustee of such trust other than (A) in the
case of a land trust, or (B) if the trustee of such trust after such removal,
appointment or substitution is a trustee identified in the trust agreement
approved by Lender.

 

                       
(3)        "Publicly-Held Corporation"
shall mean a corporation the outstanding voting stock of which is registered
under Section 12(b) or 12(g) of the Securities and Exchange Act of 1934, as
amended.

 

           
22.       EVENTS OF
DEFAULT.  

 

           
The occurrence of any one or
more of the following shall constitute an Event of Default under this
Instrument:

 

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

 

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

 

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

 

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

 

           
(e)        any Event of Default under
Section 21;

 

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

 

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

 

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

 

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

 

           
23.       REMEDIES
CUMULATIVE.  

 

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

 

           
24.      
FORBEARANCE.

 

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

 

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

 

           
25.      
[INTENTIONALLY DELETED].  

 

           
See Section 50. 

 

           
26.       WAIVER OF STATUTE
OF LIMITATIONS.  

 

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

 

           
27.       WAIVER OF
MARSHALLING. 

 

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

 

           
28.       FURTHER
ASSURANCES.  

 

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

 

           
29.       ESTOPPEL
CERTIFICATE.  

 

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

 

           
30.       GOVERNING LAW;
CONSENT TO JURISDICTION AND VENUE.

 

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

 

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

 

           
31.       NOTICE.

 

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

 

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

 

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

 

           
32.       SALE OF NOTE;
CHANGE IN SERVICER.  

 

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

 

           
33.       SINGLE ASSET
BORROWER.   

 

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

 

           
34.       SUCCESSORS AND
ASSIGNS BOUND.  

 

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

 

           
35.       JOINT AND SEVERAL
LIABILITY.  

 

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

 

           
36.       RELATIONSHIP OF
PARTIES; NO THIRD PARTY BENEFICIARY.

 

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

 

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

 

           
37.       SEVERABILITY;
AMENDMENTS.  

 

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

 

           
38.      
CONSTRUCTION.  

 

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

 

           
39.       LOAN
SERVICING.  

 

           
All actions regarding the servicing of the loan evidenced by the Note, including
the collection of payments, the giving and receipt of notice, inspections of the
Property, inspections of books and records, and the granting of consents and
approvals, may be taken by the Loan Servicer unless Borrower receives notice to
the contrary.  If Borrower receives conflicting notices regarding the
identity of the Loan Servicer or any other subject, any such notice from Lender
shall govern.

 

           
40.       DISCLOSURE OF
INFORMATION.  

 

           
Lender may furnish information regarding Borrower or the Mortgaged Property to
third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, purchase or securitization of the
Indebtedness, including trustees, master servicers, special servicers, rating
agencies, and organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans.  Borrower irrevocably waives any
and all rights it may have under applicable law to prohibit such disclosure,
including any right of privacy.

 

           
41.       NO CHANGE IN FACTS
OR CIRCUMSTANCES.  

 

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

 

           
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 invoke the power of sale and any other remedies
permitted by Texas law or provided in this Instrument or in any other Loan
Document.  Borrower acknowledges that the power of sale granted in this
Instrument may be exercised by Lender without prior judicial hearing. 
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 may, by and through the Trustee, or
otherwise, sell or offer for sale the Mortgaged Property in such portions, order
and parcels as Lender may determine, with or without having first taken
possession of the Mortgaged Property, to the highest bidder for cash at public
auction.  Such sale shall be made at the courthouse door of the county in
which all or any part of the Land to be sold is situated (whether the parts or
parcel, if any, situated in different counties are contiguous or not, and
without the necessity of having any Personalty present at such sale) on the
first Tuesday of any month between the hours of 10:00 a.m. and 4:00 p.m., after
advertising the time, place and terms of sale and that portion of the Mortgaged
Property to be sold by posting or causing to be posted written or printed notice
of sale at least twenty-one (21) days before the date of the sale at the
courthouse door of the county in which the sale is to be made and at the
courthouse door of any other county in which a portion of the Land may be
situated, and by filing such notice with the County Clerk(s) of the county(s) in
which all or a portion of the Land may be situated, which notice may be posted
and filed by the Trustee acting, or by any person acting for the Trustee, and
Lender has, at least twenty-one (21) days before the date of the sale, served
written or printed notice of the proposed sale by certified mail on each debtor
obligated to pay the Indebtedness according to Lender’s records by the deposit
of such notice, enclosed in a postpaid wrapper, properly addressed to such
debtor at debtor’s most recent address as shown by Lender’s records, in a post
office or official depository under the care and custody of the United States
Postal Service.  The affidavit of any person having knowledge of the facts
to the effect that such service was completed shall be prima facie
evidence of the fact of service.

 

           
Trustee shall deliver to the purchaser at the sale, within a reasonable time
after the sale, a deed conveying the Mortgaged Property so sold in fee simple
with covenants of general warranty.  Borrower covenants and agrees to
defend generally the purchaser’s title to the Mortgaged Property against all
claims and demands.  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 reasonable costs and expenses of the sale, including
reasonable Trustee’s fees and 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 the
excess.

 

           
If all or any part of the Mortgaged Property is sold pursuant to this Section
43, Borrower will be divested of any and all interest and claim to the Mortgaged
Property, including any interest or claim to all insurance policies, utility
deposits, bonds, loan commitments and other intangible property included as a
part of the Mortgaged Property.  Additionally, after a sale of all or any
part of the Land, Improvements, Fixtures and Personalty, Borrower will be
considered a tenant at sufferance of the purchaser of the same, and the
purchaser shall be entitled to immediate possession of such property.  If
Borrower shall fail to vacate the Mortgaged Property immediately, the purchaser
may and shall have the right, without further notice to Borrower, to go into any
justice court in any precinct or county in which the Mortgaged Property is
located and file an action in forcible entry and detainer, which action shall
lie against Borrower or its assigns or legal representatives, as a tenant at
sufferance.  This remedy is cumulative of any and all remedies the
purchaser may have under this Instrument or otherwise.

 

           
In any action for a deficiency after a foreclosure under this Instrument, if any
person against whom recovery is sought requests the court in which the action is
pending to determine the fair market value of the Mortgaged Property, as of the
date of the foreclosure sale, the following shall be the basis of the court’s
determination of fair market value:

 

           
(a)        the Mortgaged Property shall be
valued “as is” and in its condition as of the date of foreclosure, and no
assumption of increased value because of post-foreclosure repairs,
refurbishment, restorations or improvements shall be made;

 

           
(b)        any adverse effect on the
marketability of title because of the foreclosure or because of any other title
condition not existing as of the date of this Instrument shall be
considered;

 

           
(c)        the valuation of the Mortgaged
Property shall be based upon an assumption that the foreclosure purchaser
desires a prompt resale of the Mortgaged Property for cash within a six
month-period after foreclosure;

 

           
(d)        although the Mortgaged Property
may be disposed of more quickly by the foreclosure purchaser, the gross
valuation of the Mortgaged Property as of the date of foreclosure shall be
discounted for a hypothetical reasonable holding period (not to exceed 6 months)
at a monthly rate equal to the average monthly interest rate on the Note for the
twelve months before the date of foreclosure;

 

           
(e)        the gross valuation of the
Mortgaged Property as of the date of foreclosure shall be further discounted and
reduced by reasonable estimated costs of disposition, including brokerage
commissions, title policy premiums, environmental assessment and clean-up costs,
tax and assessment, prorations, costs to comply with legal requirements and
attorneys’ fees;

 

           
(f)         expert opinion testimony
shall be considered only from a licensed appraiser certified by the State of
Texas and, to the extent permitted under Texas law, a member of the Appraisal
Institute, having at least five years’ experience in appraising property similar
to the Mortgaged Property in the county where the Mortgaged Property is located,
and who has conducted and prepared a complete written appraisal of the Mortgaged
Property taking into considerations the factors set forth in this Instrument; no
expert opinion testimony shall be considered without such written appraisal;

 

           
(g)        evidence of comparable sales shall
be considered only if also included in the expert opinion testimony and written
appraisal referred to in the preceding paragraph; and 

 

           
(h)        an affidavit executed by Lender to
the effect that the foreclosure bid accepted by Trustee was equal to or greater
than the value of the Mortgaged Property determined by Lender based upon the
factors and methods set forth in subparagraphs (a) through (g) above before the
foreclosure shall constitute prima facie evidence that the foreclosure
bid was equal to or greater than the fair market value of the Mortgaged Property
on the foreclosure date.

 

           
Lender may, at Lender’s option, comply with these provisions in the manner
permitted or required by Title 5, Section 51.002 of the Texas Property Code
(relating to the sale of real estate) or by Chapter 9 of the Texas Business and
Commerce Code (relating to the sale of collateral after default by a debtor), as
those titles and chapters now exist or may be amended or succeeded in the
future, or by any other present or future articles or enactments relating to
same subject.  Unless expressly excluded, the Mortgaged Property shall
include Rents collected before a foreclosure sale, but attributable to the
period following the foreclosure sale, and Borrower shall pay such Rents to the
purchaser at such sale.  At any such sale:

 

           
(a)        whether made under the power
contained in this Instrument, Section 51.002, the Texas Business and Commerce
Code, any other legal requirement or by virtue of any judicial proceedings or
any other legal right, remedy or recourse, it shall not be necessary for Trustee
to have physically present, or to have constructive possession of, the Mortgaged
Property (Borrower shall deliver to Trustee any portion of the Mortgaged
Property not actually or constructively possessed by Trustee immediately upon
demand by Trustee) and the title to and right of possession of any such property
shall pass to the purchaser as completely as if the property had been actually
present and delivered to the purchaser at the sale;

 

           
(b)        each instrument of conveyance
executed by Trustee shall contain a general warranty of title, binding upon
Borrower;

 

           
(c)        the recitals contained in any
instrument of conveyance made by Trustee shall conclusively establish the truth
and accuracy of the matters recited in the Instrument, including nonpayment of
the Indebtedness and the advertisement and conduct of the sale in the manner
provided in this Instrument and otherwise by law and the appointment of any
successor Trustee; 

 

           
(d)        all prerequisites to the validity
of the sale shall be conclusively presumed to have been satisfied;

 

           
(e)        the receipt of Trustee or of such
other party or officer making the sale shall be sufficient to discharge to the
purchaser or purchasers for such purchaser(s)’ purchase money, and no such
purchaser or purchasers, or such purchaser(s)’ assigns or personal
representatives, shall thereafter be obligated to see to the application of such
purchase money or be in any way answerable for any loss, misapplication or
nonapplication of such purchase money;

 

           
(f)         to the fullest extent
permitted by law, Borrower shall be completely and irrevocably divested of all
of Borrower’s right, title, interest, claim and demand whatsoever, either at law
or in equity, in and to the property sold, and such sale shall be a perpetual
bar to any claim to all or any part of the property sold, both at law and in
equity, against Borrower and against any person claiming by, through or under
Borrower; and

 

           
(g)        to the extent and under such
circumstances as are permitted by law, Lender may be a purchaser at any such
sale.

 

           
44.      
RELEASE.  

 

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

 

           
45.      
TRUSTEE.  

 

           
(a)        Trustee may resign by giving of
notice of such resignation in writing to Lender.  If Trustee shall die,
resign or become disqualified from acting under this Instrument or shall fail or
refuse to act in accordance with this Instrument when requested by Lender or if
for any reason and without cause Lender shall prefer to appoint a substitute
trustee to act instead of the original Trustee named in this Instrument or any
prior successor or substitute trustee, Lender shall have full power to appoint a
substitute trustee and, if preferred, several substitute trustees in succession
who shall succeed to all the estate, rights, powers and duties of the original
Trustee named in this Instrument.  Such appointment may be executed by an
authorized officer, agent or attorney-in-fact of Lender (whether acting pursuant
to a power of attorney or otherwise), and such appointment shall be conclusively
presumed to be executed with authority and shall be valid and sufficient without
proof of any action by Lender.

 

           
(b)        Any successor Trustee appointed
pursuant to this Section shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts of the
predecessor Trustee with like effect as if originally named as Trustee in this
Instrument; but, nevertheless, upon the written request of Lender or such
successor Trustee, the Trustee ceasing to act shall execute and deliver an
instrument transferring to such successor Trustee, all the estates, properties,
rights, powers and trusts of the Trustee so ceasing to act, and shall duly
assign, transfer and deliver any of the property and monies held by the Trustee
ceasing to act to the successor Trustee.

 

           
(c)        Trustee may authorize one or more
parties to act on Trustee’s behalf to perform the ministerial functions required
of Trustee under this Instrument, including the transmittal and posting of any
notices.

 

           
46.       VENDOR’S
LIEN; RENEWAL AND EXTENSION.  Intentionally
Deleted.

 

           
47.       NO
FIDUCIARY DUTY.  

           

           
Lender owes no fiduciary or
other special duty to Borrower.

 

           
48.       FIXTURE
FILING.  

 

           
This Instrument is also a
fixture filing under the Uniform Commercial Code of Texas.

 

           
49.       ADDITIONAL
PROVISIONS REGARDING ASSIGNMENT OF RENTS.  

 

           
In no event shall the assignment of Rents or Leases in Section 3 and Section 4
cause the Indebtedness to be reduced by an amount greater than the Rents
actually received by Lender and applied by Lender to the Indebtedness, whether
before, during or after (i) an Event of Default, or (ii) a suspension or
revocation of the license granted to Borrower in Section 3(c) with regard to the
Rents.  Borrower and Lender specifically intend that the assignment of
Rents and Leases in Section 3 and Section 4 is not intended to result in a
pro tanto reduction of the Indebtedness.  The assignment of Rents
and Leases in Section 3 and Section 4 is not intended to constitute a payment
of, or with respect to, the Indebtedness and, therefore, Borrower and Lender
specifically intend that the Indebtedness shall not be reduced by the value of
the Rents and Leases assigned.  Such reduction shall occur only if, and to
the extent that, Lender actually receives Rents pursuant to Section 3 and
applies such Rents to the Indebtedness.  Borrower agrees that the value of
the license granted with regard to the Rents equals the value of the absolute
assignment of Rents to Lender.  The assignment of Rents contained in
Section 3 shall terminate upon the release of this Instrument. 

 

           
50.       LOAN
CHARGES.  

 

           
Borrower and Lender intend at all times to comply with the laws of the State of
Texas governing the maximum rate or amount of interest payable on or in
connection with the Indebtedness (or applicable United States federal law to the
extent that it permits Lender to contract for, charge, take, reserve or receive
a greater amount of interest than under Texas law).  If the applicable law
is ever judicially interpreted so as to render usurious any amount payable under
the Note, this Instrument or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Indebtedness, or if
acceleration of the maturity of the Indebtedness, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by any applicable law, then Borrower and Lender expressly intend that
all excess amounts collected by Lender shall be applied to reduce the unpaid
principal balance of the Indebtedness (or, if the Indebtedness has been or would
thereby be paid in full, shall be refunded to Borrower), and the provisions of
the Note, this Instrument and the other Loan Documents immediately shall be
deemed reformed and the amounts thereafter collectible under the Loan Documents
reduced, without the necessity of the execution of any new documents, so as to
comply with any applicable law, but so as to permit the recovery of the fullest
amount otherwise payable under the Loan Documents.  The right to accelerate
the maturity of the Indebtedness does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
Lender does not intend to collect any unearned interest in the event of
acceleration.  All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the Indebtedness shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of the Indebtedness until payment in full so that the rate or amount of
interest on account of the Indebtedness does not exceed the applicable usury
ceiling.  Notwithstanding any provision contained in the Note, this
Instrument or any other Loan Document that permits the compounding of interest,
including any provision by which any accrued interest is added to the principal
amount of the Indebtedness, the total amount of interest that Borrower is
obligated to pay and Lender is entitled to receive with respect to the
Indebtedness shall not exceed the amount calculated on a simple
(i.e., noncompounded) interest basis at the maximum rate on
principal amounts actually advanced to or for the account of Borrower, including
all current and prior advances and any advances made pursuant to the Instrument
or any other Loan Document (such as for the payment of Impositions and similar
expenses or costs).

 

           
51.       PROPERTY
AND LIABILITY INSURANCE — DELIVERY OF POLICY TO LENDER.  

 

           
Notwithstanding the provisions of Section 19(b), Borrower shall not be required
to deliver the original (or a duplicate original) of any renewal policy of
insurance to Lender more than 15 days prior to the expiration date of the policy
then held by Lender. 

 

           
52.       ENTIRE
AGREEMENT.  

 

           
THIS INSTRUMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

           
53.       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-I                   
Modifications to Instrument (Bankruptcy)

 

                       
|X|        Exhibit
B-II                 
Modifications to Instrument (Supplemental Lien-Refi Plus)

 

                       
|X|        Exhibit
B-III                
Modifications to Instrument (Imposition Deposits Waived)

 

                       
|X|        Exhibit
B-IV                
Modifications to Instrument (Borrower-Specific)

 

 

[DOCUMENT EXECUTION AND
ACKNOWLEDGMENT OCCUR ON THE FOLLOWING PAGES]

 

 

 

 

 

[THIS PAGE INTENTIONALLY
LEFT BLANK]

 

 

 

 

[THIS PAGE INTENTIONALLY
LEFT BLANK]

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

 

 

AIMCO
COVINGTON POINTE, L.P.,

a
Delaware limited partnership

 

By:      
DAVIDSON GP, L.L.C.,

           
a South Carolina limited liability company,

           
its General Partner

 

By:      
Davidson Income Real Estate, L.P.,

                       
a Delaware limited partnership,

                       
its Sole Member

 

           
By:       Davidson Diversified Properties,
Inc.,

                                   
a Tennessee corporation,

                                   
its Managing General Partner

 

 

 

                                   
By:       /s/Patti K. Fielding

                                   
Patti K. Fielding

                                   
Executive Vice President and 

                                   
TreasurerExhibit
10.66

FHLMC Loan No.
504140973
Cedar Rim Apartments

MULTIFAMILY
NOTE

MULTISTATE – FIXED
RATE

(REVISION DATE 
2-15-2008)

 

	
US $4,030,000.00
	
Effective Date:  As of
March 31, 2009

FOR VALUE RECEIVED, the undersigned
(together with such party's or parties' successors and assigns,
"Borrower") jointly and severally (if more than one) promises to pay to
the order of CAPMARK BANK, a Utah industrial bank, the principal sum of
Four Million Thirty Thousand and 00/100 Dollars (US $4,030,000.00), with
interest on the unpaid principal balance, as hereinafter provided.

1.                 
Defined Terms.  

(a)               
As used in this Note: 

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

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

"Default Rate" means an annual
interest rate equal to four (4) percentage points above the Fixed Interest
Rate.  However, at no time will the Default Rate exceed the Maximum
Interest Rate.

"Fixed Interest Rate" means the
annual interest rate of six and forty-five hundredths percent (6.45%).

"Installment Due Date" means,
for any monthly installment of interest only or principal and interest, the date
on which such monthly installment is due and payable pursuant to Section 3 of
this Note. The "First Installment Due Date" under this Note is May 1,
2009.  

"Lender" means the holder from
time to time of this Note.

"Loan" means the loan evidenced
by this Note.

"Maturity Date" means
the earlier of (i) August 1, 2021 (the "Scheduled Maturity
Date"), and (ii) the date on which the unpaid principal
balance of this Note becomes due and payable by acceleration or otherwise
pursuant to the Loan Documents or the exercise by Lender of any right or remedy
under any Loan Document. 

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

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

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

"Treasury Security" means the
8.125% U.S. Treasury Security due May 15, 2021.

"Window Period" means the six
(6) consecutive calendar month period prior to the Scheduled Maturity
Date.

"Yield Maintenance Period"
means the period from and including the date of this Note until but not
including February 1, 2021. 

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

2.                 
Address for Payment.  All payments due under this
Note shall be payable at c/o Capmark Finance Inc., 116 Welsh Road, Horsham,
Pennsylvania  19044, Attn:  Servicing - Account Manager, or such other
place as may be designated by Notice to Borrower from or on behalf of
Lender.

3.                 
Payments.  

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

(b)              
Interest under this Note shall be computed, payable and allocated
on the basis of a 360-day year consisting of twelve 30-day months. 

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

(d)              
Beginning on the First Installment Due Date, and continuing until
and including the monthly installment due on the Maturity Date, principal and
accrued interest shall be payable by Borrower in consecutive monthly
installments due and payable on the first day of each calendar month.  The
amount of the monthly installment of principal and interest payable pursuant to
this Section 3(d) on an Installment Due Date shall be Twenty-Five Thousand Three
Hundred Thirty-Nine and 97/100 Dollars ($25,339.97).

(e)               
All remaining Indebtedness, including all principal and interest,
shall be due and payable by Borrower on the Maturity Date.

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

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

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

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

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

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

7.                 
Late Charge.

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

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

8.                 
Default Rate.  

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

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

(c)               
Borrower acknowledges that (i) its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Loan, (ii) during the time that any monthly installment
under this Note is delinquent for thirty (30) days or more, Lender will incur
additional costs and expenses arising from its loss of the use of the money due
and from the adverse impact on Lender's ability to meet its other obligations
and to take advantage of other investment opportunities; and (iii)  it is
extremely difficult and impractical to determine those additional costs and
expenses.  Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for thirty (30) days or more
or any other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk.  Borrower agrees that the increase
in the rate of interest payable under this Note to the Default Rate represents a
fair and reasonable estimate, taking into account all circumstances existing on
the date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.

9.                 
Limits on Personal Liability. 

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

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

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

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

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

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

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

[Deferred]       
Hazard Insurance premiums or other insurance premiums,

[Deferred]       
Taxes, 

[Deferred]       
water and sewer charges (that could become a lien on the Mortgaged
Property),

[N/A]  
            ground rents,

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

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

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

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

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

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

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

(i)                 
Borrower's ownership of any property or operation of any business
not permitted by Section 33 of the Security Instrument;

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

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

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

10.             
Voluntary and Involuntary Prepayments.

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

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

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

(d)              
Unless otherwise expressly provided in the Loan Documents,
Borrower may not voluntarily prepay less than all of the unpaid principal
balance of this Note.  In order to voluntarily prepay all or any part of
the principal of this Note, Borrower must also pay to Lender, together
with the amount of principal being prepaid, (i) all accrued and unpaid
interest due under this Note, plus (ii) all other sums due to Lender at the
time of such prepayment, plus (iii) any prepayment premium calculated
pursuant to Section 10(e).

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

(i)                 
For any prepayment made during the Yield Maintenance Period, the
prepayment premium shall be whichever is the greater of subsections (A) and (B)
below:

(A)             
1.0% of the amount of principal being prepaid; or 

(B)             
the product obtained by multiplying:

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

by

(2)              
the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate, 

by

(3)              
the Present Value Factor.

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

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

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

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

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:

 [1-{1/(1+ARR)}n]/ARR

 

 

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

ARR = Assumed Reinvestment Rate

(ii)               
For any prepayment made after the expiration of the Yield
Maintenance Period but during the remainder of the Prepayment Premium Period,
the prepayment premium shall be 1.0% of the amount of principal being
prepaid.

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

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

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

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

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

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

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

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

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

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

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

19.             
Notices; Written Modifications.  

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

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

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

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

22.             
State-Specific Provisions. NOTICE:  ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

ATTACHED EXHIBIT.  The Exhibit noted below, if
marked with an "X" in the space provided, is attached to this Note: 

	
X
	
 
	
Exhibit A
	
Modifications to Multifamily
Note

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

CEDAR RIM
APARTMENTS, LLC, a
Delaware limited liability company

 

By:  Consolidated Capital
Institutional Properties/3, LP, a Delaware limited partnership, its sole
member

 

By:  CONCAP Equities, Inc., a
Delaware corporation, its general partner

 

 

 

By: 
/s/Patti K. Fielding

Patti K. Fielding

Executive Vice
President and Treasurer

 

 

 

 

 

 

 

 

PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE
CORPORATION, WITHOUT RECOURSE.

 

CAPMARK BANK, a
Utah industrial bank

 

 

 

By: /s/Max W. Foore

Max W. Foore

Limited Signer

 

 

 

 

 

 

FHLMC Loan No.
504140973

 

EXHIBIT A

 

MODIFICATIONS TO MULTIFAMILY
NOTE

 

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

 

1.                 
The definition of
“Default Rate” set forth in Section 1(a) of this Note is deleted and replaced
with the following:

 

"Default Rate" means an annual
interest rate equal to the greater of (i) three (3) percentage points above the
Fixed Interest Rate, or (ii) four percentage (4) points above the
then-prevailing Prime Rate.  However, at no time will the Default Rate
exceed the Maximum Interest Rate.

 

2.                 
The following
definition is added to Section 1(a) of this Note:

 

"Prime Rate" means the rate of
interest announced by The Wall Street Journal from time to time as the
“Prime Rate”.

 

3.        
The second sentence of Section 9(c)(i) is deleted and replaced with the
following:

 

However, Borrower will not be
personally liable for any failure described in this subsection (i) if
Borrower is unable to pay to Lender all Rents and security deposits as required
by the Security Instrument (a) because of a valid order issued in a bankruptcy,
receivership, or similar judicial proceeding, or (b) if such funds have been
applied by Borrower as required or permitted by the Security Instrument prior to
the occurrence of an Event of Default.

 

4.        
Section 19(b) of this Note is modified by deleting: “provided, however, in the
event of a Transfer under the terms of the Security Instrument that requires
Lender's consent, any or some or all of the Modifications to Multifamily Note
set forth in Exhibit A to this Note may be modified or rendered void by
Lender at Lender's option, by Notice to Borrower and the transferee, as a
condition of Lender's consent” in the last sentence of the Section; and by
adding the following new sentence: 

 

The Modifications to Multifamily Note
set forth in this Exhibit A shall be null and void unless title to the Mortgaged
Property is vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP.  The capitalized terms used in
this Section are defined in the Security Instrument.

 

5.                             
Section 20 of this
Note is deleted and replaced with the following:

 

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.

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