8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) September 21, 2007

  CENTURY PROPERTIES FUND XVI

(Exact name of Registrant as specified in its charter)

            California

   0-10435  

       94-2704651

(State or other jurisdiction

(Commission

     (I.R.S. Employer

   of incorporation or

File Number)

  Identification Number)

           organization)

55 Beattie Place

Post Office Box 1089

Greenville, South Carolina 29602

(Address of principal executive offices)

(864) 239-1000

(Issuer's telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

[ ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definitive Agreement

Please see the description under Item 2.03 below.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant

Century Properties Fund XVI (the “Registrant”), a California limited partnership, owns a 100% interest in Woods of Inverness CPF 16, L.P., a Delaware limited partnership (the “Partnership”). On September 21, 2007, the Partnership refinanced the mortgage encumbering its sole investment property, Woods of Inverness Apartments, located in Houston, Texas. The refinancing replaced the existing mortgage, which at the time of refinancing had a principal balance of approximately $4,139,000, with a new mortgage loan in the principal amount of approximately $5,878,000. The new loan was refinanced under a secured real estate credit facility (“Secured Credit Facility”) with AEGON USA Realty Advisors, Inc., as agent for Transamerica Occidental Life Insurance Company, which has a maturity of October 1, 2010, with two one year extension options. The new mortgage requires monthly payments of interest only beginning on November 1, 2007 , through the October 1, 2010 maturity date, at which date the entire principal balance of approximately $5,878,000 is due.  The new loan has a variable interest rate of the one-month LIBOR rate plus 0.78%, which rate is currently 6.28% per annum, and resets monthly.  The variable interest rate may increase to the one-month LIBOR rate plus 0.98% if the debt service coverage ratio of the investment property decreases below a prescribed threshold. The Secured Credit Facility provides mortgage loans on properties owned by other partnerships that are affiliated with the managing general partner of the Registrant. The Secured Credit Facility creates separate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. Monthly interest payments are required based on the interest rate in effect during the first month that any property is in the Secured Credit Facility. The loans are prepayable without penalty.  As a condition of the Secured Credit Facili ty, the lender required AIMCO Properties, L.P., an affiliate of the Registrant, to guarantee the obligations and liabilities of the Registrant with respect to the new mortgage financing.

In accordance with the terms of the loan agreement relating to the new mortgage, the payment of the mortgage may be accelerated at the option of the lender if an Event of Default, as defined in the loan agreement, occurs. Events of Default include, but are not limited to, nonpayment of monthly interest and reserve requirements and nonpayment of amounts outstanding on or before the maturity date.

The foregoing description is qualified in its entirety by reference to the Deed of Trust, Security Agreement and Fixture Filing, Secured Promissory Note and Carveout Guarantee and Indemnity Agreement, copies of which are filed as exhibits 10.11, 10.12 and 10.13.

In accordance with the Registrant’s partnership agreement, the Registrant’s managing general partner is evaluating the cash requirements of the Registrant to determine what portion of the net proceeds, if any, from the above transaction will be distributed to the Registrant’s partners.

Item 9.01

Financial Statements and Exhibits

(d)

Exhibits

  The following exhibits are filed with this report:

10.11

Deed of Trust, Security Agreement and Fixture Filing between Woods of Inverness CPF 16, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation, dated September 21, 2007.

10.12

Secured Promissory Note between Woods of Inverness CPF 16, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation, dated September 21, 2007.  

10.13

Carveout Guarantee and Indemnity Agreement between AIMCO Properties, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation, dated September 21, 2007.

*

Schedules and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTURY PROPERTIES FUND XVI

By:

Fox Capital Management Corporation

Managing General Partner

By:

/s/Stephen B. Waters

Stephen B. Waters

Vice President

Date:

September 27, 2007

EX-10

Exhibit 10.11

Prepared by, and after recording return to:

John P. Machen, Esquire
DLA Piper US LLP
6225 Smith Avenue
Baltimore, Maryland 21209-3600

 NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

 WOODS OF INVERNESS CPF 16, L.P.,
a Delaware limited partnership
Borrower,

 having an office at
4582 South Ulster Parkway, Suite 1100
Denver, Colorado 80237

 to

 KEITH H. MULLEN,
Trustee

for the benefit of
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY,

 an Iowa corporation,
Lender,

 having an office
c/o AEGON USA Realty Advisors, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-5443

 effective as of the 21 day of September, 2007

 
Loan Amount:  $5,877,950.00
Premises:  Woods of Inverness, Harris County, Houston, Texas

 Deed of Trust, Security Agreement and Fixture Filing

This Deed of Trust, Security Agreement and Fixture Filing (this “Deed of Trust”) is made and given as of the Effective Date , by WOODS OF INVERNESS CPF 16, L.P., as Borrower, a Delaware limited partnership, whose address is 4582 South Ulster Parkway, Suite 1100, Denver, Colorado 80237 (the “Borrower”), to KEITH H. MULLEN, as Trustee, whose address is 1201 Elm Street, Suite 5400, Dallas, Texas 75270-2199 (the “Trustee”), for the benefit of TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, as Beneficiary, an Iowa corporation having an office c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-5443 (the “Lender”). The definitions of capitalized terms used in this Deed of Trust may be found either in Section 3 below, or through the cross-references provided in that Section.

1.

RECITALS

A.

Under the terms of a certain Secured Real Estate Credit Facility Agreement dated September 11, 2007 (the “Facility Agreement”), AEGON USA Realty Advisors, Inc. (“AEGON”), as agent for affiliated lenders agreed to fund a series of loans to affiliates of the Carveout Obligor.

B.

Under the terms of the Facility Agreement and a Second Revised Loan Application/Commitment dated September 12, 2007 (the “Commitment”), AEGON , as agent for the Lender, agreed to fund a loan in the principal amount of $5,877,950 (the “Loan”).

C.

The Lender has funded the Loan in the principal amount of $5,877,950 in accordance with the Commitment and the Facility Agreement, and to evidence the Loan, the Borrower has executed and delivered to the Lender a certain Secured Promissory Note, of even date, in the amount of $5,877,950, with a maturity and final payment date of October 1, 2010.

D.

The Commitment requires and the Facility Agreement require that the Loan be secured by all of the Borrower’s existing and after-acquired interest in certain real property and by certain tangible and intangible personal property.

2.

GRANTING CLAUSE

To secure the repayment of the Indebtedness, any increases, modifications, renewals or extensions of the Indebtedness, and any substitutions for the Indebtedness, as well as the performance of the Borrower’s other Obligations, and in consideration of the sum of ten dollars ($10.00) and other valuable consideration, the receipt and sufficiency of which are acknowledged, the Borrower grants, bargains, warrants, conveys, alienates, releases, assigns, sets over and confirms to the Trustee, his successors or substitutes in the Trust and his or their assigns, in trust with the POWER OF SALE for the benefit of the Lender and to his successors and assigns forever, all of the Borrower’s existing and after acquired interests in the Real Property.

3.

DEFINED TERMS

The following defined terms are used in this Deed of Trust. For ease of reference, terms relating primarily to the Security Agreement are defined in Subsection 22.1.

“Absolute Assignment of Leases and Rents” means the Loan Document bearing this heading.

an “Affiliate” of any person means any entity controlled by, or under common control with, that person.

“Appurtenances” means all rights, estates, titles, interests, privileges, easements, tenements, hereditaments, titles, royalties, reversions, remainders and other interests, whether presently held by the Borrower or acquired in the future, that may be conveyed as interests in the Land under the laws of Texas. Appurtenances include the Easements and the Assigned Rights.

“Assigned Rights” means all of the Borrower’s rights, easements, privileges, tenements, hereditaments, contracts, claims, licenses or other interests, whether presently existing or arising in the future. The Assigned Rights include all of the Borrower’s rights in and to:

(i)

any greater estate in the Real Property;

(ii)

insurance policies required to be carried hereunder, including the right to negotiate claims and to receive Insurance Proceeds and unearned insurance premiums (except as expressly provided in Subsection 8.1);

(iii)

Condemnation Proceeds;

(iv)

licenses and agreements permitting the use of sources of groundwater or water utilities, septic leach fields, railroad sidings, sewer lines, means of ingress and egress;

(v)

drainage over other property;

(vi)

air space above the Land;

(vii)

mineral rights;

(viii)

party walls;

(ix)

vaults and their usage;

(x)

franchises;

(xi)

commercial tort claims that arise during the Loan term in respect of damages to the Real Property or to its operations, in respect of any impairment to the value of the Real Property, or in respect of the collection of any Rents;

(xii)

construction contracts;

(xiii)

roof and equipment guarantees and warranties;

(xiv)

building and development licenses and permits;

(xv)

tax credits or other governmental entitlements, credits or rights, whether or not vested;

(xvi)

licenses and applications (whether or not yet approved or issued);

(xvii)

rights under management and service contracts;

(xviii)

leases of Fixtures; and

(xix)

trade names, trademarks, trade styles, service marks, and copyrights that are directly related to the property and reasonably necessary for operation of the Property or the principal manner with which the Improvements are identified, and agreements with architects, environmental consultants, property tax consultants, engineers, and any other third party contractors whose services benefit the Real Property.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. Sections 101 et seq., and the regulations promulgated pursuant to those statutes.

“Business Day” means any day when state and federal banks are open for business in Cedar Rapids, Iowa.

“Carveout Guarantee and Indemnity” means that certain “Carveout Guarantee and Indemnity Agreement” entered into by the Carveout Obligor on the date of this Deed of Trust, together with all substitutions, modifications, and amendments.

“Carveout Obligations” means those obligations described in Section 21.

“Carveout Obligor” means AIMCO Properties, L.P.. Any other person who expressly assumes liability for the Carveout Obligations during the term of the Loan shall become a “Carveout Obligor” for purposes of this Deed of Trust.

“Carveouts” means those matters from which Carveout Obligations may arise, which are described in Section 21.

“Charges” means all fees, charges, and other things of value, if any, contracted for, charged, received, taken or reserved pursuant to the Note or any of the other Loan Documents in connection with the Loan, and which are treated as interest under applicable law (whether in connection with any voluntary prepayment of the Indebtedness, or otherwise, and including fees for the forbearance of any enforcement action or for the extension or modification of the Loan).

“Condemnation Proceeds” means all money or other property that has been, or is in the future, awarded or agreed to be paid or given in connection with any taking by eminent domain of all or any part of the Real Property (including a taking through the vacation of any street dedication or through a change of grade of such a street), either permanent or temporary, or in connection with any purchase in lieu of such a taking, or as a part of any related settlement, except for the right to condemnation proceeds awarded to the tenant in a separate proceeding in respect of the lost value of the tenant’s leasehold interest, provided that the award does not reduce, directly or indirectly, the award to the owner of the Real Property.

“Curable Non-Monetary Default” means any of the acts, omissions, or circumstances specified in Subsection 10.3 below.

“Default” means any of the acts, omissions, or circumstances specified in Section 10 below.

“Default Rate” means the rate of interest specified as the “Default Rate” in the Note.

“Development Agreements” means all development, utility or similar agreements included in the Permitted Encumbrances.

“Easements” means the Borrower’s existing and future interests in and to the declarations, easements, covenants, and restrictions appurtenant to the Land.

“Environmental Indemnity Agreement” means the Loan Document bearing that heading, together with all substitutions, modifications, and amendments.

“Environmental Laws” means all present and future laws, statutes, ordinances, rules, regulations, orders, guidelines, rulings, decrees, notices and determinations of any Governmental Authority to the extent that they pertain to: (A) the protection of health against environmental hazards; (B) the protection of the environment, including air, soils, wetlands, and surface and underground water, from contamination by any substance that may have any adverse health effect on humans, livestock, fish, wildlife, or plant life, or which may disturb an ecosystem; (C) underground storage tank regulation or removal; (D) wildlife conservation; (E) protection or regulation of natural resources; (F) the protection of wetlands; (G) management, regulation and disposal of solid and hazardous wastes; (H) radioactive materials; (I) biologically hazardous materials; (J) indoor air quality; or (K) the manufacture, possession, presence, use, generation, storage, transportation, treatment, release, emission, discharge, disposal, abatement, cleanup, removal, remediation or handling of any Hazardous Substances. “Environmental Laws” include the Comprehensive Environmental Response, Compensation, and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act, 33 U.S.C. §1251 et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq., the Texas Solid Waste Disposal Act (V.T.C.A. Health and Safety Code §361.001 et. seq.), the Texas Water Code (V.T.C.A. §36.001 et seq.), all similar state statutes and local ordinances, and all regulations promulgated under any of those statutes, and all administrative and judicial actions respecting such legislation, all as amended from time to time.

“ESA” means the written environmental site assessment of the Real Property obtained under the terms of the Commitment.

“Escrow Expenses” means those expenses in respect of real and personal property taxes and assessments, Insurance Premiums and such other Impositions as the Lender pays from time to time directly from the Escrow Fund using monies accumulated through the collection of Monthly Escrow Payments.

“Escrow Fund” means the funds deposited by Borrower with the Lender pursuant to Section 9 hereof, as reflected in the accounting entry maintained on the books of the Lender as funds available for the payment of Escrow Expenses under the terms of this Deed of Trust.

“Facility Agreement” means that certain Facility Agreement dated September 11, 2007, entered into by and between AEGON and AIMCO Properties, L.P. (“AIMCO”), under which the AIMCO has the right, subject to certain conditions, to borrower up to Two Hundred Million Dollars ($200,000,000.00) in loans secured by stabilized multifamily properties from AEGON’s affiliated lenders.

“Fixtures” means all materials, supplies, equipment, apparatus and other items now or hereafter attached to or installed on the Land and Improvements in a manner that causes them to become fixtures under the laws of Texas, including all built-in or attached furniture or appliances, elevators, escalators, heating, ventilating and air conditioning system components, emergency electrical generators and related fuel storage or delivery systems, septic system components, storm windows, doors, electrical equipment, plumbing, water conditioning, lighting, cleaning, snow removal, lawn, landscaping, irrigation, security, incinerating, fire-fighting, sprinkler or other fire safety equipment, bridge cranes or other installed materials handling equipment, satellite dishes or other telecommunication equipment, built-in video conferencing equipment, sound systems or other audiovisual equipment, and cable television distribution systems. Fixtures do not include trade fixtures, office furniture and office equipment owned by a tenant who is unrelated to the Borrower, provided such items may be detached and removed by the tenant without damage to the Real Property, other than incidental damage that the tenant is obligated to repair under the terms of its Lease. Fixtures expressly include HVAC, mechanical, security and similar systems of general utility for the operation of the Improvements as leasable commercial real property.

“Governmental Authority” means any political entity with the legal authority to impose any requirement on the Property, including the governments of the United States, the State of Texas, Harris County, the City of Houston, and any other entity with jurisdiction to decide, regulate, or affect the ownership, construction, use, occupancy, possession, operation, maintenance, alteration, repair, demolition or reconstruction of any portion or element of the Real Property.

“Hazardous Substance” means any substance the release of or the exposure to which is prohibited, limited or regulated by any Environmental Law, or which poses a hazard to human health because of its toxicity, including: (A) any “oil,” as defined by the Federal Water Pollution Control Act and regulations promulgated thereunder (including crude oil or any fraction of crude oil), (B) any radioactive substance and (C) Stachybotrys chartarum or other molds. However, the term “Hazardous Substance” includes neither (A) a substance used in the cleaning and maintenance of the Real Property, if the quantity, storage and manner of its use are customary, prudent, and do not violate applicable law, nor (B) automotive motor oil in immaterial quantities, if leaked from vehicles in the ordinary course of the operation of the Real Property and cleaned up in accordance with reasonable prop erty management procedures and in a manner that violates no applicable law.

“Impositions” means all real and personal property taxes levied against the Property; general or special assessments; ground rent; water, gas, sewer, vault, electric or other utility charges; common area charges; owners’ association dues or fees; fees for any easement, license or agreement maintained for the benefit of the Property; and any and all other taxes, levies, user fees, claims, charges and assessments whatsoever that at any time may be assessed, levied or imposed on the Property or upon its ownership, use, occupancy or enjoyment, and any related costs, interest or penalties. In addition, “Impositions” include all documentary, stamp or intangible personal property taxes that may become due in connection with the Indebtedness, including Indebtedness in respect of any future advance made by the Lender to the Borrower, or that are imposed on any of the Loan Documents.

“Improvements” means, to the extent of the Borrower’s existing and future interest, all buildings and improvements of any kind erected or placed on the Land now or in the future, including the Fixtures, together with all appurtenant rights, privileges, Easements, tenements, hereditaments, titles, reversions, remainders and other interests.

“Indebtedness” means all sums that are owed or become due pursuant to the terms of the Note, this Deed of Trust, or any of the other Loan Documents or any other writing executed by the Borrower relating to the Loan, including scheduled principal payments, scheduled interest payments, default interest, late charges, prepayment premiums, accelerated or matured principal balances, advances, collection costs (including reasonable attorneys’ fees), reasonable attorneys’ fees and costs in enforcing or protecting the Note, the Deed of Trust, or any of the other Loan Documents in any probate, bankruptcy or other proceeding, receivership costs, fees and costs of the Trustee, his successors or substitutes in the Trust and his or their assigns and all other financial obligations of the Borrower incurred in connection with the Loan transaction, provided, however, that this Deed of Trust shall not secure any Loan Document or any particular person’s liabilities or obligations under any Loan Document to the extent that such Loan Document expressly states that it or such particular person's liabilities or obligations are unsecured by this Deed of Trust. Indebtedness shall also include any obligations under agreements executed and delivered by Borrower which specifically provide that such obligations are secured by this Deed of Trust.

“Insurance Premiums” means all premiums or other charges required to maintain in force any and all insurance policies that this Deed of Trust requires that the Borrower maintain.

“Insurance Proceeds" means (A) all proceeds of all insurance now or hereafter carried by or payable to the Borrower with respect to the Real Property, including with respect to the interruption of rents or income derived from the Property, all unearned insurance premiums and all related claims or demands, and (B) all Proceeds (as defined in Subsection 22.1).

“Key Principal” means Apartment Investment and Management Company.

“Land” means that certain tract of land located in Houston, Harris County, Texas, which is described on the attached Exhibit A, together with the Appurtenances.

“Leases” means all leases, subleases, licenses, concessions, extensions, renewals and other agreements (whether written or oral, and whether presently effective or made in the future) through which the Borrower grants any possessory interest in and to, or any right to occupy or use, all or any part of the Real Property, and any related guaranties.

“Legal Control” means the power, either directly or indirectly, to exercise the authority of the owner of the Real Property, either as or through the majority shareholder of the common stock of a corporation, the sole or managing general partner of a limited partnership, the managing general partner of a general partnership, or the sole manager of a limited liability company, provided the person or entity exercising such authority cannot be divested of such authority without its consent, either directly or indirectly, except for cause.

“Legal Requirements” means all laws, statutes, rules, regulations, ordinances, judicial decisions, administrative decisions, building permits, development permits, certificates of occupancy, or other requirements of any Governmental Authority.

“Loan Documents” means all documents evidencing the Loan or delivered in connection with the Loan, whether entered into at the closing of the Loan or in the future, including, without limitation, the Note, this Mortgage, the Absolute Assignment of Leases and Rents, the Carveout Guarantee and Indemnity, and the Environmental Indemnity Agreement.

“Maximum Lawful Rate” means the maximum lawful rate of interest that may be contracted for, charged, received or reserved by the Lender in accordance with the applicable laws of the State of Texas (or applicable federal law to the extent that it permits the Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law), taking into account all Charges.

“Monthly Escrow Payment” means the sum of the Monthly Imposition Requirement, the Monthly Insurance Premium Requirement, and the Monthly Reserve Requirement.

“Monthly Imposition Requirement” means one-twelfth (1/12th) of the annual amount that the Lender estimates will be required to permit the timely payment by the Lender of those Impositions that the Lender elects, from time to time, to include in the calculation of the Monthly Imposition Requirement. Such Impositions shall include real and personal property taxes and may include, at the Lender’s sole and absolute discretion, any Impositions that the Borrower has failed to pay on a timely basis during the term of the Loan. The Lender shall base its estimate on the most recent information supplied by the Borrower concerning future Impositions. If the Borrower fails to supply such information or if it is unavailable at the time of estimation, the Lender shall estimate future Impositions using historical information and an annual inflation factor equal to the lesser of five percent (5%) and t he maximum inflation factor permitted by law.

“Monthly Insurance Premium Requirement” means one-twelfth (1/12th) of the annual amount that the Lender estimates (based on available historical data and using, if future Insurance Premiums are as yet undeterminable, a five percent (5%) inflation factor) will be required to permit the timely payment of the Insurance Premiums by the Lender.

“Monthly Reserve Requirement” means the monthly payment amount which the Lender estimates will result, over the subsequent twelve (12) months, in the accumulation of a surplus in the Escrow Fund equal to the sum of the Monthly Imposition Requirement and the Monthly Insurance Premium Requirement.

“Note” means the promissory note dated of even date herewith to evidence the Indebtedness in the original principal amount of $5,877,950, together with all extensions, renewals and modifications.

“Notice” means a notice given in accordance with the provisions of Subsection 27.12.

“Obligations” means all of the obligations required to be performed under the terms and conditions of any of the Loan Documents by any Obligor.

“Obligor” means the Borrower, the Carveout Obligor, or any other Person that is liable under the Loan Documents for the payment of any portion of the Indebtedness, or the performance of any other obligation required to be performed under the terms and conditions of any of the Loan Documents, under any circumstances.

“Participations” means participation interests in the Loan Documents granted by the Lender.

“Permitted Control Group Member” shall mean any member of a group comprised of Apartment Investment and Management Company and trusts for the benefit of any of the foregoing persons.

“Permitted Encumbrances” means (A) the lien of taxes and assessments not yet due and payable and (B) those matters of public record listed as special exceptions in the Lender's title insurance policy insuring the priority of this Deed of Trust.

“Permitted Transfer” means a transfer specifically described in Section 14 as permitted.

“Person” means any individual, corporation, limited liability company, partnership, trust, unincorporated association, government, governmental authority or other entity.

“Property” means the Real Property and the Leases, Rents and Personal Property (as defined in Subsection 22.1 below).

“Qualified Property Manager” means either (A) a financially sound, professional property management company, experienced in managing properties similar in type and quality to the Real Property, and which is one of the top three institutional property management companies in the real estate market where the Real Property is located, based on the number of units under its management or (B) another property management company approved in writing by the Lender.

“Rating Agencies” means one or more credit rating agencies approved by Lender.

“Real Property” means the Land and the Improvements.

“REIT” means Apartment Investment and Management Company, a Maryland corporation.

“Rents” means all rents, income, receipts, issues and profits and other benefits paid or payable for using, leasing, licensing, possessing, operating from or in, residing in, selling, mining, extracting minerals from, or otherwise enjoying the Real Property, whether presently existing or arising in the future, to which the Borrower may now or hereafter become entitled or may demand or claim from the commencement of the Loan term through the time of the satisfaction of all of the Obligations, including security deposits, amounts drawn under letters of credit securing tenant obligations, minimum rents, additional rents, common area maintenance charges, parking revenues, deficiency rents, termination payments, space contraction payments, damages following default under a Lease, premiums payable by tenants upon their exercise of cancellation privileges, proceeds from lease guarantees, proceeds p ayable under any policy of insurance covering loss of rents resulting from untenantability caused by destruction or damage to the Real Property, all rights and claims of any kind which the Borrower has or may in the future have against the tenants under the Leases, lease guarantors, or any subtenants or other occupants of the Real Property, all proceeds of any sale of the Real Property in violation of the Loan Documents, any future award granted the Borrower in any court proceeding involving any such tenant in any bankruptcy, insolvency, or reorganization proceedings in any state or federal court, and any and all payments made by any such tenant in lieu of rent.

“Restoration” means (A) in the case of a casualty resulting in damage to or the destruction of the Improvements, the repair or rebuilding of the Improvements to their a condition that is at least equivalent to that as of the Effective Date, or (B) in the case of the condemnation of a portion of the Real Property, the completion of such work as may be necessary in order to remedy the effects of the condemnation so that the value and income-generating characteristics of the Real Property are restored.

“Securities” means mortgage pass-through certificates or other securities evidencing a beneficial interest in the Loan, issued in a rated or unrated public offering or private placement.

“Securitization” means the issuance of Securities.

4.

TITLE

The Borrower represents to and covenants with the Lender and with its successors and assigns that, at the point in time of the grant of the lien created by this Deed of Trust, the Borrower is well seized of good and indefeasible title to the Real Property, in fee simple absolute, subject to no lien or encumbrance except the Permitted Encumbrances. The Borrower warrants this estate and title to Trustee, his successors or substitutes in the Trust and his or their assigns, and the Lender and to its successors and assigns forever, against all lawful claims and demands of all persons. The Borrower shall maintain mortgagee title insurance issued by a solvent carrier, covering the Real Property in an amount at least equal to the amount of the Loan’s original principal balance. This Deed of Trust is and shall remain a valid and enforceable first lien on the Real Property, and if the validity or enforceability of this first lien is attacked by appropriate proceedings, the Borrower shall diligently and continuously defend it through appropriate proceedings. Should the Borrower fail to do so, the Lender may at the Borrower’s expense take all necessary action, including the engagement and compensation of legal counsel, the prosecution or defense of litigation, and the compromise or discharge of claims. THE BORROWER SHALL DEFEND, INDEMNIFY AND HOLD THE BENEFICIARY HARMLESS IN ANY SUIT OR PROCEEDING BROUGHT TO CHALLENGE OR ATTACK THE VALIDITY, ENFORCEABILITY OR PRIORITY OF THE LIEN GRANTED BY THIS DEED OF TRUST. If a prior construction, mechanics’ or materialmen’s lien on the Real Property arises by operation of statute during any construction or repair of the Improvements, the Borrower shall either cause the lien to be discharged by paying when due any amounts owed to such persons, or shall comply with Section 12 of this Deed of Trust.

5.

REPRESENTATIONS OF THE BORROWER

The Borrower represents to the Lender as follows:

5.1

LEGAL CONTROL

The Borrower and the Property are under the Legal Control of one or more Permitted Control Group Members.

5.2

FORMATION, EXISTENCE, GOOD STANDING

The Borrower is a limited partnership duly organized, validly existing and in good standing under the laws of Delaware and has obtained all licenses and permits and filed all statements of fictitious name and registrations necessary for the lawful operation of its business in Delaware.

5.3

QUALIFICATION TO DO BUSINESS

The Borrower is qualified to do business as a foreign limited partnership under the laws of Texas and has obtained all licenses and permits and filed all statements of fictitious name and registrations necessary for the lawful operation of its business in Texas.

5.4

POWER AND AUTHORITY

The Borrower has full power and authority to carry on limited partnership business as presently conducted, to own the Property, to execute and deliver the Loan Documents, and to perform limited partnership Obligations.

5.5

ANTI-TERRORISM REGULATIONS

No Borrower, Borrower Affiliate, or, to the Borrower’s actual knowledge, shareholder of the REIT or limited partner of the Carveout Obligor, is either a “Specially Designated National” or a “Blocked Person” as those terms are defined in the Office of Foreign Asset Control Regulations (31 CFR Section 500 et seq.).

5.6

DUE AUTHORIZATION

The Loan transaction and the performance of all of the Borrower’s Obligations have been duly authorized by all requisite partnership action, and each individual executing any Loan Document on behalf of the Borrower has been duly authorized to do so.

5.7

NO DEFAULT OR VIOLATIONS

To the best of the Borrower’s knowledge, the execution and performance of the Borrower’s Obligations will not result in any breach of, or constitute a default under, any contract, agreement, document or other instrument to which the Borrower is a party or by which the Borrower may be bound or affected, and to the best of the Borrower’s knowledge do not and will not violate or contravene any law to which the Borrower is subject; nor to the best of the Borrower’s knowledge do any such other instruments impose or contemplate any obligations which are or will be inconsistent with the Loan Documents.

5.8

NO FURTHER APPROVALS OR ACTIONS REQUIRED

To the best of the Borrower’s knowledge, no approval by, authorization of, or filing with any federal, state or municipal or other governmental commission, board or agency or other governmental authority is necessary in connection with the authorization, execution and delivery of the Loan Documents by the Borrower.

5.9

DUE EXECUTION AND DELIVERY

Each of the Loan Documents to which the Borrower is a party has been duly executed and delivered on behalf of the Borrower.

5.10

LEGAL, VALID, BINDING AND ENFORCEABLE

Each of the Loan Documents to which the Borrower is a party constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.

5.11

ACCURATE FINANCIAL INFORMATION

To the best of the Borrower’s knowledge, all financial information furnished by the Borrower to the Lender in connection with the application for the Loan is true, correct and complete in all material respects and does not omit to state any fact or circumstance necessary to make the statements in them not misleading, and there has been no material adverse change in the financial condition of the Borrower since the date of such financial information.

5.12

COMPLIANCE WITH LEGAL REQUIREMENTS

All governmental approvals and licenses required for the conduct of the Borrower’s business and for the maintenance and operation of the Real Property in compliance with applicable law are in full force and effect, and the Real Property is currently being operated in compliance with the Legal Requirements in all material respects.

5.13

CONTRACTS AND FRANCHISES

To the best of the Borrower’s knowledge, all contracts and franchises necessary for the conduct of the Borrower’s business and for the operation of the Real Property in accordance with good commercial practice are in force.

5.14

NO CONDEMNATION PROCEEDING

As of the Effective Date of this Deed of Trust, the Borrower has no knowledge of any present, pending or threatened condemnation proceeding or award affecting the Real Property.

5.15

NO CASUALTY

As of the Effective Date of this Deed of Trust, no damage to the Real Property by any fire or other casualty has occurred, other than damage that has been completely repaired in accordance with good commercial practice and in compliance with applicable law.

5.16

INDEPENDENCE OF THE REAL PROPERTY

The Real Property may be operated independently from other land and improvements not included within or located on the Land, and it is not necessary to own or control any property other than the Real Property in order to meet the obligations of the landlord under any Lease, or in order to comply with the Legal Requirements.

5.17

COMPLETE LOTS AND TAX PARCELS

The Land is comprised exclusively of tax parcels that are entirely included within the Land, and, if the Land is subdivided, of subdivision lots that are entirely included within the Land.

5.18

OWNERSHIP OF FIXTURES

The Borrower owns the Fixtures free of any encumbrances, including purchase money security interests, rights of lessors, and rights of sellers under conditional sales contracts or other financing arrangements.

5.19

COMMERCIAL PROPERTY

The Real Property is used as a multifamily apartment complex , and the Loan is for commercial purposes and has not been made for personal, family or household purposes.

5.20

REAL PROPERTY IS NOT HOMESTEAD PROPERTY

The Real Property is NOT HOMESTEAD PROPERTY of the Borrower or of the spouse of any person named as the Borrower.

5.21

PERFORMANCE UNDER DEVELOPMENT AGREEMENTS

To the best of the Borrower’s knowledge, all of the obligations of the owner of the Real Property due under the Development Agreements have been fully, timely and completely performed and such performance has been accepted by the related governmental agency or utility company, and no Governmental Authority has alleged that any default exists under any of the Development Agreements.

5.22

STATUS OF CERTAIN TITLE MATTERS

To the best of the Borrower’s knowledge, each of the Easements included within the Appurtenances (a) is valid and in full force and effect and may not be amended or terminated, except for cause, without the consent of the Borrower, (b) has not been amended or supplemented, (c) requires no approval of the Improvements that has not been obtained, (d) is free of defaults or alleged defaults, (e) does not provide for any assessment against the Real Property that has not been paid in full, and (f) has not been violated by the owner of the Real Property or, to the best of the Borrower’s knowledge, by any tenant of the Real Property.

5.23

NO PROHIBITED TRANSACTIONS

The Borrower represents to the Lender that either (a) the Borrower is not an “employee benefit plan” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, a “plan” within the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or an entity that is deemed to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of any such employee benefit plan or (b) the entering into of the Loan Documents, the acceptance of the Loan by the Borrower and the existence of the Loan will not result in a non-exempt prohibited transaction under §406 of ERISA or Section 4975 of the Code. The Borrower further warrants and covenants that the foregoing representation will remain true during the term of the Loan.

6.

COVENANTS

6.1

GOOD STANDING

The Borrower shall remain in good standing as a limited partnership under the laws of Delaware and shall maintain in force all statements of fictitious name and registrations necessary for the lawful operation of its business in Delaware during the term of the Loan.

6.2

QUALIFICATION TO DO BUSINESS

The Borrower shall remain qualified to do business as a foreign limited partnership under the laws of Texas and shall maintain in force all licenses and permits, filings and statements of fictitious name and registrations necessary for the lawful operation of its business in Texas.

6.3

NO DEFAULT OR VIOLATIONS

The Borrower shall not enter into any contract, agreement, document or other instrument, if the performance of the Borrower's Obligations would result in any breach of, or constitute a default under, any such contract, agreement, document or other instrument, or if the contract, agreement, document or other instrument would impose or contemplate any obligations the performance of which would result in a Default under the Loan Documents or would be inconsistent with the performance of the Borrower's Obligations.

6.4

PAYMENT AND PERFORMANCE

The Borrower shall pay the Indebtedness and perform all of its other Obligations, as and when the Loan Documents require such payment and performance.

6.5

PAYMENT OF IMPOSITIONS

The Borrower shall pay the Impositions on or before the last day on which they may be paid without penalty or interest, and shall, within thirty (30) days, furnish the Lender with a paid receipt or a cancelled check as evidence of payment. If the Lender does not receive such evidence, the Lender may obtain it directly. If it does so, the Lender will charge the Borrower an administrative fee of $250 for securing the evidence of payment. The payment of this fee shall be a demand obligation of the Borrower. The Borrower may meet the Imposition payment requirements of this Subsection 6.5 by remitting the Monthly Escrow Payments when due, by immediately providing Notice to the Lender of any new Imposition or increased Imposition unknown to the Lender, and by paying to the Lenderon demand any amount required to increase the Escrow Fund to an amount sufficient to permit the Lender to pay all Impositions from the Escrow Fund on time. If the Borrower wishes to contest the validity or amount of an Imposition, it may do so by complying with Section 12. If any new Legal Requirement (other than a general tax on income or on interest payments) taxes the Deed of Trust so that the yield on the Indebtedness would be reduced, and the Borrower may lawfully pay the tax or reimburse the Lender for its payment, the Borrower shall do so.

6.6

LEGAL CONTROL OF THE BORROWER

The Borrower shall remain under the Legal Control of one or more Permitted Control Group Members during the term of the Loan.

6.7

MANAGEMENT OF THE REAL PROPERTY

The Real Property shall be managed at all times by the Key Principal, by a property management company engaged by the Key Principal to manage the Real Property, or by a Qualified Property Manager.

6.8

MAINTENANCE OF THE REAL PROPERTY

The Borrower shall not commit or permit any waste of the Real Property as a physical or economic asset, and agrees to maintain in good repair the Improvements, including structures, roofs, mechanical systems, parking lots or garages, and other components of the Real Property that are necessary or desirable for the use of the Real Property, or which the Borrower as landlord under any Lease is required to maintain for the benefit of any tenant. In its performance of this Obligation, the Borrower shall promptly and in a good and workmanlike manner repair or restore, as required under Subsection 6.19, any elements of the Improvements that are damaged or destroyed. The Borrower shall also replace roofs, parking lots, mechanical systems, and other elements of the Improvements requiring periodic replacement. The Borrower shall carry out such replacements no less frequently than would a commercially reasonable owner intending to maintain the maximum income-generating potential of the Real Property over its reasonable economic life. The Borrower shall not, without the prior written consent of the Lender, demolish, reconfigure, or materially alter the structural elements of the Improvements, unless such an action is the obligation of the Borrower under a Lease approved by Lender or for which the Lender's approval is not required under the Absolute Assignment of Leases and Rents. The Lender agrees that any request for its consent to such an action shall be deemed given if the Lender does not respond within fifteen (15) Business Days to any written request for such a consent, if the request is accompanied by all materials required to permit the Lender to analyze the proposed action. Any provision in this or any other Section of this Deed of Trust or any of the other Loan Documents to the contrary notwithstanding, the Borrower’s compliance with the terms and conditions of any written asset management plan approved by t he Lender in writing shall constitute the Borrower’s compliance with its obligations under the Loan Documents to maintain, repair and furnish any apartment units in the Improvements that are or become vacant.  

6.9

USE OF THE REAL PROPERTY

The Borrower agrees that the Real Property may only be used as a residential apartment complex and for no other purpose. The Real Property may not be converted to a cooperative or condominium without Lender’s prior written consent, which consent may be withheld in Lender's sole and absolute discretion.

6.10

LEGAL REQUIREMENTS

The Borrower shall maintain in full force and effect all governmental approvals and licenses required for the conduct of the Borrower’s business and for the maintenance and operation of the Real Property in compliance with applicable law, and shall comply with all Legal Requirements relating to the Real Property at all times.

6.11

CONTRACTS AND FRANCHISES

The Borrower shall maintain in force all contracts and franchises necessary for the conduct of the Borrower’s business and for the operation of the Real Property in accordance with good commercial practice.

6.12

COVENANTS REGARDING CERTAIN TITLE MATTERS

The Borrower shall promptly pay, perform and observe all of its obligations under the Easements included within the Appurtenances or under reciprocal easement agreements, operating agreements, declarations, and restrictive covenants included in the Permitted Encumbrances, shall not modify or consent to the termination of any of them without the prior written consent of the Lender, shall promptly furnish the Lender with copies of all notices of default under them, and shall cause all covenants and conditions under them and benefiting the Real Property to be fully performed and observed.

6.13

INDEPENDENCE OF THE REAL PROPERTY

The Borrower shall maintain the independence of the Real Property from other land and improvements not included within or located on the Land. In fulfilling this covenant, the Borrower shall neither take any action which would make it necessary to own or control any property other than the Real Property in order to meet the obligations of the landlord under any Lease, or in order to comply with the Legal Requirements, nor take any action which would cause any land or improvements other than the Land and the Improvements to rely upon the Land or the Improvements for those purposes.

6.14

COMPLETE LOTS AND TAX PARCELS

The Borrower shall take no action that would result in the inclusion of any portion of the Land in a tax parcel or subdivision lot that is not entirely included within the Land.

6.15

COMMERCIAL PROPERTY

The Real Property shall be used for commercial purposes as a multifamily residential apartment complex and not by the Borrower  for residential, personal, family or household purposes.

6.16

REAL PROPERTY IS NOT HOMESTEAD PROPERTY

The Real Property shall NOT BECOME HOMESTEAD PROPERTY of the Borrower or of the spouse of any person named as the Borrower.

6.17

PERFORMANCE UNDER DEVELOPMENT AGREEMENTS

The Borrower shall fully, timely and completely perform all of the obligations of the owner of the Real Property due under the Development Agreements and shall cause no default under any of the Development Agreements.

6.18

STATUS OF CERTAIN TITLE MATTERS

The Borrower shall not take or fail to take any action with respect to the Easements included within the Appurtenances or the reciprocal easement agreements, operating agreements, declarations, and restrictive covenants included in the Permitted Encumbrances if, as the result of such an action or failure, the subject Easement or other title matter would (a) be rendered invalid or without force or effect, (b) be amended or supplemented without the consent of the Lender, (c) be placed in default or alleged default, (d) result in any lien against the Real Property, or (e) give rise to any assessment against the Real Property, unless immediately paid in full.

6.19

RESTORATION UPON CASUALTY OR CONDEMNATION

If a casualty or condemnation occurs, the Borrower shall promptly commence and diligently complete the Restoration of the Real Property, provided the related Insurance Proceeds or Condemnation Proceeds held by the Lender are available for Restoration under the terms of Sections 8.3 and 8.4.

6.20

PERFORMANCE OF LANDLORD OBLIGATIONS; MANAGEMENT STANDARD

The Borrower shall perform its obligations as landlord under the Leases, shall cause the Real Property to be professionally leased and managed in a manner that is consistent with good commercial practices for institutional owners of multifamily apartment projects (the “Management Standard”) and shall neither take any action, nor fail to take any action, if the action or failure would be inconsistent with the commercially reasonable management of the Real Property for the purpose of enhancing its long-term performance and value. The Borrower shall not, without the Lender’s written consent, extend, modify, declare a default under, terminate, or enter into any Lease of the Real Property, except as otherwise permitted under the Loan Documents.

6.21

FINANCIAL REPORTS AND OPERATING STATEMENTS

(a)

Maintenance of Books and Records

During the term of the Loan, the Borrower shall maintain complete and accurate accounting and operational records, including copies of all Leases and other material written contracts relating to the Real Property, copies of all tax statements, and evidence to support the payment of all material property-related expenses.

(b)

Delivery of Financial and Property-Related Information

Within one hundred twenty (120) days after the end of each of its fiscal years, or, if a Default exists, on demand by the Lender, the Borrower shall deliver to the Lender (A) copies of the financial statements of the Borrower, and to the extent the same are prepared and available for its general partner, such general partner, including balance sheets and earnings statements, (B) a complete and accurate operating statement for the Real Property, and (C) a complete rent roll, all in form satisfactory to the Lender. The rent roll must be certified by the Borrower to be true and correct and must include each tenant’s name, unit type and address, rent, lease expiration date, renewal options and related rental rates, delinquencies and vacancies. If the Borrower fails to deliver the items required in this Subsection, the Lender may engage an accounting firm to prepare the required items. The Borrower shall coo perate fully with any investigative audit required to permit the accounting firm to produce these items, and the fees and expenses incurred in connection with their preparation shall be paid on demand by the Borrower.

(c)

Effect of Failure to Deliver Financial and Property Reports

If no Default exists and the Borrower fails to provide the financial and property reports required under this Section within one hundred twenty (120) days of the close of any fiscal year, the Lender will provide a Notice of this failure and a thirty (30)-day opportunity to cure before a Default shall exist. All monthly payments of principal and interest under the Note that become due after this cure period has elapsed but before the reports are received by the Lender must be accompanied by a fee of .000834 times the principal balance of the Loan at the beginning of the previous month, regardless of whether the Notice has asserted that the failure constitutes a Default under this Deed of Trust. This fee is to compensate the Lender for (A) the increased risk resulting from the Lender’s inability to monitor and service the Loan using up-to-date information and (B) the reduced value and liquidity of the Loa n as a financial asset.

(d)

Certification of Information

The financial and operating statements provided under this Subsection need not, as an initial matter, be certified by an independent certified public accountant as having been prepared in accordance with generally accepted accounting principles, consistently applied, or, in the case of financial statements prepared on a cash or income tax basis, or of operating statements, as not materially misleading based on an audit conducted in accordance with generally accepted auditing standards. The Borrower shall, however certify that such statements are true and correct, and the Lender expressly reserves the right to require such a certification by an independent certified public accountant if a Default exists or if the Lender in the exercise of its reasonable discretion has reason to believe that any previously provided financial or operating statement is misleading in any material respect.

6.22

ESTOPPEL STATEMENTS

Upon request by the Lender, the Borrower shall, within ten (10) Business Days of Notice of the request, furnish to the Lender or to whom it may direct, a written statement acknowledging the amount of the Indebtedness and disclosing whether, to the best of the Borrower’s knowledge, any offsets or defenses exist against the Indebtedness. Thereafter, the Borrower shall be estopped from asserting any other offsets or defenses alleged to have arisen as of the date of the statement.

6.23

PROHIBITION ON CERTAIN DISTRIBUTIONS

If a Default exists under Subsection 10.1 or under any of Subparagraphs (b), (c), (d), (e) or (f) of Subsection 10.2, the Borrower shall not pay any dividend or make any partnership, trust or other distribution, and shall not make any payment or transfer any property in order to purchase, redeem or retire any interest in its beneficial interests or ownership.

6.24

USE OF LOAN PROCEEDS

The Loan proceeds shall be used solely for commercial purposes.

6.25

PROHIBITION ON CUTOFF NOTICES

The Borrower shall not issue any Notice to the Lender to the effect that liens on the Real Property after the date of the Notice will enjoy priority over the lien of this Deed of Trust.

6.26

PROHIBITED PERSON COMPLIANCE

Borrower warrants, represents and covenants that neither Borrower nor any Obligor nor any of their respective affiliated entities is or will be an entity or person (i) that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order 13224 issued on September 24, 2001 (“EO13224”), (ii) whose name appears on the United States Treasury Department's Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO 13224, or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in subparts [i] - - [iv] above are herein referred to as a “Prohibited Person”). Borrower covenants and agrees that neither Borrower, nor any Obligor nor any of their respective affiliated entities will (i) conduct any business, nor engage in any transaction or dealing, with any Prohibited Person, including, but not limited to, the making or receiving of any contribution of funds, goods, or services to or for the benefit of a Prohibited Person, or (ii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in EO13224. Borrower further covenants and agrees to deliver (from time to time) to Lender any such certification or other evidence as may be requested by Lender in its sole and absolute discretion, confirming that (i) neither Borrower nor any Obligor is a Prohibited Person and (ii) neither Borrower nor any Obligor has engaged in any business, transaction or dealings with a Prohibited Person, inc luding, but not limited to, the making or receiving of any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person. The representations and warranties in this Section regarding the current status of the Borrower and any Obligor are given to the Borrower’s actual knowledge.

6.27

BANKRUPTCY REMOTE COVENANTS

Borrower agrees to be bound by the bankruptcy remote entity covenants set forth in Exhibit B attached hereto. 

7.

INSURANCE REQUIREMENTS

At all times until the Indebtedness is paid in full, the Borrower shall maintain insurance coverage and administer insurance claims in compliance with this Section.

7.1

REQUIRED COVERAGES

(a)

Open Perils/Special Form/Special Perils Property

The Borrowershall maintain “Open Perils,” “Special Form,” or “Special Perils” property insurance coverage in an amount not less than one hundred percent (100%) of the replacement cost of all insurable elements of the Real Property and of all tangible Personal Property, with coinsurance waived, or if a coinsurance clause is in effect, with an agreed amount endorsement acceptable to the Lender. Coverage shall extend to the Real Property and to all tangible Personal Property.

(b)

Broad Form Boiler and Machinery

If any boiler or other machinery is located on or about the Real Property, the Borrowershall maintain broad form boiler and machinery coverage, including a form of business income coverage.

(c)

Flood

If the Real Property is located in a special flood hazard area (that is, an area within the 100-year floodplain) according to the most current flood insurance rate map issued by the Federal Emergency Management Agency and if flood insurance is available, the Borrower shall maintain flood insurance coverage on all insurable elements of Real Property and of all tangible Personal Property.

(d)

Business Interruption

The Borrower shall maintain a form of business income coverage in the amount of eighty percent (80%) of one year’s business income from the Property.

(e)

Comprehensive/General Liability

The Borrowershall maintain commercial general liability coverage (which may be in the form of umbrella/excess liability insurance) with a $1,000,000 combined single limit per occurrence and a minimum aggregate limit of $2,000,000.

(f)

Liquor Liability

The Borrower shall maintain liquor liability coverage, if applicable law may impose liability on those selling, serving, or giving alcoholic beverages to others and if such beverages will be sold, served or given on the Real Property by the Borrower.

(g)

Elective Coverages

The Lender may require additional coverages appropriate to the property type and site location. Additional coverages may include earthquake, windstorm, mine subsidence, sinkhole, personal property, supplemental liability, or coverages of other property-specific risks.

7.2

PRIMARY COVERAGE

Each coverage required under this Section shall be primary rather than contributing or secondary to the coverage Borrower may carry for other properties or risks, provided, however, that blanket coverage shall be acceptable if (a) the policy includes limits by property location and (b) the Lender determines, in the exercise of its sole and absolute discretion, that the amount of such coverage is sufficient in light of the other risks and properties insured under the blanket policy.

7.3

HOW THE LENDER SHALL BE NAMED

On all property insurance policies and coverages required under this Section (including coverage against loss of business income), the Lender must be named as “first mortgagee” under a standard mortgagee clause. On all liability policies and coverages, the Lender must be named as an “additional insured.” The Lender shall be referred to verbatim as follows: “Transamerica Occidental Life Insurance Company and its successors, assigns, and affiliates; as their interest may appear; c/o AEGON USA Realty Advisors, Inc.; Mortgage Loan Dept.; 4333 Edgewood Rd., NE; Cedar Rapids, Iowa  52499-5443.”

7.4

RATING

Each insurance carrier providing insurance required under this Section must have, independently of its parent’s or any reinsurer’s rating, a General Policyholder Rating of A, and a Financial Rating of IX or better, as reported in the most current issue of Best’s Insurance Guide, or as reported by Best on its internet web site.

7.5

DEDUCTIBLE

The maximum deductible on each required coverage or policy is $100,000.

7.6

NOTICES, CHANGES AND RENEWALS

All policies must require the insurance carrier to give the Lendera minimum of ten (10) days’ notice in the event of modification, cancellation or termination for nonpayment of premium and a minimum of thirty (30) days’ notice of nonrenewal. The Borrower shall report to the Lender immediately any material facts known to the Borrower that may adversely affect the appropriateness or enforceability of any insurance contract, including, without limitation, changes in the ownership or occupancy of the Real Property, any hazard to the Real Property and any matters that may give rise to any claim. Prior to expiration of any policy required under this Section, the Borrower shall provide either (a) an original or certified copy of the renewed policy, or (b) a “binder,” an Acord 28 (real property), Acord 27 (personal property) or Acord 25 (liability) certificate, or anot her document satisfactory to the Lender conferring on the Lender the rights and privileges of mortgagee. If the Borrower meets the foregoing requirement under clause (b), the Borrower shall use its best efforts to supply an original or certified copy of the original policy within ninety (90) days, and shall be obligated to do so within two hundred forty (240) days. All binders, certificates, documents, and original or certified copies of policies must name the Borrower as a named insured or as an additional insured, must include the complete and accurate property address and must bear the original signature of the issuing insurance agent.

7.7

UNEARNED PREMIUMS

If this Deed of Trust is foreclosed, the Lender may at its discretion cancel any of the insurance policies required under this Section and apply any unearned premiums to the Indebtedness.

7.8

FORCED PLACEMENT OF INSURANCE

If the Borrower fails to comply with the requirements of this Section, the Lender may, at its discretion, procure any required insurance. Any premiums paid for such insurance, or the allocable portion of any premium paid by the Lender under a blanket policy for such insurance, shall be a demand obligation under this Deed of Trust, and any unearned premiums under such insurance shall comprise Insurance Proceeds and therefore a portion of the Property.

7.9

INSURANCE DISCLOSURE NOTICE

TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE NOTICE: (A) BORROWER IS REQUIRED TO (i) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT SPECIFIED HEREIN; (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER OR OTHERWISE AS PROVIDED HEREIN; AND (iii) NAME LENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS AS PROVIDED HEREIN; (B) SUBJECT TO THE PROVISIONS HEREOF, BORROWER MUST, IF REQUIRED BY LENDER, DELIVER TO LENDER A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF INSURANCE PREMIUMS; AND (C) SUBJECT TO THE PROVISIONS HEREOF, IF BORROWER FAILS TO MEET ANY REQUIREMENT LISTED IN THE FOREGOING SUBPARTS (A) OR (B), LENDER MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF BORROWER AT BORROWER’S EXPENSE.

8.

INSURANCE AND CONDEMNATION PROCEEDS

8.1

ADJUSTMENT AND COMPROMISE OF CLAIMS AND AWARDS

The Borrower may settle any insurance claim or condemnation proceeding if the effect of the casualty or the condemnation may be remedied for $50,000 or less. If a greater sum is required, the Borrower may not settle any such claim or proceeding without the advance written consent of the Lender. If a Default exists, the Borrower may not settle any insurance claim or condemnation proceeding without the advance written consent of the Lender.

8.2

DIRECT PAYMENT TO THE LENDER OF PROCEEDS

If the Insurance Proceeds received in connection with a casualty or the Condemnation Proceeds received in respect of a condemnation exceed $50,000, or if there is a Default, then such proceeds shall be paid directly to the Lender. The Lender shall have the right to endorse instruments which evidence proceeds that it is entitled to receive directly.

8.3

AVAILABILITY TO THE BORROWER OF PROCEEDS

The Borrower shall have the right to use the Insurance Proceeds or the Condemnation Proceeds to carry out the Restoration of the Real Property, if the amount received is less than $250,000, subject to the conditions set forth in Subsections 8.4, 8.5, and 8.6 of this Section.

If the amount received in respect of a casualty or condemnation equals or exceeds $250,000, and if the Loan-to-Value ratio of the Property on completion will be sixty-five percent (65%) or less, as determined by the Lender in its discretion based on its estimate of the market value of the Real Property, the Lender shall receive such Insurance Proceeds or Condemnation Proceeds directly and hold them in a fund for Restoration subject to the conditions set forth in Subsections 8.4, 8.5, and 8.6 of this Section. If the Lender’s estimate of the market value of the Real Property implies a Loan-to-Value ratio of over 65%, and the Borrower disagrees with the Lender’s estimate, the Borrower may require that the Lender engage an independent appraiser (the “Fee Appraiser”) to prepare and submit to AEGON a full narrative appraisal report estimating the market value of the Real Property. The Fee Appra iser shall be certified in Texas and shall be a member of a national appraisal organization that has adopted the Uniform Standards of Professional Appraisal Practice (USPAP) established by the Appraisal Standards Board of the Appraisal Foundation. The Fee Appraiser will be required to use assumptions and limiting conditions established by the Lender and to prepare the appraisal in conformity with the Lender’s Appraisal Guidelines. For purposes of this Section, the independent appraiser’s value conclusion shall be binding on both the Lender and the Borrower. The Borrower shall have the right to make a prepayment of the Loan, without premium, sufficient to achieve this Loan-to-Value ratio. The independent fee appraisal shall be at the Borrower’s expense in connection with its review. The Lender may require that the Borrower deposit $10,000 with the Lender as security for these expenses or may pay the fee appraiser’s fee from the proceeds at its sole discretion.

Unless the Borrower has the right to use the Insurance Proceeds or the Condemnation Proceeds under the foregoing paragraphs, the Lender may, in its sole and absolute discretion, either apply them to the Loan balance or disburse them for the purposes of repair and reconstruction, or to remedy the effects of the condemnation. No prepayment premium will be charged on Insurance Proceeds or Condemnation Proceeds applied to reduce the principal balance of the Loan.

8.4

CONDITIONS TO AVAILABILITY OF PROCEEDS

The Lender shall have no obligation to release Insurance Proceeds or Condemnation Proceeds to the Borrower, and may hold such amounts as additional security for the Loan, if (a) a Default exists, (b) the Lender has delivered to the Borrower Notice of any act, omission or circumstance that will, if uncured, become a Default, and the required cure has not been effected or (c) if the Insurance Proceeds or Condemnation Proceeds received by the Lender and any other funds deposited by the Borrower with the Lender are insufficient, as determined by the Lender in its reasonable discretion, to complete the Restoration. If a Default exists, the Lender may at its sole and absolute discretion apply such Insurance Proceeds and Condemnation Proceeds to the full or partial cure of the Default.

8.5

GROSS UP OF RESTORATION FUND; PERMITTED MEZZANINE FINANCING

If the Lender reasonably determines that the Insurance Proceeds or Condemnation Proceeds received in respect of a casualty or a condemnation, as the case may be, would be insufficient to permit the Borrower to effect the Restoration, then the Borrower shall use reasonable efforts to secure such additional funds as the Lender determines are necessary to effect the Restoration. The Lender agrees to permit the Borrower to secure mezzanine financing in order to meet its obligation under this Subsection. The mezzanine loan may be secured by a pledge of interests in the Borrower, subject to an inter-creditor agreement on market terms for securitized loans.

8.6

DRAW REQUIREMENTS

The Borrower’s right to receive Insurance Proceeds and Condemnation Proceeds held by the Lender under this Section shall be conditioned on the Lender’s reasonable approval of plans and specifications for the Restoration. Each draw shall be in the minimum amount of $50,000. Draw requests shall be accompanied by customary evidence of construction completion, and by endorsements to the Lender’s mortgagee title insurance coverage insuring the absence of construction, mechanics’ or materialmen’s liens. Draws based on partial completion of the Restoration shall be subject to a ten percent (10%) holdback. All transactional expenses shall be paid by the Borrower.

9.

ESCROW FUND

The Borrower shall pay the Monthly Escrow Payment on the first (1st) day of every month, commencing with the month in which the first regular payment of principal and interest is due. The Lender shall hold Monthly Escrow Payments in a non-interest-bearing fund from which the Lender will pay on a timely basis those Escrow Expenses that the Lender has anticipated will become payable on a regular basis during the Loan’s term, and on which the Lender has based its determination of the Monthly Imposition Requirement, the Monthly Insurance Premium Requirement and the Monthly Reserve Requirement. The Escrow Fund will be maintained as an accounting entry in the Lender’s general account, where it may be commingled with the Lender’s other funds. The Lender may reanalyze the projected Escrow Expenses from time to time and shall advise the Borrower of any change in the amount of the Monthly Escrow Payment. Upon the foreclosure of this Deed of Trust, the delivery of a deed in lieu of foreclosure, or the payoff of the Loan, the Lender shall apply amounts in the Escrow Fund, net of accrued Escrow Expenses, to the Indebtedness. The Lender shall remit any amounts in excess of the Indebtedness to the Borrower.

10.

DEFAULT

10.1

PAYMENT DEFAULTS

A “Default” shall exist without Notice upon the occurrence of any of the following events:

(a)

Scheduled Payments

The Borrower’s failure to pay, or to cause to be paid, (i) any regular monthly payment of interest under the Note, together with any required Monthly Escrow Payment, on or before the tenth (10^th) day of the month in which it is due or (ii) any other scheduled payment under the Note, this Deed of Trust or any other Loan Document within ten (10) days of the date when due.

(b)

Payment at Maturity

The Borrower’s failure to pay, or to cause to be paid, the Indebtedness when the Loan matures by acceleration under Section 16, because of a transfer or encumbrance under Section 13, or by lapse of time.

(c)

Demand Obligations

The Borrower’s failure to pay, or to cause to be paid, within five (5) Business Days of the Lender’s demand, any other amount required under the Note, this Deed of Trust or any of the other Loan Documents.

10.2

INCURABLE NON-MONETARY DEFAULT

A Default shall exist upon any of the following (each of which is an “Incurable Non-Monetary Default”):

(a)

Material Untruth or Misrepresentation

The Lender’s discovery that any representation made by the Borrower in any Loan Document was materially untrue or misleading when made, if the misrepresentation either was intentional or is not capable of being cured as described in Subsection 10.3(a) below.

(b)

Due on Sale or Encumbrance

The occurrence of any sale, conveyance, transfer or vesting or any Prohibited Structural Change that would result in the Loan becoming immediately due and payable at the Lender’s option under Section 13.

(c)

Voluntary Bankruptcy Filing

The filing by the Borrower of a petition in bankruptcy or for relief from creditors under any present or future law that affords general protection from creditors.

(d)

Insolvency

The failure of the Borrower generally to pay its debts as they become due, its admission in writing to an inability so to pay its debts, the making by the Borrower of a general assignment for the benefit of creditors, or a judicial determination that the Borrower is insolvent.

(e)

Receivership

The appointment of a receiver or trustee to take possession of any of the assets of the Borrower.

(f)

Levy or Attachment

The taking or seizure of any material portion of the Property under levy of execution or attachment.

(g)

Lien

The filing against the Real Property of any lien or claim of lien for the performance of work or the supply of materials, or the filing of any federal, state or local tax lien against the Borrower, or against the Real Property, unless the Borrower promptly complies with Section 12 of this Deed of Trust.

(h)

Defaults under other Loan Documents

The existence of any default under any other Loan Document, provided any required Notice of such default has been given and any applicable cure period has expired.

(i)

Dissolution or Liquidation

The Borrower shall initiate the commencement of a proceeding for its dissolution or liquidation, and such proceeding shall not be dismissed within thirty (30) days, or the Borrower shall suffer the commencement of a proceeding for its dissolution or liquidation, and such proceeding shall not be dismissed within ninety (90) days, or the Borrower shall cease to exist as a legal entity (unless resulting in a Permitted Transfer).

10.3

CURABLE NON-MONETARY DEFAULT

A Default shall exist, following the cure periods specified below, under the following circumstances:

(a)

Unintentional Misrepresentations that are Capable of Being Cured

A “Default” shall exist, with Notice specifying such misrepresentation, if the Lender discovers that the Borrower has unintentionally made any material misrepresentation that is capable of being cured, unless the Borrower promptly commences and diligently pursues a cure of the misrepresentation approved by the Lender, and completes the cure within thirty (30) days. Any such cure shall place the Lender in substantially the same risk position that would have existed had the false representation been true when made.

(b)

Involuntary Bankruptcy or Similar Filing

The Borrower becomes the subject of any petition or action seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief, or that may result in a composition of its debts, provide for the marshaling of the Borrower’s assets for the satisfaction of its debts, or result in the judicially ordered sale of the Borrower’s assets for the purpose of satisfying its obligations to creditors, unless a motion for the dismissal of the petition or other action is filed within ten (10) days and results in its dismissal within seventy-five (75) days of the filing of the petition or other action.

(c)

Entry of a Material Judgment

Any judgment is entered against the Borrower or any other Obligor, and the judgment may materially and adversely affect the value, use or operation of the Real Property, unless the judgment is satisfied within fifteen (15) business days.

(d)

Other Defaults

The Borrower fails to observe any promise or covenant made in this Deed of Trust, unless the failure results in a Default described elsewhere in this Section 13, provided the Lender delivers written Notice to the Borrower of the existence of such an act, omission or circumstance, and that such an act, omission or circumstance shall constitute a Default under the Loan Documents unless the Borrower promptly initiates an effort to cure the potential Default, pursues the cure diligently and continuously, and succeeds in effecting the cure within one hundred twenty (120) days of its receipt of Notice. The Lender shall afford the Borrower an additional period of one hundred twenty (120) days in cases where construction or repair is needed to cure the potential Default, and the cure cannot be completed within the first one hundred twenty (120) day cure period. During the cure period, the Borrower has the obligation t o provide on demand satisfactory documentation of its effort to cure, and, upon completion, evidence that the cure has been achieved. All notice and cure periods provided in this Deed of Trust shall run concurrently with any notice or cure periods provided by law and in any of the other Loan Documents.

11.

RIGHT TO CURE

The Lender shall have the right to cure any Default. The expenses of doing so shall be part of the Indebtedness, and the Borrower shall pay them to the Lender on demand.

12.

CONTEST RIGHTS

The Borrower may secure the right to contest Impositions and construction, mechanics’ or materialmen’s liens, through appropriate proceedings conducted in good faith, by either (A) depositing with the Lender an amount equal to one hundred twenty five percent (125%) of the amount of the Imposition or the lien, or (B) obtaining and maintaining in effect a bond issued by a surety acceptable to the Lender, in an amount equal to the greater of (i) the amount of a required deposit under clause (A) above and (ii) the amount required by the surety or by the court in order to obtain a court order staying the foreclosure of the lien pending resolution of the dispute, and releasing the lien of record. The proceeds of such a bond must be payable directly to the Lender. The surety issuing such a bond must be acceptable to the Lender in its reasonable discretion. After such a deposit is made or bond issued, the B orrower shall promptly commence the contest of the lien and continuously pursue that contest in good faith and with reasonable diligence. If the contest of the related Imposition or lien is unsuccessful, any deposits or bond proceeds shall be used to pay the Imposition or to satisfy the obligation from which the lien has arisen. Any surplus shall be refunded to the Borrower.

13.

DUE ON TRANSFER OR ENCUMBRANCE

Upon the sale or transfer of any portion of the Real Property or any other conveyance, transfer or vesting of any direct or indirect interest in the Borrower or the Property, including (i) the direct or indirect transfer of, or the granting of a security interest in, the ownership of the Borrower, (ii) any encumbrance (other than a Permitted Encumbrance) of the Real Property (unless the Borrower contests the encumbrance in compliance with Section 12) and (iii) the lease, license or granting of any security interest in the Personal Property, the Indebtedness shall, at the Lender’s option, become immediately due and payable upon Notice to the Borrower, unless the sale, conveyance, transfer or vesting is a Permitted Transfer or is permitted by Section 8.5.

14.

DUE ON SALE EXCEPTIONS

The following transfers and encumbrances shall constitute Permitted Transfers:

14.1

PUBLICLY TRADED SHARES OF THE REIT

The public trading of the shares of the REIT on the New York Stock Exchange.

14.2

LIMITED PARTNERSHIP TRANSFERS OF THE CARVEOUT OBLIGOR

The transfer of limited partnership interests of the Carveout Obligor, provided the REIT maintains direct or indirect ownership of more than 75% of the Carveout Obligor’s limited partnership interests and the REIT continues to have Legal Control of the Borrower.

14.3

PERMITTED TRANSFERS OF CERTAIN PASSIVE INTERESTS

Certain other transfers of direct or indirect interests in the Borrower (each, a “Qualified Passive Interest Transfer”). A Qualified Passive Interest Transfer is any transfer of a direct or indirect interest in the Borrower, if, following the transfer, (i) the Real Property remains under the Legal Control of the REIT; (ii) the REIT maintains Legal Control of the Borrower, and (iii) the Carveout Obligor meets the Net Worth Requirement.

14.4

PERMITTED TRANSFER TO A JOINT VENTURE

The Borrower shall have the right, on one occasion during the term of the Loan, to sell or transfer the Property in a transaction approved by the Lender. The Lender agrees that such a transfer shall be a Permitted Transfer if the following conditions are satisfied:

(a)

No Default

No Default shall exist, and no act, omission or circumstance shall exist which, if uncured following Notice and the passage of time, would become a Default.

(b)

Request and Supporting Materials

The Lender shall receive a written request for its approval at least thirty (30) days before the proposed transfer. The request shall specify the identity of the proposed transferee and the material economic terms of the transaction, and shall be accompanied by the financial statements, tax returns, and organizational documents of the proposed transferee and its principals.

(c)

Joint Venture

The proposed transferee shall be a newly formed, joint venture of which the REIT has Legal Control and beneficial ownership of more than ten percent (10%). Such joint venture shall be formed as a special purpose entity or otherwise as approved by Lender.  Approval of the proposed transferee shall be limited to verification that the entity meets the foregoing requirements, based on review of the borrowing structure and organizational documents; provided, however, the Lender expressly reserves the right to withhold its approval of the proposed transfer if any of principals of the proposed transferee is or has been the subject of any bankruptcy, insolvency, or similar proceeding.

(d)

Assumption Agreement

Under the terms of the proposed transfer, the proposed transferee shall assume the Loan, without modification, under the terms of an assumption agreement and additional documentation reasonably satisfactory to the Lender in form and substance.

(e)

Title Insurance Endorsement

The Borrower shall agree to provide an endorsement to the Lender’s mortgagee title insurance policy, insuring the continued validity and priority of this Deed of Trust following the assumption.

(f)

Assumption Fee

The Lender shall receive an assumption fee equal to the greater of (i) $7,500 and (ii) of one-quarter percent (0.25%) of the outstanding balance of the Loan, and the Borrower shall agree to reimburse the Lender’s out-of-pocket expenses incurred in connection with the proposed transfer, including title updates and endorsement charges, recording fees, any applicable taxes and attorneys’ fees, regardless of whether the transfer is consummated.

15.

NOTICE OF ABSOLUTE ASSIGNMENT OF LEASES AND RENTS

Under the Absolute Assignment of Leases and Rents, the Borrower has assigned to the Lender, and to its successors and assigns, all of the Borrower’s right and title to, and interest in, the Leases, including all rights under the Leases and all benefits to be derived from them. The rights assigned include all authority of the Borrower to modify or terminate Leases, or to exercise any remedies, and the benefits assigned include all Rents. This assignment is present and absolute, but under the terms of the Absolute Assignment of Leases and Rents, the Lender has granted the Borrower a conditional license to collect and use the Rents, and to exercise the rights assigned, in a manner consistent with the Obligations, all as more particularly set forth in the Absolute Assignment of Leases and Rents. The Lender may, however, terminate the license by written Notice to the Borrower on certain conditions set forth i n the Absolute Assignment of Leases and Rents.

16.

ACCELERATION

If a Default exists, the Lender may, at its option, declare the unpaid principal balance of the Note to be immediately due and payable, together with all accrued interest on the Indebtedness, all costs of collection (including reasonable attorneys’ fees and expenses) and all other charges due and payable by the Borrower under the Note or any other Loan Document. If the subject Default has arisen from a failure by the Borrower to make a regular monthly payment of principal and interest, the Lender shall not accelerate the Indebtedness unless the Lender shall have given the Borrower at least three (3) Business Days’ advance Notice of its intent to do so.

If the subject Default is curable and non-monetary in nature, the Lender shall exercise its option to accelerate only by giving Notice of acceleration to the Borrower. The Lender shall not give any such Notice of acceleration until (a) the Borrower has been given any required Notice of the prospective Default and (b) any applicable cure period has expired.

Except as expressly described in this Section, no notice of acceleration shall be required in order for the Lender to exercise its option to accelerate the Indebtedness in the event of Default.

17.

RIGHTS OF ENTRY AND TO OPERATE

17.1

ENTRY ON REAL PROPERTY

If a Default exists, the Lender may, to the extent permitted by law, enter upon the Real Property and take exclusive possession of the Real Property and of all books, records and accounts, all without Notice and without being guilty of trespass, but subject to the rights of tenants in possession under the Leases. If the Borrower remains in possession of all or any part of the Property after Default and without the Lender’s prior written consent, the Lender may, without Notice to the Borrower, invoke any and all legal remedies to dispossess the Borrower, including specifically one or more actions for forcible entry and detainer, trespass to try title and writ of restitution.

17.2

OPERATION OF REAL PROPERTY

Following Default, the Lender may hold, lease, manage, operate or otherwise use or permit the use of the Real Property, either itself or by other persons, firms or entities, in such manner, for such time and upon such other terms as the Lender may deem to be prudent under the circumstances (making such repairs, alterations, additions and improvements thereto and taking any and all other action with reference thereto, from time to time, as the Lender deems prudent), and apply all Rents and other amounts collected by the Lender in accordance with the provisions of the Absolute Assignment of Leases and Rents.

18.

RECEIVERSHIP

Following Default, the Lender, at Lender’s election and by or through the Trustee, his successors or substitutes in the Trust and his or their assigns or otherwise, may apply to a court of competent jurisdiction for the appointment of a receiver of the Property, ex parte without Notice to the Borrower, whether or not the value of the Property exceeds the Indebtedness, whether or not waste or deterioration of the Real Property has occurred, and whether or not other arguments based on equity would justify the appointment. The Borrower irrevocably, with knowledge and for valuable consideration, consents to such an appointment. Any such receiver shall have all the rights and powers customarily given to receivers in Texas, including the rights and powers granted to the Lender and Trustee, his successors or substitutes in the Trust and his or their assigns by this Deed of Trust, the power to maintain, lease an d operate the Real Property on terms approved by the court, and the power to collect the Rents and apply them to the Indebtedness or otherwise as the court may direct. Once appointed, a receiver may at the Lender’s option remain in place until the Indebtedness has been paid in full.

19.

FORECLOSURE; POWER OF SALE

19.1

AVAILABILITY OF REMEDIES

Upon Default, Trustee, his successors or substitutes in the Trust and his or their assigns or the Lender may immediately proceed to foreclose the lien of this Deed of Trust, against all or part of the Property, or to sell the Property, by judicial or nonjudicial foreclosure in accordance with the laws of Texas and may pursue any other remedy available to commercial mortgage lenders under the laws of Texas.  It shall be the duty of the Trustee and of his successors and substitutes in the Trust, on Lender’s request (which request is hereby presumed) to enforce the Trust by selling the Property as is provided in this Deed of Trust.

19.2

PUBLIC SALE

Trustee, his successors or substitutes in the Trust and his or their assigns is hereby authorized and empowered, and it shall be Trustee, his successors or substitutes in the Trust and his or their assigns’ special duty, upon such request of Lender, to sell the Property, or any part thereof, at public auction to the highest bidder for cash, with or without having taken possession of same. Any such sale (including notice thereof) shall comply with the applicable requirements, at the time of the sale, of Section 51.002 of the Texas Property Code or, if and to the extent such statute is not then in force, with the applicable requirements, at the time of the sale, of the successor statute or statutes, if any, governing sales of Texas real property under powers of sale conferred by deeds of trust. If there is no statute in force at the time of the sale governing sales of Texas real property under powers of s ale conferred by deeds of trust, such sale shall comply with applicable law, at the time of the sale, governing sales of Texas real property under powers of sale conferred by deeds of trust.

19.3

RIGHT TO REQUIRE PROOF OF FINANCIAL ABILITY AND/OR CASH BID

At any time during the bidding, the Trustee, his successors or substitutes in the Trust and his or their assigns may require a bidding party (A) to disclose its full name, state and city of residence, occupation, and specific business office location, and the name and address of the principal the bidding party is representing (if applicable), and (B) to demonstrate reasonable evidence of the bidding party’s financial ability (or, if applicable, the financial ability of the principal of such bidding party), as a condition to the bidding party submitting bids at the foreclosure sale. If any such bidding party (the “Questioned Bidder”) declines to comply with the Trustee, his successors or substitutes in the Trust and his or their assigns’ requirement in this regard, or if such Questioned Bidder does respond but the Trustee, his successors or substitutes in the Trust and his or their assigns, in Trustee, his successors or substitutes in the Trust and his or their assigns’ sole and absolute discretion, deems the information or the evidence of the financial ability of the Questioned Bidder (or, if applicable, the principal of such bidding party) to be inadequate, then the Trustee, his successors or substitutes in the Trust and his or their assigns may continue the bidding with reservation; and in such event (1) the Trustee, his successors or substitutes in the Trust and his or their assigns shall be authorized to caution the Questioned Bidder concerning the legal obligations to be incurred in submitting bids, and (2) if the Questioned Bidder is not the highest bidder at the sale, or if having been the highest bidder the Questioned Bidder fails to deliver the cash purchase price payment promptly to the Trustee, his successors or substitutes in the Trust and his or their assigns, all bids by the Questioned Bidder shall be null and void. The Trustee, his successors or substitutes in the Trust and his or their assigns may, in Trustee, his successors or substitutes in the Trust and his or their assigns’ sole and absolute discretion, determine that a credit bid may be in the best interest of the Borrower and Lender, and elect to sell the Property for credit or for a combination of cash and credit; provided, however, that the Trustee, his successors or substitutes in the Trust and his or their assigns shall have no obligation to accept any bid except an all cash bid. In the event the Trustee, his successors or substitutes in the Trust and his or their assigns requires a cash bid and cash is not delivered within a reasonable time after conclusion of the bidding process, as specified by the Trustee, his successors or substitutes in the Trust and his or their assigns, but in no event later than 3:45 p.m. local time on the day of sale, then said contingent sale shall be null and void, the bidding process may be recommenced, and any subsequent bids or sale shall be made as if no prior bids were made or accepted.

19.4

SALE SUBJECT TO UNMATURED INDEBTEDNESS

In addition to the rights and powers of sale granted under the preceding provisions of this subsection, if default is made in the payment of any installment of the Indebtedness, Lender may, at Lender’s option, at once or at any time thereafter while any matured installment remains unpaid, without declaring the entire Indebtedness to be due and payable, orally or in writing direct Trustee, his successors or substitutes in the Trust and his or their assigns to enforce this trust and to sell the Property subject to such unmatured Indebtedness and to the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of such unmatured Indebtedness, in the same manner, all as provided in the preceding provisions of this subsection. Sales made without maturing the Indebtedness may be made hereunder whenever there is a default in the payment of any installment of the Indebte dness, without exhausting the power of sale granted hereby, and without affecting in any way the power of sale granted under this subsection, the unmatured balance of the Indebtedness or the rights, powers, liens, security interests, and assignments securing or providing recourse for payment of the Indebtedness.

19.5

PARTIAL FORECLOSURE

Sale of a part of the Property shall not exhaust the power of sale, but sales may be made from time to time until the Indebtedness is paid and the Obligations are performed and discharged in full. It is intended by each of the foregoing provisions of this subsection that Trustee, his successors or substitutes in the Trust and his or their assigns may, after any request or direction by Lender, sell not only the Land and the Improvements, but also the Fixtures and Personal Property and other interests constituting a part of the Property or any part thereof, along with the Land and the Improvements or any part thereof, as a unit and as a part of a single sale, or may sell at any time or from time to time any part or parts of the Property separately from the remainder of the Property. It shall not be necessary to have present or to exhibit at any sale any of the Property.

19.6

TRUSTEE’S DEEDS

After any sale under this subsection, Trustee, his successors or substitutes in the Trust and his or their assigns shall make good and sufficient deeds, assignments, and other conveyances to the purchaser or purchasers thereunder in the name of Borrower, conveying the Property or any part thereof so sold to the purchaser or purchasers with general warranty of title by Borrower. It is agreed that in any deeds, assignments or other conveyances given by Trustee, his successors or substitutes in the Trust and his or their assigns, any and all statements of fact or other recitals therein made as to the identity of Lender, the occurrence or existence of any Default, the notice of intention to accelerate, or acceleration of, the maturity of the Indebtedness, the request to sell, notice of sale, time, place, terms and manner of sale, and receipt, distribution, and application of the money realized therefrom, the due and proper appointment of a substitute trustee, and without being limited by the foregoing, any other act or thing having been duly done by or on behalf of Lender or by or on behalf of Trustee, his successors or substitutes in the Trust and his or their assigns, shall be taken by all courts of law and equity as prima facie evidence that such statements or recitals state true, correct, and complete facts and are without further question to be so accepted, and Borrower does hereby ratify and confirm any and all acts that Trustee, his successors or substitutes in the Trust and his or their assigns may lawfully do in the premises by virtue hereof.

19.7

WAIVER OF DEFICIENCY STATUTE

In the event of an interest in any of the Property is foreclosed upon pursuant to a judicial or nonjudicial foreclosure sale, Borrower agrees as follows. Notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 of the Texas Property Code (as the same may be amended from time to time), and to the extent permitted by law, Borrower agrees that Lender shall be entitled to seek a deficiency judgment from Borrower and any other party obligated on the indebtedness secured hereby equal to the difference between the amount owing on the indebtedness secured hereby and the amount for which the Property was sold pursuant to judicial or nonjudicial foreclosure sale, but not for an amount in excess of the Carveout Obligations. Borrower expressly recognizes that this section constitutes a waiver of the above-cited provisions of the Texas Property Code which would otherwise permit Borrower and other persons agai nst whom recovery of deficiencies is sought or Obligor independently (even absent the initiation of deficiency proceedings against them) to present competent evidence of the fair market value of the Property as of the date of the foreclosure sale and offset against any deficiency the amount by which the foreclosure sale price is determined to be less than such fair market value. Borrower further recognizes and agrees that this waiver creates an irrebuttable presumption that the foreclosure sale price is equal to the fair market value of the Property for purposes of calculating deficiencies owed by Borrower, Obligor and others against whom recovery of a deficiency is sought. Alternatively, in the event the waiver provided for above is determined by a court of competent jurisdiction to be unenforceable, the following shall be the basis for the finder of fact’s determination of the fair market value of the Property as of the date of the foreclosure sale in proceedings governed by Sections 51.003, 51.004 an d 51.005 of the Texas Property Code (as amended from time to time):  (i) the Property shall be valued in an “as is” condition as of the date of the foreclosure sale, without any assumption or expectation that the Property will be repaired or improved in any manner before a resale of the Property after foreclosure; (ii) the valuation shall be based upon an assumption that the foreclosure purchaser desires a resale of the Property for cash promptly (but no later than twelve (12) months following the foreclosure sale; (iii) all reasonable closing costs customarily borne by the seller in commercial real estate transactions should be deducted from the gross fair market value of the Property, including, without limitation, brokerage commissions, title insurance, a survey of the Property, tax prorations, attorneys’ fees, and marketing costs; (iv) the gross fair market value of the Property shall be further discounted to account for any estimated holding costs associated with maintaining the Prop erty pending sale, including, without limitation, utilities expenses, property management fees, taxes and assessments (to the extent not accounted for in (iii) above), and other maintenance, operational and ownership expenses; and (v) any expert opinion testimony given or considered in connection with a determination of the fair market value of the Property must be given by persons having at least five (5) years experience in appraising property similar to the Property and who have conducted and prepared a complete written appraisal of the Property taking into consideration the factors set forth above.

20.

WAIVERS

To the maximum extent permitted by law, the Borrower irrevocably and unconditionally WAIVES and RELEASES any present or future rights (a) of reinstatement or redemption (b) that may exempt the Property from any civil process, (c) to appraisal or valuation of the Property, (d) to extension of time for payment, (e) that may subject the Lender’s exercise of its remedies to the administration of any decedent’s estate or to any partition or liquidation action, (f) to any homestead and exemption rights provided by the Constitution and laws of the United States and of Texas, (g) to notice of acceleration or notice of intent to accelerate (other than as expressly stated herein), and (h) that in any way would delay or defeat the right of the Lender to cause the sale of the Real Property for the purpose of satisfying the Indebtedness. The Borrower agrees that the price paid at a lawful foreclosure sale, whet her by the Lender or by a third party, and whether paid through cancellation of all or a portion of the Indebtedness or in cash, shall conclusively establish the value of the Real Property.

BORROWER expressly WAIVES and RELINQUISHES any right or remedy which it may have or be able to assert by reason of the provisions of Chapter 34 of the Business and Commerce Code of the State of Texas pertaining to the rights and remedies of sureties. To the maximum extent permitted by applicable law, BORROWER hereby WAIVES and RELEASES all rights, remedies, claims and defenses based upon or related to Sections 51.003, 51.004 and 51.005 of the Property Code of the State of Texas to the extent the same pertain or may pertain to any enforcement of this Deed of Trust.

The foregoing waivers shall apply to and bind any party assuming the Obligations of the Borrower under this Deed of Trust.

21.

EXCULPATION CLAUSE AND CARVEOUT OBLIGATIONS

The Lender agrees that it shall not seek to enforce any monetary judgment with respect to any Obligation against the Borrower except through recourse to the Property, unless the Obligation from which the judgment arises is a Carveout Obligation. The Carveout Obligations include (a) the obligation to repay any portion of the Indebtedness that arises because the Lender has advanced funds or incurred expenses in respect of any of the “Carveouts” (as defined below), (b) the obligation to repay the entire Indebtedness, if the Lender’s exculpation of the Borrower from personal liability under this Section has become void as set forth below, (c) the obligation to indemnify the Lender in respect of its actual damages suffered in connection with a Carveout, and (d) the obligation to defend and hold the Lender harmless from and against any claims, judgments, causes of action or proceedings arising from a Carveout. The Carveouts are:

(ii)

fraud or material written misrepresentation;

(iii)

waste of the Property (which shall include damage, destruction or disrepair of the Real Property caused by a willful act or grossly negligent omission of the Borrower, but shall exclude ordinary wear and tear in the absence of gross negligence);

(iv)

misappropriation of tenant security deposits (including proceeds of tenant letters of credit), Insurance Proceeds or Condemnation Proceeds;

(v)

failure to pay property taxes, assessments or other lienable Impositions;

(vi)

failure to pay to the Lender all Rents, income and profits (including any rent collected more than one month in advance, or any rent for the last month of the lease term, under any Lease in force at the time of Default), net of reasonable and customary operating expenses, received in respect of a period when the Loan is in Default;

(vii)

removal from the Real Property of Fixtures or Personal Property, unless replaced in a commercially reasonable manner;

(viii)

the out-of-pocket expenses of enforcing the Loan Documents following Default, not including expenses incurred after the Borrower has agreed in writing to transfer the Real Property to the Lender by the Lender’s choice of either an uncontested foreclosure or delivery of a deed in lieu of foreclosure;

(ix)

terminating or amending a Lease in violation of the Loan Documents; and

(x)

any liability of the Borrower under the Environmental Indemnity Agreement.

The Lender’s exculpation of the Borrower from personal liability for the repayment of the Indebtedness evidenced by this Note shall be void without Notice if the Borrower (A) voluntarily transfers or creates any voluntary lien on the Property in violation of the Deed of Trust, or (B) files a voluntary petition for reorganization under Title 11 of the United States Code (or under any other present or future law, domestic or foreign, relating to bankruptcy, insolvency, reorganization proceedings or otherwise similarly affecting the rights of creditors), and has not offered, prior to the filing, to enter into the Lender’s choice of either an agreement to permit an uncontested foreclosure, or an agreement to deliver a deed in lieu of foreclosure within sixty (60) days of the Lender’s acceptance of the offer. After the Lender accepts such an offer, default by the Borrower in fulfilling the terms of th e accepted offer shall trigger personal liability for the entire Indebtedness. No such offer shall be conditioned on any payment by the Lender, on the release of any Obligor from any Obligation, or on any other concession.

22.

SECURITY AGREEMENT AND FIXTURE FILING

22.1

DEFINITIONS

“Account” shall have the definition assigned in the UCC.

“Account Collateral” means all Accounts that arise from the operation, use or enjoyment of the Property, from the commencement of the Loan term through the satisfaction of all of the Obligations.

“Bank” shall have the definition assigned in the UCC.

“Chattel Paper” shall have the definition assigned in the UCC.

“Chattel Paper Collateral” means all Chattel Paper arising from the sale or other disposition of all or part of the Property.

“Deposit Account” shall have the definition assigned in the UCC.

“Deposit Account Collateral” means all the Deposit Accounts into which Rents or Proceeds are deposited at any time from the commencement of the Loan term through the satisfaction of all of the Obligations.

“Document” shall have the definition assigned in the UCC.

“Document Collateral” means all Documents that evidence title to all or any part of the Goods Collateral.

“Equipment” shall have the definition assigned in the UCC.

“Equipment Collateral” means all Equipment that relates to the Real Property and is used in the operation of the Real Property as commercial real estate.

“Financing Statements” shall have the definition assigned in the UCC.

“General Intangibles” shall have the definition assigned in the UCC.

“General Intangible Collateral” means all General Intangibles that have arisen or that arise in the future in connection with the Borrower’s ownership, operation or leasing of the Real Property, at any time from the commencement of the Loan term through the satisfaction of all of the Obligations.

“Goods” shall have the definition assigned in the UCC. “Goods” include all detached Fixtures, items of Personal Property that may become Fixtures, major appliances, property management files, accounting books and records, reports of consultants relating to the Real Property, site plans, test borings, environmental or geotechnical surveys, samples and test results, blueprints, construction and shop drawings, and plans and specifications.

“Goods Collateral” means all Goods that relate to the Real Property and are used in the operation of the Real Property as commercial real estate.

“Instrument” shall have the definition assigned in the UCC.

“Instrument Collateral” means all Instruments received as Rents or Proceeds or purchased by the Borrower with Rents or Proceeds.

“Investment Property” shall have the definition assigned in the UCC.

“Investment Property Collateral” means all the Investment Property purchased using Rents or Proceeds, or received in respect of Account Collateral.

“Letter of Credit” shall have the definition assigned in the UCC.

“Letter of Credit Collateral” means all Letters of Credit that relate to the use, operation or enjoyment of the Property, including those that secure the payment of any Accounts comprising Account Collateral or arising from the sale or other disposition of all or part of the Property.

“Letter of Credit Rights” shall have the definition assigned in the UCC.

“Letter of Credit Rights Collateral” means all Letter of Credit Rights that relate to the use, operation or enjoyment of the Property, including rights to Letters of Credit that secure the payment of any Accounts comprising Account Collateral or arising from the sale or other disposition of all or part of the Property.

“Money Collateral” means all money received in respect of Rents.

“Personal Property” means Account Collateral, Chattel Paper Collateral, Commercial Tort Claim Collateral, Deposit Account Collateral, Document Collateral, Equipment Collateral, General Intangibles, Goods Collateral, Instrument Collateral, Investment Property Collateral, Letter of Credit Rights Collateral, Letters of Credit Collateral, and Money Collateral.

“Proceeds” shall have the definition assigned in the UCC.

“UCC” means the Uniform Commercial Code as adopted in Texas.

22.2

CREATION OF SECURITY INTEREST

This Deed of Trust shall be self-operative and shall constitute a security agreement pursuant to the provisions of the UCC with respect to the Personal Property. The Borrower, as debtor, hereby grants the Lender, as secured party, for the purpose of securing the Indebtedness, a security interest in the Account Collateral, Chattel Paper Collateral, Commercial Tort Claim Collateral, Deposit Account Collateral, Document Collateral, General Intangible Collateral, Goods Collateral, Instrument Collateral, Investment Property Collateral, Letter of Credit Rights Collateral, Letter of Credit Collateral, and Money Collateral, in the accessions, additions, replacements, substitutions and Proceeds of any of the foregoing items of collateral. Upon Default, the Lender shall have the rights and remedies of a secured party under the UCC as well as all other rights and remedies available at law or in equity, and, at the Lend er’s option, the Lender may also invoke the remedies provided elsewhere in this Deed of Trust as to such Property. The Borrower and the Lender agree that the rights granted to the Lender as secured party under this Section 22 are in addition to rather than a limitation on any of the Lender’s other rights under this Deed of Trust with respect to the Property.

22.3

FILING AUTHORIZATION

The Borrower irrevocably authorizes the Lender to file, in the appropriate locations for filings of UCC financing statements in any jurisdictions as the Lender in good faith deems appropriate, such financing statements and amendments as the Lender may require in order to perfect or continue this security interest, or in order to prevent any filed financing statement from becoming misleading or from losing its perfected status.

22.4

ADDITIONAL SEARCHES AND DOCUMENTATION

Borrower shall provide to Lender upon request, certified copies of any searches of UCC records deemed necessary or appropriate by Lender to confirm the first priority status of its security interest in the Personal Property, together with copies of all documents or records evidencing security interests disclosed by such searches.

22.5

COSTS

The Borrower shall pay all filing fees and costs and all reasonable costs and expenses of any record searches (or their continuations) as the Lender may require.

22.6

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER

(a)

Ownership of the Personal Property

All of the Personal Property is, and shall during the term of the Loan continue to be, owned by the Borrower, and is not the subject matter of any lease, control agreement or other instrument, agreement or transaction whereby any ownership, security or beneficial interest in the Personal Property is held by any person or entity other than the Borrower, subject only to (1) the Lender’s security interest, (2) the rights of tenants occupying the Property pursuant to Leases approved by the Lender, and (3) the Permitted Encumbrances.

(b)

No Other Identity

The Borrower represents and warrants that the Borrower has not used or operated under any other name or identity for at least five (5) years or, if more recent, since the Borrower’s date of organization. The Borrower covenants and agrees that Borrower will furnish Lender with notice of any change in its name, form of organization, or state of organization within thirty (30) days prior to the effective date of any such change.

(c)

Location of Equipment

All Equipment Collateral is located upon the Land.

(d)

Removal of Goods

The Borrower will not remove or permit to be removed any item included in the Goods Collateral from the Land, unless the same is replaced immediately with unencumbered Goods Collateral (1) of a quality and value equal or superior to that which it replaces and (2) which is located on the Land. All such replacements, renewals, and additions shall become and be immediately subject to the security interest of this Deed of Trust.

(e)

Proceeds

The Borrower may, without the Lender’s prior written consent, dispose of Goods Collateral in the ordinary course of business, provided that, following the disposition, the perfection of the Lender’s security interest in the Proceeds of the disposition will continue under § 9-315 (d) of the UCC. The Borrower shall not, without the Lender’s prior written consent, dispose of any Personal Property in any other manner, except in compliance with Paragraph (d) of this Subsection 22.6.

22.7

FIXTURE FILING

This Deed of Trust constitutes a financing statement filed as a fixture filing in the Official Records of the County Clerk of Harris County, Texas with respect to any and all fixtures comprising Property. The “debtor” is Woods of Inverness CPF 16, L.P., a limited partnership organized under Delaware law, the “secured party” is Transamerica Occidental Life Insurance Company, an Iowa corporation, the collateral is as described in Subsection 22.1 above and the granting clause of this Deed of Trust, and the addresses of the debtor and secured party are the addresses stated in Subsection 27.12 of this Deed of Trust for Notices to such parties. The organizational identification number of the debtor is 2574682. The owner of record of the Real Property is Woods of Inverness CPF 16, L.P.. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oi l and gas) and accounts subject to Subsection (e) of Section 9.103 of the Texas Business and Commerce Code, as amended.

23.

ENVIRONMENTAL MATTERS

23.1

REPRESENTATIONS

The Borrower represents as follows:

(a)

No Hazardous Substances

To the best of the Borrower’s knowledge, and except as disclosed in the ESA, no release of any Hazardous Substance has occurred on or about the Real Property in a quantity or at a concentration level that (i) violates any Environmental Law, or (ii) requires reporting to any regulatory authority or may result in any obligation to remediate under any Environmental Law.

(b)

Absence of Mold Contamination

To the best of the Borrower’s knowledge, the amount of mold present in the air within the Improvements and the extent of mold growth on the elements of the Improvements are no greater than normal in buildings free of moisture intrusion. No mold-related tenant complaint or legal proceeding relating to the Improvements exists, except as otherwise disclosed to AEGON in writing.

(c)

Compliance with Environmental Laws

To the best of the Borrower’s knowledge, the Real Property and its current use and presently anticipated uses comply with all Environmental Laws, including those requiring permits, licenses, authorizations, and other consents and approvals.

(d)

No Actions or Proceedings

To the Borrower’s actual knowledge, no governmental authority or agency has commenced any action, proceeding or investigation based on any suspected or actual violation of any Environmental Law on or about the Real Property. To the best of the Borrower’s knowledge, no such authority or agency has threatened to commence any such action, proceeding, or investigation.

23.2

ENVIRONMENTAL COVENANTS

The Borrower covenants as follows:

(a)

Compliance with Environmental Laws

The Borrower shall, and the Borrower shall cause all employees, agents, contractors, and tenants of the Borrower and any other persons present on or occupying the Real Property to, keep and maintain the Real Property in compliance with all Environmental Laws.

(b)

Notices, Actions and Claims

The Borrower shall immediately advise the Lender in writing of (i) any notices from any governmental or quasi-governmental agency or authority of violation or potential violation of any Environmental Law received by the Borrower, (ii) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened pursuant to any Environmental Law, (iii) all claims made or threatened by any third party against the Borrower or the Real Property relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Substances, and (iv) discovery by the Borrower of any occurrence or condition on any real property adjoining or in the vicinity of the Real Property that creates a foreseeable risk of contamination of the Real Property by or with Hazardous Substances.

23.3

THE LENDER’S RIGHT TO CONTROL CLAIMS

The Lender shall have the right (but not the obligation) to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Substances and to have its related and reasonable attorneys’ and consultants’ fees paid by the Borrower upon demand.

23.4

INDEMNIFICATION

THE BORROWER SHALL BE SOLELY RESPONSIBLE FOR, AND SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS THE LENDER, THE TRUSTEE, HIS SUCCESSORS OR SUBSTITUTES IN THE TRUST AND HIS OR THEIR ASSIGNS, AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS, FROM AND AGAINST, ANY CLAIM, JUDGMENT, LOSS, DAMAGE, DEMAND, COST, EXPENSE OR LIABILITY OF WHATEVER KIND OR NATURE, KNOWN OR UNKNOWN, CONTINGENT OR OTHERWISE, DIRECTLY OR INDIRECTLY ARISING OUT OF OR ATTRIBUTABLE TO THE USE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE (WHETHER PRIOR TO OR AFTER THE EFFECTIVE DATE OF THIS DEED OF TRUST) OF HAZARDOUS SUBSTANCES ON, IN, UNDER OR ABOUT THE REAL PROPERTY (WHETHER BY THE BORROWER, A PREDECESSOR IN TITLE, ANY TENANT, OR ANY EMPLOYEES, AGENTS, CONTRACTOR OR SUBCONTRACTORS OF ANY OF THE FOREGOING OR ANY THIRD PERSONS AT ANY TIME OCCUPYING OR PRESENT ON THE REAL PROPERTY), INCLUDING: (I) PERSONAL INJURY; (II) DEATH; (III) DAMAGE TO PROPERTY; (IV) ALL CONSEQUENTIAL DAMAGES; (V) THE COST OF ANY REQUIRED OR NECESSARY REPAIR, CLEANUP OR DETOXIFICATION OF THE REAL PROPERTY, INCLUDING THE SOIL AND GROUND WATER THEREOF, AND THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL OR OTHER REQUIRED PLANS; (VI) DAMAGE TO ANY NATURAL RESOURCES; AND (VII) ALL REASONABLE COSTS AND EXPENSES INCURRED BY THE LENDER OR THE TRUSTEE, HIS SUCCESSORS OR SUBSTITUTES IN THE TRUST AND HIS OR THEIR ASSIGNS IN CONNECTION WITH CLAUSES (I) THROUGH (VI), INCLUDING REASONABLE ATTORNEYS’ AND CONSULTANTS’ FEES; PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED TO PRECLUDE THE BORROWER FROM SEEKING INDEMNIFICATION FROM, OR OTHERWISE PROCEEDING AGAINST, ANY THIRD PARTY INCLUDING ANY TENANT OR PREDECESSOR IN TITLE TO THE REAL PROPERTY, AND FURTHER PROVIDED THAT THIS INDEMNIFICATION WILL NOT EXTEND TO MATTERS CAUSED BY THE LENDER'S GROSS NEGLIGENCE O R WILLFUL MISCONDUCT, OR ARISING FROM A RELEASE OF HAZARDOUS SUBSTANCES WHICH OCCURS AFTER THE LENDER HAS TAKEN POSSESSION OF THE REAL PROPERTY, SO LONG AS THE BORROWER HAS NOT CAUSED THE RELEASE THROUGH ANY ACT OR OMISSION. THE COVENANTS, AGREEMENTS, AND INDEMNITIES SET FORTH IN THIS SECTION SHALL BE BINDING UPON THE BORROWER AND ITS HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS, AND SHALL SURVIVE REPAYMENT OF THE INDEBTEDNESS, FORECLOSURE OF THE REAL PROPERTY, AND THE BORROWER’S GRANTING OF A DEED TO THE REAL PROPERTY IN LIEU OF FORECLOSURE. PAYMENT SHALL NOT BE A CONDITION PRECEDENT TO THIS INDEMNITY. ANY COSTS OR EXPENSES INCURRED BY THE LENDER OR THE TRUSTEE, HIS SUCCESSORS OR SUBSTITUTES IN THE TRUST AND HIS OR THEIR ASSIGNS FOR WHICH THE BORROWER IS RESPONSIBLE OR FOR WHICH THE BORROWER HAS INDEMNIFIED THE LENDER SHALL BE PAID TO THE LENDER ON DEMAND, WITH INTEREST AT THE DEFAULT RATE FROM THE DATE INCURRED BY THE LENDER UNTIL PAID IN FULL, AND SHALL BE SECURED BY THIS DEED OF TRUST. WI THOUT THE PRIOR WRITTEN CONSENT OF THE LENDER, the BORROWER SHALL NOT ENTER INTO ANY SETTLEMENT AGREEMENT, CONSENT DECREE, OR OTHER COMPROMISE IN RESPECT TO ANY CLAIMS RELATING TO HAZARDOUS SUBSTANCES.

23.5

ENVIRONMENTAL AUDITS

If a Default exists, or at any time the Lender has reason to believe that a release of Hazardous Substances may have occurred or may be likely to occur, the Lender may require that the Borrower retain, or the Lender may retain directly, at the sole cost and expense of the Borrower, a licensed geologist, industrial hygienist or an environmental consultant acceptable to the Lender to conduct an environmental assessment or audit of the Real Property. In the event that the Lender makes a reasonable determination of the need for an environmental assessment or audit, the Lender shall inform the Borrower in writing that such a determination has been made and, if requested to do so by the Borrower, give the Borrower a written explanation of that determination before the assessment or audit is conducted. The Borrower shall afford any person conducting an environmental assessment or audit access to the Real Property an d all materials reasonably requested, subject to the rights of tenants in possession. The Borrower shall pay on demand the cost and expenses of any environmental consultant engaged by the Lender under this Subsection. The Borrower shall, at the Lender’s request and at the Borrower’s sole cost and expense, take such investigative and remedial measures determined by the geologist, hygienist or consultant to be necessary to address any condition discovered by the assessment or audit so that (i) the Real Property shall be in compliance with all Environmental Laws, (ii) the condition of the Real Property shall not constitute any identifiable risk to human health or to the environment, and (iii) the value of the Real Property shall not be affected by the presence of Hazardous Substances.

24.

CONCERNING THE TRUSTEE

24.1

NO LIABILITY

The Trustee, his successors or substitutes in the Trust and his or their assigns will not be liable for any error of judgment or act, or be otherwise responsible or accountable under any circumstances. If the Trustee, his successors or substitutes in the Trust and his or their assigns or anyone acting by virtue of the Trustee, his successors or substitutes in the Trust and his or their assigns’ powers enters the Real Property, the Trustee, his successors or substitutes in the Trust and his or their assigns will not be personally liable for debts contracted or for liability or damages incurred in the management or operation of the Real Property. The Trustee, his successors or substitutes in the Trust and his or their assigns will have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by the Trustee, his successors or substitutes in the Trust and his or their assigns or believed by the Trustee, his successors or substitutes in the Trust and his or their assigns in good faith to be genuine. The Trustee, his successors or substitutes in the Trust and his or their assigns will be entitled to reimbursement for expenses actually incurred by the Trustee, his successors or substitutes in the Trust and his or their assigns in the performance of the Trustee, his successors or substitutes in the Trust and his or their assigns’ duties and to reasonable compensation for services rendered. The Borrower shall, from time to time, pay compensation due the Trustee, his successors or substitutes in the Trust and his or their assigns under this Deed of Trust and reimburse the Trustee, his successors or substitutes in the Trust and his or their assigns for and save and hold the Trustee, his successors or substitutes in the Trust and his or their assigns harmless from and against any and all loss, cost, liability, damage and expense whatsoever incur red by the Trustee, his successors or substitutes in the Trust and his or their assigns in the performance of the Trustee, his successors or substitutes in the Trust and his or their assigns’ duties.

24.2

RETENTION OF MONEY

All money received by the Trustee, his successors or substitutes in the Trust and his or their assigns must, until used or applied, be held in trust for the purposes for which it was received, but need not be segregated in any manner from any other money (except to the extent required by law) and the Trustee, his successors or substitutes in the Trust and his or their assigns will have no liability for interest on any money received.

24.3

SUCCESSOR TRUSTEES

The Trustee may resign by giving notice of such resignation in writing to the Lender. If the Trustee dies, resigns or becomes disqualified from acting in the execution of this Trust or fails or refuses to exercise the same when requested by the Lender so to do or if for any reason and without cause the Lender prefers to appoint a substitute trustee to act instead of the original Trustee, or any prior successor or substitute trustee, the Lender will have full power to appoint a substitute trustee and, if preferred, several substitute trustees in succession who shall succeed to all the estates, rights, powers and duties of the Trustee.

24.4

SUCCESSION INSTRUMENTS

Any new Trustee appointed will, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of the Trustee’s predecessor. Upon the written request of the Lender or of any successor trustee, the former Trustee shall execute and deliver an instrument transferring to such successor Trustee all the estates, properties, rights, powers and trusts of the former Trustee, and shall duly assign, transfer and deliver any of the property and money held by the former Trustee to the successor Trustee so appointed in the former Trustee’s place.

24.5

PERFORMANCE OF DUTIES BY AGENTS

The Trustee, his successors or substitutes in the Trust and his or their assigns may authorize one or more parties to act on the Trustee, his successors or substitutes in the Trust and his or their assigns’ behalf to perform the Trustee, his successors or substitutes in the Trust and his or their assigns’ ministerial functions, including, without limitation, the transmittal and posting of any notices.

25.

AGREEMENT CONCERNING INTERESTS

25.1

SAVINGS CLAUSE

It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the Note or 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 (i) contracted for, taken, reserved or received pursuant to the Note, any of the other Loan Documents or any communication or writing by or between Borrower and Lender related to the transaction or transactions that are the subject matter of the Loan Documents, (ii) contracted for, charged, taken, reserved or received by reason of the Lender’s exercise of the option to accelerate the maturity of the Note and/or the Indebtedness, or (iii) Borrower will have paid or Lender will have received by reason of any prepayment by Borrower of the Note and/or the Indebtedness, then it is Borrower’s and Lender’s express intent that all amounts charged in excess of the Maximum Lawful Rate shall be automatically cancelled, ab initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by Lender shall be credited on the principal balance of the Note and/or the Indebtedness (or, if the Note and all Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of the Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if the Note has been paid in full before the end of the stated term of the Note, then Borrower and Lender agree that Lender shall, with reasonable promptness after Lender discovers or is advised by Borrower that interest was received in an amount in excess of the Maximum Lawful Rate, either refund such excess interest to Borrower and/or credit such excess interest against the Note and/or any Indebtedness then owing by Borrower to Lender.  Borrower hereby agrees that as a condition precedent to any claim or counterclaim (in which event such proceeding shall be abated for such time period) seeking usury penalties against Lender, Borrower will provide written Notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and the Lender shall have sixty (60) days after receipt of the Notice to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against the Note and/or the Indebtedness then owing by Borrower to Lender. All sums contrac ted for, charged, taken, reserved or received by Lender for the use, forbearance or detention of any debt evidenced by the Note and/or the Indebtedness shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of the Note and/or the Indebtedness (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Note and/or the Indebtedness does not exceed the Maximum Lawful Rate from time to time in effect and applicable to the Note and/or the Indebtedness for so long as debt is outstanding. In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the Note and/or any of the Indebtedness.

Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

25.2

CEILING ELECTION

To the extent that the Lender is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Lawful Rate payable on the Indebtedness, the Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended. To the extent federal law permits the Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, the Lender will rely on federal law instead of such Chapter 303 for the purpose of determining the Maximum Lawful Rate. Additionally, to the extent permitted by applicable law now or hereafter in effect, the Lender may, at its option and from time to time, utilize any other method of establishing the Maximum Lawful Rate under such Chapter 303 or under other applicable law by giving notice, if required, to the Borrower as provided by applicable law now or hereafter in effect.

26.

SECONDARY MARKET

26.1

DISSEMINATION OF INFORMATION

In connection with any transfer of the Loan, the Lender may forward any documents and information that the Lender now has or acquires in the future concerning the Loan, including the financial statements of any Obligor,  and such other information as may be reasonably related to the Obligors, the Property or the Leases to any:

(i)

transferee or prospective transferee of the Loan;

(ii)

Rating Agency rating the Loan, a Participation, or Securities; or

(iii)

purchaser, transferee, assignee, servicer, participant, investor or prospective investor in any Securitization, or to any of their advisors.

The Borrower irrevocably waives any and all rights it may have under applicable Legal Requirements to prohibit such disclosure, including any right of privacy.

26.2

COOPERATION

The Borrower, any guarantor and any Carveout Obligor agree to reasonably cooperate at no cost to Borrower or Carveout Obligor with the Lender in connection with any transfer of the Loan or any Participation or Securities. The Borrower agrees to provide to the Lender or to any persons to whom the Lender may disseminate such information, at the Lender’s request, financial statements of Obligors, an estoppel certificate and such other documents as may be reasonably related to the Obligors, the Property, or the Leases.

26.3

ADDITIONAL FINANCIAL INFORMATION

If a decision is made to include the Loan in a Securitization and the amount of the Loan would exceed 20% of the amount estimated in good faith to be raised in the offering, the Borrower agrees to provide, to the extent required by SEC Regulation S-X Rule 3-14, and to the extent not previously supplied to Lender, financial statements for the Real Property in respect of the three years prior to the Securitization. If the amount of the Loan would exceed 10% (but not 20%) of the amount estimated in good faith to be raised by the offering, the Borrower agrees to provide such additional property-related financial information as the Lender may request in order to meet then-applicable SEC rules in connection with the contemplated manner of the offering.

26.4

RESERVES/ESCROWS

If Participations are granted or Securities issued in connection with the Loan, all funds held by the Lender in escrow or as reserves in accordance with the Loan Documents may, at the Lender’s discretion, be deposited in “eligible accounts” at “eligible institutions” and invested in “permitted investments” as then defined and required by the Rating Agencies.

27.

MISCELLANEOUS

27.1

SUCCESSORS AND ASSIGNS

All of the terms of the Loan Documents shall apply to, be binding upon and inure to the benefit of the heirs, personal representatives, successors and assigns of the Obligors, or to the holder of the Note, as the case may be.

27.2

SURVIVAL OF OBLIGATIONS

Each and all of the Obligations shall continue in full force and effect until the latest of (a) the date the Indebtedness has been paid in full and the Obligations have been performed and satisfied in full, (b) the last date permitted by law for bringing any claim or action with respect to which the Lender may seek payment or indemnification in connection with the Loan Documents, and (c) the date on which any claim or action for which the Lender seeks payment or indemnification is fully and finally resolved and, if applicable, any compromise thereof of judgment or award thereon is paid in full.

27.3

FURTHER ASSURANCES

The Borrower, upon the request of the Lender or the Trustee, his successors or substitutes in the Trust and his or their assigns, shall complete, execute, acknowledge, deliver and record or file such further instruments and do such further acts as may be reasonably necessary to carry out more effectively the purposes of this Deed of Trust, to subject any property intended to be covered by this Deed of Trust to the liens and security interests it creates, to place third parties on notice of those liens and security interests, or to correct any defects which may be found in any Loan Document.

27.4

RIGHT OF INSPECTION

The Lender shall have the right from time to time, upon reasonable advance notice to the Borrower, to enter onto the Real Property for the purpose of inspecting and reporting on its physical condition, tenancy and operations.

27.5

EXPENSE INDEMNIFICATION

The Borrower shall pay all filing and recording fees, documentary stamps, intangible taxes, and all expenses incident to the execution and acknowledgment of this Deed of Trust, the Note or any of the other Loan Documents, any supplements, amendments, renewals or extensions of any of them, or any instrument entered into under Subsection 27.3. The Borrower shall pay or reimburse the Lender, upon demand, for all costs and expenses, including appraisal and reappraisal costs of the Property and reasonable attorneys’ and legal assistants’ fees, which the Lender may incur in connection with enforcement proceedings under the Note, this Deed of Trust, or any of the other Loan Documents (including all fees and costs incurred in enforcing or protecting the Note, this Deed of Trust, or any of the other Loan Documents in any bankruptcy proceeding), and attorneys’ and legal assistants’ fees incurred by the Lender in any other suit, action, legal proceeding or dispute of any kind in which the Lender is made a party or appears as party plaintiff or defendant, affecting the Indebtedness, the Note, this Deed of Trust, any of the other Loan Documents, or the Property, or required to protect or sustain the lien of this Deed of Trust. The Borrower shall be obligated to pay (or to reimburse the Lender) for such fees, costs and expenses and shall indemnify and hold the Lender and the Trustee, his successors or substitutes in the Trust and his or their assigns harmless from and against any and all loss, cost, expense, liability, damage and claims and causes of action, including attorneys’ fees, incurred or accruing by reason of the Borrower’s failure to promptly repay any such fees, costs and expenses. If any suit or action is brought to enforce or interpret any of the terms of this Deed of Trust (including any effort to modify or vacate any automatic stay or injunction, any trial, an y appeal, any petition for review or any bankruptcy proceeding), the Lender shall be entitled to recover all expenses reasonably incurred in preparation for or during the suit or action or in connection with any appeal of the related decision, whether or not taxable as costs. Such expenses include reasonable attorneys’ fees, witness fees (expert or otherwise), deposition costs, copying charges and other expenses. Whether or not any court action is involved, all reasonable expenses, including the costs of searching records, obtaining title reports, appraisals, environmental assessments, surveying costs, title insurance premiums, trustee fees, and other reasonable attorneys’ fees, incurred by the Lender that are necessary at any time in the Lender’s opinion for the protection of its interest or enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest from the date of expenditure until repaid at the interest rate as provided in the Note.

27.6

GENERAL INDEMNIFICATION

THE BORROWER SHALL INDEMNIFY, DEFEND AND HOLD THE LENDER HARMLESS AGAINST: (I) ANY AND ALL CLAIMS FOR BROKERAGE, LEASING, FINDER’S OR SIMILAR FEES WHICH MAY BE MADE RELATING TO THE REAL PROPERTY OR THE INDEBTEDNESS AND (II) ANY AND ALL LIABILITY, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS, SUITS COSTS AND EXPENSES (INCLUDING THE LENDER'S REASONABLE ATTORNEYS’ FEES, TOGETHER WITH REASONABLE APPELLATE COUNSEL FEES, IF ANY) OF WHATEVER KIND OR NATURE WHICH MAY BE ASSERTED AGAINST, IMPOSED ON OR INCURRED BY THE LENDER IN CONNECTION WITH THE INDEBTEDNESS, THIS DEED OF TRUST, THE REAL PROPERTY OR ANY PART THEREOF, OR THE OPERATION, MAINTENANCE AND/OR USE THEREOF, OR THE EXERCISE BY THE LENDER OF ANY RIGHTS OR REMEDIES GRANTED TO IT UNDER THIS DEED OF TRUST OR PURSUANT TO APPLICABLE LAW; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED TO OBLIGATE THE BORROWER TO INDEMNIFY, DEFEN D AND HOLD HARMLESS THE LENDER FROM AND AGAINST ANY OF THE FOREGOING WHICH IS IMPOSED ON OR INCURRED BY THE LENDER BY REASON OF THE LENDER’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE.

27.7

RECORDING AND FILING

The Borrower shall cause this Deed of Trust and all amendments, supplements, and substitutions to be recorded, filed, re-recorded and re-filed in such manner and in such places as the Lender may reasonably request. The Borrower will pay all recording filing, re-recording and re-filing taxes, fees and other charges.

27.8

NO WAIVER

No deliberate or unintentional failure by the Lender to require strict performance by the Borrower of any Obligation shall be deemed a waiver, and the Lender shall have the right at any time to require strict performance by the Borrower of any Obligation.

27.9

COVENANTS RUNNING WITH THE LAND

All Obligations are intended by the parties to be and shall be construed as covenants running with the Land.

27.10

SEVERABILITY

The Loan Documents are intended to be performed in accordance with, and only to the extent permitted by, all applicable Legal Requirements. Any provision of the Loan Documents that is prohibited or unenforceable in any jurisdiction shall nevertheless be construed and given effect to the extent possible. The invalidity or unenforceability of any provision in a particular jurisdiction shall neither invalidate nor render unenforceable any other provision of the Loan Documents in that jurisdiction, and shall not affect the validity or enforceability of that provision in any other jurisdiction. If a provision is held to be invalid or unenforceable as to a particular person or under a particular circumstance, it shall nevertheless be presumed valid and enforceable as to others, or under other circumstances.

27.11

ENTIRE AGREEMENT

THE LOAN DOCUMENTS CONTAIN THE ENTIRE AGREEMENTS BETWEEN THE PARTIES RELATING TO THE FINANCING OF THE REAL PROPERTY, AND ALL PRIOR AGREEMENTS WHICH ARE NOT CONTAINED IN THE LOAN DOCUMENTS AND THE UNSECURED ENVIRONMENTAL INDEMNITY AGREEMENT, ARE TERMINATED. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THE LOAN DOCUMENTS MAY BE AMENDED, REVISED, WAIVED, DISCHARGED, RELEASED OR TERMINATED ONLY BY A WRITTEN INSTRUMENT OR INSTRUMENTS EXECUTED BY THE PARTY AGAINST WHOM ENFORCEMENT OF THE AMENDMENT, REVISION, WAIVER, DISCHARGE, RELEASE OR TERMINATION IS ASSERTED. ANY ALLEGED AMENDMENT, REVISION, WAIVER, DISCHARGE, RELEASE OR TERMINATION THAT IS NOT SO DOCUMENTED SHALL BE NULL AND VOID.

27.12

NOTICES

In order for any demand, consent, approval or other communication to be effective under the terms of this Deed of Trust, “Notice” must be provided under the terms of this Subsection. All Notices must be in writing. Notices may be (a) delivered by hand, (b) transmitted by facsimile (with a duplicate copy sent by first class mail, postage prepaid), (c) sent by certified or registered mail, postage prepaid, return receipt requested, or (d) sent by reputable overnight courier service, delivery charges prepaid. Notices shall be addressed as set forth below:

If to the Lender:

Transamerica Occidental Life Insurance Company
c/o AEGON USA Realty Advisors, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-5443
Attn:  Mortgage Loan Department
Reference:  Loan #90059
Fax Number: (319) 355-2277

If to the Borrower: Woods of Inverness CPF 16, L.P.
4582 South Ulster Parkway, Suite 1100
Denver, Colorado 80237
Fax Number: (720) 200-6882 If to the Trustee: Keith H. Mullen
1201 Elm Street, Suite 5400
Dallas, Texas 75270-2199
Fax Number:  2147455390

Notices delivered by hand or by overnight courier shall be deemed given when actually received or when refused by their intended recipient. Notices sent by facsimile will be deemed delivered when a legible copy has been received (provided receipt has been verified by telephone confirmation or one of the other permitted means of giving Notices under this Subsection). Mailed Notices shall be deemed given on the date of the first attempted delivery (whether or not actually received). Either the Lender or the Borrower may change its address for Notice by giving at least fifteen (15) Business Days’ prior Notice of such change to the other party.

27.13

COUNTERPARTS

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

27.14

CHOICE OF LAW

This Deed of Trust shall be interpreted, construed, applied, and enforced according to, and will be governed by, the laws of Texas, without regard to any choice of law principle which, but for this provision, would require the application of the law of another jurisdiction and regardless of where executed or delivered, where payable or paid, where any cause of action accrues in connection with this transaction, where any action or other proceeding involving the Loan is instituted, or whether the laws of Texas otherwise would apply the laws of another jurisdiction.

27.15

FORUM SELECTION

The Borrower agrees that the sole and exclusive forum for the determination of any action relating to the validity and enforceability of the Note, this Deed of Trust and the other Loan Documents, and any other instruments securing the Note shall be either in an appropriate court of the State of Texas or the applicable United States District Court.

27.16

SOLE BENEFIT

This Deed of Trust and the other Loan Documents have been executed for the sole benefit of the Borrower and the Lender and the successors and assigns of the Lender. No other party shall have rights thereunder or be entitled to assume that the parties thereto will insist upon strict performance of their mutual obligations hereunder, any of which may be waived from time to time. The Borrower shall have no right to assign any of its rights under the Loan Documents to any party whatsoever, except in connection with a Permitted Transfer.

27.17

RELEASE OF CLAIMS

The Borrower hereby RELEASES, DISCHARGES and ACQUITS forever the Lender and the Trustee, his successors or substitutes in the Trust and his or their assigns and their officers, directors, trustees, agents, employees and counsel (in each case, past, present or future) from any and all Claims existing as of the Effective Date (or the date of actual execution hereof by the Borrower, if later). As used herein, the term “Claim” shall mean any and all liabilities, claims, defenses, demands, actions, causes of action, judgments, deficiencies, interest, liens, costs or expenses (including court costs, penalties, attorneys’ fees and disbursements, and amounts paid in settlement) of any kind and character whatsoever, including claims for usury, breach of contract, breach of commitment, negligent misrepresentation or failure to act in good faith, in each case whether now known or unknown, suspected or un suspected, asserted or unasserted or primary or contingent, and whether arising out of written documents, unwritten undertakings, course of conduct, tort, violations of laws or regulations or otherwise.

27.18

NO PARTNERSHIP

Nothing contained in the Loan Documents is intended to create any partnership, joint venture or association between the Borrower and the Lender, or in any way make the Lender a co-principal with the Borrower with reference to the Property.

27.19

PAYOFF PROCEDURES

If the Borrower pays or causes to be paid to the Lender all of the Indebtedness, then the Trustee, his successors or substitutes in the Trust and his or their assigns’ interest in the Real Property shall cease, and upon receipt by the Lender of such payment, the Lender shall either (a) release this Deed of Trust or (b) assign the Loan Documents and endorse the Note (in either case without recourse or warranty of any kind) to a takeout lender, upon payment (in the latter case) of an administrative fee of $750.

27.20

FUTURE ADVANCES

Under the terms of this Deed of Trust, “Indebtedness” includes any and all indebtedness owed by the Borrower to the Lender, any and all obligations of the Borrower to the Lender, and any and all liabilities of the Borrower to the Lender, regardless of the kind or character of such indebtedness, obligations or liabilities, if they relate to the Loan or to the Real Property in any way, and regardless of whether they arise now or in the future, are absolute or contingent, secured or unsecured, due or not due, arise by operation of law or by contract, are direct or indirect, primary or secondary, joint, several, joint and several, fixed or contingent, or are secured or unsecured by additional or different security or securities, and regardless of whether the indebtedness, obligations or liabilities are of the Borrower directly or arise through its participation in any form of business or economic assoc iation or transaction, whether as a partner, joint venturer, trustee, principal, surety, endorser, guarantor, accommodation party or otherwise. However, this Deed of Trust shall not secure any such other indebtedness, obligation or liability with respect to which the Lender is by applicable law prohibited from obtaining a lien on real estate, nor shall this definition operate or be effective to constitute or require any assumption or payment by any person, in any way, of any debt or obligation of any other person to the extent that the same would violate or exceed the limit provided in any applicable usury or other law.

27.21

INTERPRETATION

(a)

Headings and General Application

The section, subsection, paragraph and subparagraph headings of this Deed of Trust are provided for convenience of reference only and shall in no way affect, modify or define, or be used in construing, the text of the sections, subsections, paragraphs or subparagraphs. If the text requires, words used in the singular shall be read as including the plural, and pronouns of any gender shall include all genders.

(b)

Sole Discretion

The Lender may take any action or decide any matter under the terms of this Deed of Trust or of any other Loan Document (including any consent, approval, acceptance, option, election or authorization) in its sole and absolute discretion, for any reason or for no reason, unless the related Loan Document contains specific language to the contrary. Any approval or consent that the Lender might withhold may be conditioned in any way.

(c)

Result of Negotiations

This Deed of Trust results from negotiations between the Borrower and the Lender and from their mutual efforts. Therefore, it shall be so construed, and not as though it had been prepared solely by the Lender.

(d)

Reference to Particulars

The scope of a general statement made in this Deed of Trust or in any other Loan Document shall not be construed as having been reduced through the inclusion of references to particular items that would be included within the statement’s scope. Therefore, unless the relevant provision of a Loan Document contains specific language to the contrary, the term “include” shall mean “include, but shall not be limited to” and the term “including” shall mean “including, without limitation.”

27.22

INDEBTEDNESS MAY EXCEED NOTE’S FACE AMOUNT

The Borrower’s successors or assigns are hereby placed on Notice that the Note contains late charge, prepayment and other provisions which may result in the outstanding principal balance exceeding the face amount of the Note.

27.23

JOINT AND SEVERAL LIABILITY

If there is more than one individual or entity executing this Deed of Trust as the Borrower, liability of such individuals and entities under this Deed of Trust shall be joint and several.

27.24

TIME OF ESSENCE

Time is of the essence of each and every covenant, condition and provision of this Deed of Trust to be performed by the Borrower.

27.25

JURY WAIVER

THE BORROWER AND BY ITS ACCEPTANCE HEREOF, THE LENDER, HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (I) UNDER THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT OR (II) ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT, AND THE BORROWER AND BY ITS ACCEPTANCE HEREOF, THE LENDER, AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

27.26

RENEWAL, EXTENSION, MODIFICATION AND WAIVER

The Lender, at its option, may at any time renew or extend this Deed of Trust, the Note or any other Loan Document with the Borrower’s consent. The Lender may enter into a modification of any Loan Document or of the Environmental Indemnity Agreement without the consent of any person not a party to the document being modified. The Lender may waive any covenant or condition of any Loan Document or of the Environmental Indemnity Agreement, in whole or in part, at the request of any person then having an interest in the Property or in any way liable for any part of the Indebtedness. The Lender may take, release, or resort to any security for the Note and the Obligations and may release any party primarily or secondarily liable on any Loan Document or on the Environmental Indemnity Agreement, all without affecting any liability not expressly released in writing by the Lender.

27.27

CUMULATIVE REMEDIES

Every right and remedy provided in this Deed of Trust shall be cumulative of every other right or remedy of the Lender, whether conferred by law or by grant or contract, and may be enforced concurrently with any such right or remedy. The acceptance of the performance of any obligation to cure any Default shall not be construed as a waiver of any rights with respect to any other past, present or future Default. No waiver in a particular instance of the requirement that any Obligation be performed shall be construed as a waiver with respect to any other Obligation or instance.

27.28

NO OBLIGATION TO MARSHAL ASSETS

No holder of any deed of trust, security interest or other encumbrance affecting all or any portion of the Real Property, which encumbrance is inferior to the lien and security interest of this Deed of Trust, shall have any right to require the Lender to marshal assets.

27.29

TRANSFER OF OWNERSHIP

The Lender may, without notice to the Borrower, deal with any person in whom ownership of any part of the Real Property has vested, without in any way vitiating or discharging the Borrower from liability for any of the Obligations.

27.30

NOTICE OF INDEMNIFICATION

THE BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT CONTAINS INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTIONS 4, 21, 23.4, 27.2, 27.5, and 27.6.

IN WITNESS WHEREOF, the Borrower has caused this Deed of Trust to be duly executed as of the Effective Date.

WOODS OF INVERNESS CPF 16, L.P., a Delaware limited partnership

By: CPF 16 WOODS OF INVERNESS GP, L.L.C., a South Carolina limited liability company, its general partner

By: CENTURY PROPERTIES FUND XVI, a California limited partnership, its member

By: FOX CAPITAL MANAGEMENT CORPORATION, a California corporation, its managing general partner

By: /s/Patti K. Fielding

Name: Patti K. Fielding

Title: Executive Vice President and

 Treasurer

EX-10

 Exhibit 10.12

 $5,877,950.00
September 21, 2007 (the “Effective Date”)

 Secured Promissory Note

FOR VALUE RECEIVED, the undersigned, WOODS OF INVERNESS CPF 16, L.P., a Delaware limited partnership, whose address is 4582 South Ulster Parkway, Suite 1100, Denver, Colorado 80237 (the “Borrower”), promises to pay Five Million Eight Hundred Seventy-Seven Thousand Nine Hundred Fifty Dollars and No Cents ($5,877,950.00), together with interest according to the terms of this Secured Promissory Note (this “Note”), to the order of TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, an Iowa corporation (together with any future holder, the “Lender”), whose address is c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-5443. Capitalized terms used but not defined in this Note shall have the meanings assigned to them in the Deed of Trust, as defined in Section 12 below.

1.

CONTRACT INTEREST RATE

The principal balance of this Note shall bear interest at the rate that is the lesser of (i) the variable rate of interest determined from time to time as described in the next succeeding paragraph (the “Note Rate”) and (ii) the Maximum Interest Rate (as defined in Section 24.1 below). Interest shall be calculated in arrears on actual days elapsed, based on a 360-day year. During any partial month, interest shall accrue based on the number of actual days which elapse during the related accrual period.

The initial Note Rate, at which interest on the Loan shall accrue from the funding date through the last day of September, 2007, shall be six and twenty-eight one-hundredths percent (6.28%) per annum. On the first day of October, 2007 and thereafter at intervals of one full calendar month during the Loan’s term (each such month, a “Loan Month”), this Note Rate shall be adjusted to the per annum rate which is 78 basis points (the “Pricing Spread”) over the 1-month LIBOR rate (the “Index”), as reported by the Wall Street Journal on the last business day of the preceding month (in respect of any rate adjustment, the “Determination Date”). The Note shall bear interest at the adjusted Note Rate during the Loan Month comprising an accrual period. If the Wall Street Journal stops publishing the Index during the term of the Loan, the Lender shall determine th e Index rate by referring to the LIBOR rate published in another nationally recognized daily paper or electronic business publication reasonably acceptable to the Lender.

The Pricing Spread is subject to increase to ninety-eight (98) basis points as provided in the Facility Agreement if the debt service coverage ratio of the Property decreases below 1.30.

2.

SCHEDULED PAYMENTS

2.1

PREPAYMENT OF INTEREST FOR THE MONTH OF FUNDING

Unless the funding of the loan evidenced by this Note (together with all additional charges, advances and accruals, the “Loan”) occurs on the first day of a calendar month, the Borrower shall prepay, on the date of the funding, interest due from the date of the funding through and including the last day of the calendar month in which the funding occurs.

2.2

MONTHLY PAYMENTS

On the first day of November, 2007 and on the first day of each subsequent calendar month through September, 2010, the Borrower shall pay an installment of accrued interest for the previous month at the Note Rate. Monthly installments of interest shall be made when due, regardless of the prior acceptance by the Lender of unscheduled payments.

2.3

FINAL PAYMENT

The Loan shall mature on the first day of October, 2010 (the “Maturity Date”), when the Borrower shall pay its entire principal balance, together with all accrued interest and any other amounts owed by the Borrower under this Note or under any of the other documents entered into now or in the future in connection with the Loan (the “Loan Documents”). The Maturity Date is subject to extension as provided in the Facility Agreement.

3.

BALLOON PAYMENT ACKNOWLEDGMENT

The Borrower acknowledges that the scheduled monthly payments referred to in Section 2 will not amortize the principal sum of this Note over its term, resulting in a “balloon” payment at maturity. Any future agreement to extend this Note or refinance the Indebtedness it evidences may be made only by means of a writing executed by a duly authorized officer of the Lender.

4.

APPLICATION OF MONTHLY INTEREST PAYMENTS

When the Lender receives a monthly interest payment, the Lender shall apply it to interest in arrears for the previous month, unless other amounts are then due under this Note or the other Loan Documents. If other amounts are due when a regular monthly payment is received, the Lender shall apply the payment first to accrued interest and then to those other amounts.

5.

DEFAULT INTEREST

If a Default exists (as defined in Section 9 below) the outstanding principal balance of this Note shall, at the option of the Lender, bear interest at a rate (the “Default Rate”) equal to the lesser of (i) ten percent (10%) per annum over the Note Rate, as determined from time to time, and (ii) the Maximum Lawful Rate. If interest has accrued at the Default Rate during any period, the difference between such accrued interest and interest which would have accrued at the Note Rate during such period shall be payable on demand. If a court of competent jurisdiction determines that any interest charged has exceeded the maximum rate allowed by law, the excess of the amount collected over the legal rate of interest will be applied to the Indebtedness as a principal prepayment without premium, retroactively, as of the date of receipt, or returned to the Borrower if the Indebtedness has been fully paid.

6.

LATE CHARGE

If the Lender does not receive any scheduled monthly principal and interest payment on or before the tenth (10th) day of the calendar month in which it is due, the Lender will send the Borrower written Notice that a late charge equal to four percent (4%) of the late payment has accrued. The Borrower shall pay any such late charge on or before the tenth day of the calendar month following the month during which the late payment was scheduled to have been received.  

7.

PREPAYMENT

Subject to the terms of the Facility Agreement, this Note may be prepaid in whole or in part, without premium or penalty, upon not less than thirty (30) days’ prior written notice to the Lender.

8.

PERMITTED PAR PREPAYMENTS

The Lender shall not charge a prepayment premium on any prepayment made as the result of the Lender’s election to apply insurance or condemnation proceeds to the principal balance of this Note or to achieve any required loan to value ratio that is a prerequisite to the Borrower’s rights to obtain and to use such proceeds (the “Permitted Par Prepayment”).

9.

DEFAULT

A default on this Note (“Default”) shall exist if (a) the Lender fails to receive any required installment of principal and interest on or before the tenth (10^th) day of the calendar month in which it is due, (b) the Borrower fails to pay the matured balance of this Note on the Maturity Date or (c) a “Default” exists as defined in any other Loan Document. If a Default exists and the Lender engages counsel to collect any amount due under this Note or if the Lender is required to protect or enforce this Note in any probate, bankruptcy or other proceeding, then any expenses incurred by the Lender in respect of the engagement, including the reasonable fees and reimbursable expenses of counsel and including such costs and fees which relate to issues that are particular to any given proceeding, shall constitute indebtedness evidenced by this Note, shall be payable on demand, and shall bear interest at the Default Rate. Such fees and expenses include those incurred in connection with any action against the Borrower for a deficiency judgment after a foreclosure or trustee’s sale of the Real Property under the Deed of Trust (defined below), including all of the Lender’s reasonable attorneys’ fees, property appraisal costs and witness fees.

10.

ACCELERATION

If a Default exists, the Lender may, at its option, declare the unpaid principal balance of this Note to be immediately due and payable, together with all accrued interest on the Indebtedness, all costs of collection (including reasonable attorneys’ fees and expenses) and all other charges due and payable by the Borrower under this Note or any other Loan Document. If the subject Default has arisen from a failure by the Borrower to make a regular monthly payment of principal and interest, the Lender shall not accelerate the Indebtedness unless the Lender shall have given the Borrower at least three (3) Business Days’ advance Notice of its intent to do so.

If the subject Default is a Curable Non-Monetary Default, the Lender shall exercise its option to accelerate only by delivering Notice of acceleration to the Borrower. The Lender shall not deliver any such Notice of acceleration until (a) the Borrower has been given any required Notice of the prospective Default and (b) any applicable cure period has expired.

Except as expressly described in this Section, no Notice of acceleration shall be required in order for the Lender to exercise its option to accelerate the Indebtedness in the event of Default.

11.

PREPAYMENT FOLLOWING ACCELERATION

Any Default resulting in the acceleration of the Indebtedness evidenced by this Note shall be presumed to be an attempt to avoid the provisions of Section 7 of this Note, which prohibit prepayment or condition the Lender’s obligation to accept prepayment on the payment of a prepayment premium. Accordingly, if the Indebtedness is accelerated, any amounts tendered to repay the accelerated Indebtedness, or realized by the Lender through its remedies following acceleration, shall be subject to the prepayment premium, if any, that would have been applicable under Section 7 (calculated from the date of acceleration through the Maturity Date).

12.

SECURITY

This Note is secured by a Deed of Trust, Security Agreement and Fixture Filing (the “Deed of Trust”) granted by the Borrower to Keith H. Mullen, the Trustee, for the benefit of the Lender, conveying certain real property (the “Real Property”) located in the City of Houston, Harris County, Texas and granting a security interest in certain fixtures and personal property, and by an Absolute Assignment of Leases and Rents made by the Borrower to the Lender, assigning the landlord’s interest in all present and future leases (the “Leases”) of all or any portion of the Real Property encumbered by the Deed of Trust. Reference is made to the Loan Documents for a description of the security and rights of the Lender. This reference shall not affect the absolute and unconditional obligation of the Borrower to repay the Loan in accordance with its terms.

13.

RECOURSE TO BORROWER

The Lender agrees that it shall not seek to enforce any monetary judgment with respect to the Indebtedness evidenced by this Note against the Borrower except through recourse to the Property (as defined in the Deed of Trust), unless the obligation from which the judgment arises is one of the “Carveout Obligations” defined in Section 14.

14.

CARVEOUT OBLIGATIONS

The “Carveout Obligations” are (a) the obligation to repay any portion of the Indebtedness evidenced by this Note that arises because the Lender has advanced funds or incurred expenses in respect of any of the “Carveouts” (as defined below), (b) the obligation to repay the entire Indebtedness evidenced by this Note, if the Lender’s exculpation of the Borrower from personal liability under this Section has become void as set forth below, (c) the obligation to indemnify the Lender in respect of its actual damages suffered in connection with any of the Carveouts, and (d) the obligation to defend and hold the Lender harmless from and against any claims, judgments, causes of action or proceedings arising from any of the Carveouts. The “Carveouts” are:

(i)

fraud or material written misrepresentation;

(ii)

waste of the Property (which shall include damage, destruction or disrepair of the Real Property caused by a willful act or grossly negligent omission of the Borrower, but shall exclude ordinary wear and tear in the absence of gross negligence);

(iii)

misappropriation of tenant security deposits (including proceeds of tenant letters of credit), Insurance Proceeds or Condemnation Proceeds;

(iv)

failure to pay property taxes, assessments or other lienable Impositions;

(v)

failure to pay to the Lender all Rents, income and profits (including any rent collected more than one month in advance, or any rent for the last month of the lease term, under any Lease in force at the time of Default), net of reasonable and customary operating expenses, received in respect of a period when the Loan is in Default;

(vi)

removal from the Real Property of Fixtures or Personal Property, unless replaced in a commercially reasonable manner;

(vii)

the out-of-pocket expenses of enforcing the Loan Documents following Default, not including expenses incurred after the Borrower has agreed in writing to transfer the Real Property to the Lender by the Lender’s choice of either an uncontested foreclosure or delivery of a deed in lieu of foreclosure;

(viii)

terminating or amending a Lease in violation of the Loan Documents; and

(ix)

any liability of the Borrower under the Environmental Indemnity Agreement.

The Lender’s exculpation of the Borrower from personal liability for the repayment of the Indebtedness evidenced by this Note shall be void without Notice if the Borrower (A) voluntarily transfers or creates any voluntary lien on the Property in violation of the Deed of Trust, or (B) files a voluntary petition for reorganization under Title 11 of the United States Code (or under any other present or future law, domestic or foreign, relating to bankruptcy, insolvency, reorganization proceedings or otherwise similarly affecting the rights of creditors), and has not offered, prior to the filing, to enter into the Lender’s choice of either an agreement to permit an uncontested foreclosure, or an agreement to deliver a deed in lieu of foreclosure within sixty (60) days of the Lender’s acceptance of the offer. After the Lender accepts such an offer, default by the Borrower in fulfilling the terms of t he accepted offer shall trigger personal liability for the entire Indebtedness. No such offer shall be conditioned on any payment by the Lender, on the release of any Obligor from any Obligation, or on any other concession.

15.

SEVERABILITY

If any provision of this Note is held to be invalid, illegal or unenforceable in any respect, or operates, or would if enforced operate to invalidate this Note, then that provision shall be deemed null and void. Nevertheless, its nullity shall not affect the remaining provisions of this Note, which shall in no way be affected, prejudiced or disturbed.

16.

WAIVER

Except to the extent that such rights are expressly provided in this Note, the Borrower waives demand, presentment for payment, notice of intent to accelerate, notice of acceleration, protest, notice of protest, dishonor and of nonpayment and any and all lack of diligence or delays in collection or enforcement of this Note. Without affecting the liability of the Borrower under this Note, the Lender may release any of the Property, grant any indulgence, forbearance or extension of time for payment, or release any other person now or in the future liable for the payment or performance of any obligation under this Note or any of the Loan Documents.

The Borrower further (a) waives any homestead or similar exemption; (b) waives any statute of limitation; (c) agrees that the Lender may, without impairing any future right to insist on strict and timely compliance with the terms of this Note, grant any number of extensions of time for the scheduled payments of any amounts due, and may make any other accommodation with respect to the Indebtedness evidenced by this Note; (d) waives any right to require a marshaling of assets; and (e) to the extent not prohibited by applicable law, waives the benefit of any law or rule of law intended for its advantage or protection as a debtor or providing for its release or discharge from liability under this Note, excepting only the defense of full and complete payment of all amounts due under this Note and the Loan Documents.

17.

VARIATION IN PRONOUNS

All the terms and words used in this Note, regardless of the number and gender in which they are used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the context or sense of this Note or any paragraph or clause herein may require, the same as if such word had been fully and properly written in the correct number and gender.

18.

WAIVER OF JURY TRIAL

THE BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT OR (B) ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, AND THE BORROWER AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

19.

OFFSET RIGHTS

In addition to all liens upon and rights of setoff against the money, securities, or other property of the Borrower given to the Lender by law, the Lender shall have a lien upon and a right of setoff against all money, securities, and other property of the Borrower, now or hereafter in possession of or on deposit with the Lender, whether held in a general or special account or deposit, or safe-keeping or otherwise, and, following a Default, every such lien and right of setoff may be exercised without demand upon, or notice to the Borrower. No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of the Lender, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by an instrume nt in writing executed by the Lender.

20.

COMMERCIAL LOAN

The Borrower hereby represents and warrants to the Lender that the Loan was made for commercial or business purposes, and that the funds evidenced by this Note will be used solely in connection with such purposes.

21.

REPLACEMENT OR BIFURCATION OF NOTE

If this Note is lost or destroyed, the Borrower shall, at the Lender’s request, execute and return to the Lender a replacement promissory note identical to this Note, provided the Lender delivers to the Borrower an affidavit to the foregoing effect. Upon delivery of the executed replacement note, the Lender shall indemnify the Borrower from and against its actual damages suffered as a result of the existence of two Notes evidencing the same obligation. No replacement of this Note under this Section shall result in a novation of the Borrower’s obligations under this Note. In addition, the Lender may at its sole and absolute discretion require, at no cost to Borrower, that the Borrower execute and deliver two separate promissory notes, which shall replace this Note as evidence of the Borrower’s obligations. The two replacement notes shall, taken together, evidence the exact obligations set forth in this Note. The replacement notes shall be independently transferable. If this Note is so replaced, the Lender shall return this Note to the Borrower marked to evidence its cancellation.

22.

GOVERNING LAW

This Note shall be construed and enforced according to, and governed by, the laws of Texas without reference to conflicts of laws provisions which, but for this provision, would require the application of the law of any other jurisdiction.

23.

TIME OF ESSENCE

In the performance of the Borrower’s obligations under this Note, time is of the essence.

24.

AGREEMENT CONCERNING INTEREST

24.1

DEFINITIONS

As used in this Note, the term “Maximum Lawful Rate” shall mean the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by Lender in accordance with the applicable laws of the State of Texas (or applicable federal law, if it permits a higher rate). “Charges” means all fees, charges, and any other things of value, if any, that are contracted for, charged, received, taken or reserved pursuant to this Note, any of the other Loan Documents, or any other conversation or writing between the Lender and the Borrower in connection with the Loan (whether in connection with the acceleration by the Lender of the maturity of the Indebtedness, in connection with any voluntary prepayment of the Indebtedness, or otherwise, and including fees for the forbearance of any enforcement action or for the extension or modification of the Loan) which are treated as in terest under applicable law. The term “Indebtedness” shall mean any and all debt paid or payable by the Borrower to the Lender pursuant to this Note, the Loan Documents or any other communication or writing by or between the Borrower and the Lender relating to the Loan.

24.2

SAVINGS CLAUSE

The Borrower and the Lender agree that they intend to comply strictly at all times with applicable Texas law governing the maximum rate or amount of interest payable on this Note or the Indebtedness (or applicable federal law, if it preempts Texas law and permits the Lender to contract for, charge, take, reserve or receive a higher rate or amount of interest than would be permitted under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any Charges, then it is the Borrower’s and the Lender’s express intent that all Charges in excess of the Maximum Lawful Rate shall be automatically cancelled, ab initio. If the Indebtedness has not been paid in full, all such cancelled amounts shall be applied to the Indebtedness, and this Note and the other Loan Documents shall immediately be deemed reformed to require the payment of interest at the Maximum Lawful Rate . If the Indebtedness has been paid in full, all such cancelled amounts shall be refunded to the Borrower. The Borrower agrees that as a condition precedent to any claim seeking usury penalties against the Lender, the Borrower shall provide written Notice to the Lender, advising the Lender in reasonable detail of the nature and amount of the violation. The Lender shall have sixty (60) days after receipt of the Notice to correct any usury violation by either refunding such excess interest to the Borrower or by crediting such excess interest against the Indebtedness. All sums contracted for, charged or received by the Lender for the use, forbearance or detention of any debt evidenced by this Note or any of the other Loan Documents shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the term of this Note (including any extension periods) until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the Max imum Lawful Rate from time to time in effect and applicable to the Indebtedness for so long as any portion of the Indebtedness remains outstanding. Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) shall not apply to this Note or to the Indebtedness. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of the Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

24.3

CEILING ELECTION

To the extent that the Lender is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Lawful Rate payable on the Indebtedness, the Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended. To the extent federal law permits the Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, the Lender will rely on federal law instead of such Chapter 303 for the purpose of determining the Maximum Lawful Rate. Additionally, to the extent permitted by applicable law now or hereafter in effect, the Lender may, at its option and from time to time, utilize any other method of establishing the Maximum Lawful Rate under such Chapter 303 or under other applicable law by giving Notice, if required, to the Borrower as provided by applicable law now or hereafter in effect.

25.

NO ORAL AGREEMENTS

THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF THE BORROWER AND THE LENDER AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE LOAN AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE BORROWER AND THE LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN THE BORROWER AND THE LENDER. THE PROVISIONS OF THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE BORROWER AND THE LENDER.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of the Effective Date.

WOODS OF INVERNESS CPF 16, L.P., a Delaware limited partnership

By: CPF 16 WOODS OF INVERNESS GP, L.L.C., a South Carolina limited liability company, its general partner

By: CENTURY PROPERTIES FUND XVI, a California limited partnership, its member

By: FOX CAPITAL MANAGEMENT CORPORATION, a California corporation, its managing general partner

By: /s/Patti K. Fielding

Name: Patti K. Fielding

Title: Executive Vice President and

 Treasurer

EX-10

 Exhibit 10.13

 Carveout Guarantee and Indemnity Agreement

This Carveout Guarantee and Indemnity Agreement (this “Agreement”) is made as of the 21 day of September, 2007 (the “Effective Date”), by AIMCO PROPERTIES, L.P., a Delaware Limited Partnership (the “Carveout Obligor”), in favor of TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, an Iowa corporation, and its successors and assigns (the “Lender”).

1.

RECITALS

A.

Under the terms of a certain Secured Real Estate Credit Facility Agreement dated September 11, 2007 (the “Facility Agreement”), AEGON USA Realty Advisors, Inc. (“AEGON”), as agent for affiliated lenders agreed to fund a series of loans to affiliates of the Carveout Obligor.

B.

Under the terms of the Facility Agreement and a certain Second Revised Loan Application/Commitment dated September 12, 2007 (the “Commitment”), AEGON, as agent for the Lender, agreed to fund a loan in the principal amount of $5,877,950 (the “Loan”).

C.

The Lender has funded the Loan in the principal amount of $5,877,950 in accordance with the Commitment and the Facility Agreement, and to evidence the Loan, Woods of Inverness CPF 16, L.P., a Delaware limited partnership (the “Borrower”) has made and delivered to Lender a certain Secured Promissory Note dated as of the Effective Date, in the original principal amount of $5,877,950(“the Note”) and certain additional documents (together with the Note, the “Loan Documents”) in accordance with the terms of the Commitment.

D.

The Note and certain of the Loan Documents include an “exculpation clause” in which the Lender agrees that it shall not seek to collect the Loan except through recourse to certain Property (as defined below), subject, however, to certain exceptions (the “Carveouts”).

E.

The Deed of Trust, Security Agreement and Fixture Filing securing the Loan (the “Deed of Trust”) provides that the exculpation clause shall be void without notice if the Borrower voluntarily transfers or encumbers the Property in violation of the “due on transfer or encumbrance” section of the Deed of Trust, or files a voluntary bankruptcy petition under certain conditions.

F.

The Facility Agreement and the Commitment require, as a condition to the funding of the Loan, that the Carveout Obligor(a) guarantee that portion of the Indebtedness that arises because the Lender has advanced funds or incurred expenses in respect of the Carveouts while the Loan has remained outstanding, (b) guarantee the entire Indebtedness, if the exculpation clause set forth in the Note has become void, and (c) indemnify the Lender and hold it harmless, to the extent of the Lender’s actual damages and losses, with respect to any circumstance or event comprising a Carveout.

2.

AGREEMENT

NOW THEREFORE, in consideration of the premises, in order to induce the Lender to disburse the proceeds of the Loan, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Carveout Obligor hereby agrees as follows:

3.

DEFINITIONS

Capitalized terms used but not defined herein shall have the meanings assigned to them in the Deed of Trust. The following capitalized terms shall have the meanings set forth below:

“Bankruptcy Code” means 11 U.S.C. §§101-1330 or any successor statute.

“Business Day” means any day when state and federal banks are open for business in Cedar Rapids, Iowa.

“Carveouts” means the following matters:

(i)

fraud or material written misrepresentation;

(ii)

waste of the Property (which shall include damage, destruction or disrepair of the Real Property caused by a willful act or grossly negligent omission of the Borrower, but shall exclude ordinary wear and tear in the absence of gross negligence);

(iii)

misappropriation of tenant security deposits (including proceeds of tenant letters of credit), Insurance Proceeds or Condemnation Proceeds;

(iv)

failure to pay property taxes, assessments or other lienable Impositions;

(v)

failure to pay to the Lender all Rents, income and profits (including any rent collected more than one month in advance, or any rent for the last month of the lease term, under any Lease in force at the time of Default), net of reasonable and customary operating expenses, received in respect of a period when the Loan is in Default;

(vi)

removal from the Real Property of Fixtures or Personal Property, unless replaced in a commercially reasonable manner;

(vii)

the out-of-pocket expenses of enforcing the Loan Documents following Default, not including expenses incurred after the Borrower has agreed in writing to transfer the Real Property to the Lender by the Lender’s choice of either an uncontested foreclosure or delivery of a deed in lieu of foreclosure;

(viii)

terminating or amending a Lease in violation of the Loan Documents; and

(ix)

any liability of the Borrower under the Environmental Indemnity Agreement.

“Carveout Obligation” means any obligation under this Agreement.

“Carveout Obligor Net Worth Requirement” equals $500,000,000 (not including the value of the Carveout Obligor’s equity in the Real Property).

“Claim” means any action, suit, proceeding, demand, assessment, adjustment, penalty or other assertion of liability, if it arises, and only to the extent that it arises, as a result of any Carveout.

“Environmental Indemnity Agreement” means the environmental indemnity agreement executed by the Borrower and the Carveout Obligor in connection with the Loan, together with all substitutions, modifications, and amendments.

“Indebtedness” means all sums that are owed or become due pursuant to the terms of the Loan Documents, together with all substitutions, modifications, and amendments, which sums include any amounts advanced by the Lender to cure defaults or to pay attorneys’ fees and expenses, receivership costs, fees and costs of the Trustee and other collection costs. Such costs and fees shall include those that relate to issues particular to any given type of proceeding and all appraisal fees and expert witness fees pertaining to the establishment of the fair value of the Property, whether or not the Carveout Obligor or any court requires that such value be ascertained.

“Legal Control” means the power, either directly or indirectly, to exercise the authority of the owner of the Real Property, either as or through the majority shareholder of the common stock of a corporation, the sole or managing general partner of a limited partnership, the managing general partner of a general partnership, or the sole manager of a limited liability company, provided the entity exercising such authority cannot be divested of such authority without its consent, either directly or indirectly, except for cause.

“Notice” means a notice given in accordance with Subsection 14.3 below.

“Property” means the Real Property and any other property now or hereafter subjected to any lien or security interest created by any of the Loan Documents.

4.

GUARANTEE OF INDEBTEDNESS ARISING FROM CARVEOUTS

In consideration of the Lender agreeing to make the Loan, and upon the terms and provisions hereof, the Carveout Obligor hereby irrevocably, absolutely and unconditionally guarantees the full and prompt payment to the Lender of the Indebtedness, to the extent, and only to the extent, of the amount of the Indebtedness which has arisen because the Lender has advanced funds or incurred expenses in respect of any of the Carveouts.

The Carveout Obligor acknowledges that the Loan is made solely for business purposes and that the Carveout Obligor will be liable for a deficiency judgment after any trustee's sale or deed in lieu of trustee's sale that the Lender elects to prosecute or accept, to the extent that Carveout Obligations have remained unsatisfied. Any such deficiency or any judgment therefor shall bear interest at the default rate specified in the Note from and after the date of such trustee's sale or the Lender’s or its affiliate’s acceptance of a deed in lieu thereof until and including the date the deficiency or judgment is paid.

5.

INDEMNITY AND HOLD HARMLESS

THE CARVEOUT OBLIGOR AGREES TO INDEMNIFY THE LENDER AND HOLD IT HARMLESS, TO THE EXTENT OF THE LENDER’S ACTUAL DAMAGES AND LOSSES, WITH RESPECT TO ANY CIRCUMSTANCE OR EVENT COMPRISING A CARVEOUT. THIS OBLIGATION INCLUDES THE PROTECTION OF THE LENDER FROM, AND THE DEFENSE OF THE LENDER AGAINST, ALL CLAIMS, AND TO THE INDEMNIFICATION OF THE LENDER FROM AND AGAINST ALL OF OUT-OF-POCKET COSTS AND EXPENSES SUSTAINED BY THE LENDER IN ENFORCING THIS AGREEMENT, INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES.

6.

CONDITIONAL GUARANTEE OF ENTIRE INDEBTEDNESS

The Carveout Obligor hereby irrevocably, absolutely and unconditionally guarantees the full and prompt payment to Lender of the Indebtedness if the Borrower(a) voluntarily transfers or creates any voluntary lien on the Property in violation of the Loan Documents, or (b) files a voluntary petition for reorganization under the Bankruptcy Code and has not offered, prior to the filing, to enter into the Lender’s choice of either an agreement to permit an uncontested foreclosure, or an agreement to deliver a deed in lieu of foreclosure within sixty days of the Lender’s acceptance of the offer. Following the Lender’s acceptance of such an offer, default by the Borrower under such an agreement shall trigger personal liability for the entire Indebtedness. No such offer shall be conditioned on any payment by the Lender, on the release of any Obligor from any Carveout Obligati on, or on any other concession.

The foregoing guarantee is not a guarantee of collection, but rather is an irrevocable, absolute and unconditional, continuing guarantee of payment and performance. In this regard, the Carveout Obligor hereby acknowledges that the guarantee set forth in this Agreement may not be revoked as to any present or future advances to or existing or additional liability incurred by the Borrower under the terms of the Loan Documents. The guarantee set forth in this Section 6 shall terminate when the Indebtedness has been satisfied in full.

7.

REPRESENTATIONS AND WARRANTIES

The Carveout Obligor hereby represents and warrants to the Lender as follows:

(a)

This Agreement has been duly executed and delivered.

(b)

To the best of the Carveout Obligor’s knowledge, the execution and performance of this Agreement and all guaranties and covenants herein will not result in any breach of, or constitute a default under, any contract, guarantee, document or other instrument to which the Carveout Obligor is a party or by which the Carveout Obligor may be bound or affected, and do not and will not violate or contravene any law to which the Carveout Obligor is subject; nor do any such other instruments impose or contemplate any obligations which are or will be inconsistent with this Agreement.

(c)

To the best of the Carveout Obligor’s knowledge, no approval by, authorization of, or filing with any federal, state or municipal or other governmental commission, board or agency or other governmental authority is necessary in connection with the authorization, execution and delivery of this Agreement.

(d)

This Agreement constitutes the legal, valid and binding obligation of the Carveout Obligor, enforceable against the Carveout Obligor in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally or by equitable principles of general application (whether considered in an action at law or in equity).

(e)

All financial information furnished by the Carveout Obligor to Lender is true, correct and complete in all material respects and does not omit to state any fact or circumstance necessary to make the statements contained therein not misleading.

(f)

The financial statement of the Carveout Obligor dated August 2, 2007 and titled 2nd Quarter 2007, AIMCO Apartment Management and Investment Company is true and accurate as of its date. There has been no material adverse change in the Carveout Obligor’s financial condition since the date of the financial statement that could interfere with the Carveout Obligor’s ability to satisfy its obligations hereunder.

(g)

The Carveout Obligor is not the subject of any bankruptcy court filing, insolvency proceeding, receivership, composition or assignment for the benefit of creditors.

(h)

There are no material actions, suits or proceedings pending or, to the best of the knowledge of the Carveout Obligor, threatened against or affecting the Carveout Obligor that could interfere with the Carveout Obligor’s ability to satisfy its obligations hereunder.

8.

FINANCIAL REPORTS

Unless the Carveout Obligor is a reporting company under the Securities and Exchange Act of 1934 as of the end of any fiscal year, it shall, within one hundred twenty (120) days of the end of such fiscal year, deliver to the Lender copies of its financial statements. If the Carveout Obligor fails to deliver the items required in this Section, the Lender may engage an accounting firm to prepare the required items. The Carveout Obligor shall cooperate fully with any investigative audit required to permit the accounting firm to produce these items, and the Carveout Obligor shall pay the fees and expenses incurred in connection with their preparation on demand. The financial and operating statements provided under this Section need not, as an initial matter be certified by an independent certified public accountant as having been prepared in accordance with generally accepted accounting principles, consistently applied, or, in the case of operating statements, in accordance with generally accepted auditing standards. The Carveout Obligor shall, however, certify that such statements are true and correct, and the Lender expressly reserves the right to require such a certification by an independent certified public accountant if in the exercise of its reasonable discretion it has reason to believe that any previously provided financial or operating statement is misleading in any material respect.

9.

FINANCIAL COVENANT

The Carveout Obligor shall maintain a net worth (not including the value of any interest in the Real Property), at least equal to the Carveout Obligor Net Worth Requirement.

10.

DEFAULT

A “Default” shall exist under this Agreement if any of the following events occur:

(a)

The Carveout Obligor shall fail to pay any monetary Carveout Obligation within five (5) Business Days after Notice by the Lender.

(b)

The Carveout Obligor shall fail to perform, observe, or comply with any non-monetary covenant under this Agreement, within thirty (30) days after Notice from the Lender demanding such performance, observance, or compliance.

(c)

The Carveout Obligor shall file a petition in bankruptcy or for relief from creditors under any present or future law that affords general protection from creditors; or any other person shall file an involuntary petition in bankruptcy against the Carveout Obligor or the filing of any other action that may result in a composition of debts, provide for the marshaling of a material portion of the Carveout Obligor’s assets for the satisfaction of such Carveout Obligor’s debts, or result in the judicially ordered sale of a material portion of the Carveout Obligor’s assets for the purpose of satisfying obligations to creditors (unless a motion for the dismissal of the petition or other action is filed within ten (10) days and results in its dismissal within seventy-five (75) days of the filing of the petition or other action).

(d)

The dissolution, liquidation or winding up of any Carveout Obligor that is not a natural person shall commence, or its legal existence shall cease, or any Carveout Obligor who is a natural person shall die, unless either (A) following the related event, any remaining Carveout Obligor or Carveout Obligors meet the Carveout Obligor Net Worth Requirement and include one or more Permitted Control Group Members or affiliates of Permitted Control Group Members or (B) the Lender is promptly advised of the event, and the Borrower or remaining Carveout Obligor(s) commence a cure of the potential default and succeed in doing so within one hundred eighty (180) days of the subject event.  

11.

APPLICATION OF PAYMENTS

All payments with respect to the Indebtedness received by the Lender from the Borrower, or any party other than the Carveout Obligor may be applied by the Lender to the Indebtedness in such manner and order as the Lender desires, in its sole discretion, whether or not such application reduces the liability of the Carveout Obligor with respect to the Carveout Obligations. If a foreclosure sale of the Real Property takes place, the proceeds of the sale (whether received in cash or by credit bid) shall be applied first to reduce that portion of the Indebtedness which is not guaranteed under this Agreement.

12.

WAIVERS

12.1

SUBROGATION RIGHTS AGAINST BORROWER

So long as any portion of the Loan remains outstanding and until the expiration of any period during which the Lender could be required to disgorge or refund any payments as a result of them being characterized as a preference or fraudulent transfer, the Carveout Obligor waives (a) any right of reimbursement, subrogation, exoneration, contribution, or indemnity from or by the Borrower with respect to the satisfaction by the Carveout Obligor of any obligation of the Borrower, and (b) any “claim,” as that term is defined in the Bankruptcy Code, which the Carveout Obligor might now have or hereafter acquire against the Borrower by virtue of the Carveout Obligor’s performance of any obligation of the Borrower. In connection with the waiver set forth in clause (a), the Carveout Obligor expressly waives (i) any and all rights to subrogation to the Lender against the Borrower and (ii) any rights to e nforce any remedy which the Lender may have against the Borrower and any right of participate in any collateral for the Loan. In addition, the Carveout Obligor hereby subordinates any and all indebtedness of the Borrower now or hereafter owed to the Carveout Obligor to all indebtedness of the Borrower to the Lender, and covenants with the Lender not to demand or accept any payment of principal or interest on any such indebtedness while any “Default” exists under the terms of any of the Loan Documents.

12.2

WAIVER OF JURY TRIAL

ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT IS HEREBY WAIVED BY THE CARVEOUT OBLIGOR, AND IT IS AGREED BY THE CARVEOUT OBLIGOR THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

12.3

MARSHALLING OF ASSETS

The Carveout Obligor waives any right to cause a marshalling of the Borrower’s assets.

12.4

HOMESTEAD LAWS AND EXEMPTIONS

The Carveout Obligor waives all rights and exemptions under homestead and similar laws.

12.5

VALUATION OF COLLATERAL

The Carveout Obligor waives any right to assert that the amount paid for the Property at a lawfully conducted judicial or non-judicial foreclosure sale is less than the value of the Property.

12.6

PROTEST, DEMAND, DISHONOR

The Carveout Obligor waives all rights of protest, demand, dishonor, presentment or any other notices or demands which might otherwise be required by any statute or rule of law now or hereafter in effect with respect to this Agreement or any of the Carveout Obligations.

12.7

SURETYSHIP

The Carveout Obligor waives all rights to which the Carveout Obligor might otherwise have been entitled under any suretyship laws in effect from time to time, including all rights prsuant to Rule 31 of the Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code, and Chapter 34 of the Texas Business and Commerce Code.

12.8

ADDITIONAL WAIVERS

The Carveout Obligor waives (A) any defense based upon the Lender’s election of any remedy, (B) any defense of the statute of limitations and (C) any defense based on the Lender’s failure to disclose any information concerning the financial condition of the Borrower or any other circumstances bearing on the ability of the Borrower to pay and perform its obligations under the Loan Documents, or the Lender’s failure to provide Notice of any act or omission by the Borrower from which any Obligation may have arisen.

13.

AGREEMENT CONCERNING INTEREST

13.1

DEFINITIONS

As used in this Section, the term “Maximum Lawful Rate” shall mean the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by the Lender in accordance with the applicable laws of the State of Texas (or applicable federal law, if it permits a higher rate). “Charges” means all fees, charges, and any other things of value, if any, that are contracted for, charged, received, taken or reserved pursuant to the Note, any of the other Loan Documents, or any other conversation or writing between the Lender and the Borrower in connection with the Loan (whether in connection with the acceleration by the Lender of the maturity of the Indebtedness, in connection with any voluntary prepayment of the Indebtedness, or otherwise, and including fees for the forbearance of any enforcement action or for the extension or modification of the Loan) which are treated as interest under applicable law. The term “Indebtedness” shall mean any and all debt paid or payable by the Borrower to the Lender pursuant to the Note, the Loan Documents or any other communication or writing by or between the Borrower and the Lender relating to the Loan.

13.2

SAVINGS CLAUSE

The Borrower and the Lender agree that they intend to comply strictly at all times with applicable Texas law governing the maximum rate or amount of interest payable on the Note or the Indebtedness (or applicable federal law, if it preempts Texas law and permits the Lender to contract for, accrue or receive a higher rate or amount of interest than would be permitted under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any Charges, then it is the Borrower’s and the Lender’s express intent that all Charges in excess of the Maximum Lawful Rate shall be automatically cancelled, ab initio. If the Indebtedness has not been paid in full, all such cancelled amounts shall be applied to the Indebtedness, and the Note and the other Loan Documents shall immediately be deemed reformed to require the payment of interest at the Maximum Lawful Rate. If the Indebted ness has been paid in full, all such cancelled amounts shall be refunded to the Borrower. The Borrower agrees that as a condition precedent to any claim seeking usury penalties against the Lender, the Borrower shall provide written Notice to the Lender, advising the Lender in reasonable detail of the nature and amount of the violation. The Lender shall have sixty (60) days after receipt of the Notice to correct any usury violation by either refunding such excess interest to the Borrower or by crediting such excess interest against the Indebtedness. All sums contracted for, charged or received by the Lender for the use, forbearance or detention of any debt evidenced by the Note or any of the other Loan Documents shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the term of the Note (including any extension periods) until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed, or exceeds to the minimum extent possible, the Maximum Lawful Rate from time to time in effect and applicable to the Indebtedness for so long as any portion of the Indebtedness remains outstanding. Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) shall not apply to the Note or to the Indebtedness. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of the Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

13.3

CEILING ELECTION

To the extent that the Lender is relying on Chapter 1D of the Texas Credit Title to determine the Maximum Lawful Rate payable on the Indebtedness, the Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter 1D, as amended. To the extent federal law permits the Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, the Lender will rely on federal law instead of such Chapter 1D for the purpose of determining the Maximum Lawful Rate. Additionally, to the extent permitted by applicable law now or hereafter in effect, the Lender may, at its option and from time to time, utilize any other method of establishing the Maximum Lawful Rate under such Chapter 1D or under other applicable law by giving notice, if required, to the Borrower as provided by applicable law now or hereafter in effect.

14.

MISCELLANEOUS

14.1

INDEPENDENCE OF OBLIGATIONS

The Carveout Obligor shall be fully and personally liable for the Carveout Obligations, and the Lender shall be entitled to maintain an independent action against the Carveout Obligor regardless of whether Lender has commenced or completed any action against the Borrower or the Property. The Carveout Obligor disclaims any status as beneficiary of any obligation of the Lender to the Borrower to provide notice of default under the Loan Documents. If the Lender has initiated any action against the Borrower to enforce the Loan Documents, the Lender may join the Carveout Obligor or refrain from doing so, at its sole and absolute discretion. The liability of Carveout Obligor under this Agreement shall be reinstated with respect to any amount at any time paid to Lender by the Borrower on account of the Carveout Obligations which shall thereafter be required to be restored or returned by the Lender upon the bankrupt cy, insolvency or reorganization of the Borrower or any other Carveout Obligor other than the party against whom the Lender has sought to enforce this Agreement, as though such amount had not been paid. Except as expressly agreed in writing by the Lender, the Carveout Obligations shall not be released, diminished, impaired, reduced or otherwise affected by (a) the reconveyance of the interest created by the Deed of Trust, (b) the consent by the Lender to any transfer of a direct or indirect interest in the Property (whether through sale of the Property, transfers of interests in the Borrower, or a change in the form of business organization of the Borrower), or (c) any forbearance by the Lender to exercise any rights under the Loan Documents, unless those rights are expressly waived or modified in a written instrument duly executed by the Lender, provided, however, that any written modification of the Loan that affects the amount of the Indebtedness may be considered in ascertaining the amount of the Indebtedness for purposes of determining the amount of any Carveout Obligation that arises under Section 4 of this Agreement, absent fraud or material written misrepresentation in connection with such a modification.

14.2

OFFSETS AND DEFENSES

No liability of the Carveout Obligor under this Agreement shall be released, diminished, impaired, reduced or otherwise affected by any existing or future offset, claim, or defense of the Carveout Obligor against the Lender.

14.3

NOTICES

In order for any demand, consent, approval or other communication to be effective under the terms of this Agreement, including any notice to any Carveout Obligor relating to a trustee's sale or deed in lieu thereof or in connection with any action or claim made against such Carveout Obligor, “Notice” must be provided under the terms of this Section. All Notices must be in writing. Notices may be (a) delivered by hand, (b) transmitted by facsimile (with a duplicate copy sent by first class mail, postage prepaid), (c) sent by certified or registered mail, postage prepaid, return receipt requested, or (d) sent by reputable overnight courier service, delivery charges prepaid. Notices shall be addressed as set forth below:

If to the Lender:

Transamerica Occidental Life Insurance Company

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E.

Cedar Rapids, Iowa 52499-5443

Attn:  Mortgage Loan Department

Reference:  Loan #90059

Fax Number: (319) 369-2277

If to the Carveout Obligor:

AIMCO Properties, L.P.

Stanford Place 3, 4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado 80237

Fax Number: (303) 300-3288

Notices delivered by hand or by overnight courier shall be deemed given when actually received or when refused by their intended recipient. Notices sent by facsimile will be deemed delivered when a legible copy has been received (provided receipt has been verified by telephone confirmation or one of the other permitted means of giving Notices under this Subsection). Mailed Notices shall be deemed received on the date of the first attempted delivery (whether or not actually received). Either the Lender or the Carveout Obligor may change its address for Notice by giving at least fifteen (15) Business Days’ prior Notice of such change to the other party.

14.4

ENTIRE AGREEMENT AND MODIFICATION

This Agreement contains the entire agreement of the Carveout Obligor relating to the subject matter hereof, and all prior guaranties relative hereto which are not contained herein are hereby terminated. This Agreement may not be amended, revised, waived, discharged, released or terminated orally but only by a written instrument or instruments executed by the Lender. Any alleged amendment, revision, waiver, discharge, release or termination that is not so documented shall not be effective as to the Lender.

14.5

COUNTERPARTS

This Agreement may be executed in multiple counterparts, all of which taken together shall constitute one and the same Agreement.

14.6

GOVERNING LAW

This Agreement shall be construed and enforced according to, and governed by, the laws of Texas without reference to conflicts of laws provisions which, but for this provision, would require the application of the law of any other jurisdiction.

14.7

CUMULATIVE REMEDIES

Every right and remedy provided in this Agreement shall be cumulative of every other right or remedy of the Lender whether herein or by law conferred and may be enforced concurrently with any such right or remedy. No acceptance of performance of any Carveout Obligation as to which the Carveout Obligor shall be in Default, or waiver of particular or single performance of any obligation or observance of any covenant, shall be construed as a waiver of the obligation or covenant or as a waiver of any other Default then, theretofore or thereafter existing.

14.8

SEVERABILITY

In the event that any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part, or in any respect, or in the event that any one or more of the provisions of this Agreement shall operate, or would prospectively operate, to invalidate this Agreement, then, and in any such event, such provision or provisions only shall be deemed to be null and void and of no force or effect and shall not affect any other provision of this Agreement, and the remaining provisions of this Agreement shall remain operative and in full force and effect and shall in no way be affected, prejudiced or disturbed thereby.

14.9

SETTLEMENTS

Upon the Lender’s request, the Carveout Obligor agrees to participate in good faith and in a commercially reasonable manner in any settlement between the Borrower and the Lender which includes or may include a deed in lieu of trustee's sale.

14.10

REFERENCE TO PARTICULARS

The scope of a general statement made in this Agreement shall not be construed as having been reduced through the inclusion of references to particular items that would be included within the statement’s scope. Therefore, unless the relevant provision of this Agreement contains specific language to the contrary, the term “include” shall mean “include, but shall not be limited to” and the term “including” shall mean “including, without limitation.”

14.11

ASSIGNMENT

The Lender may assign its rights under this Agreement without Notice to any holder of the Note and assignee of the Lender’s rights under the Loan Documents.

14.12

SURVIVAL

All obligations under this Agreement shall terminate upon the payment and satisfaction of the entire Indebtedness, provided, however, that this paragraph shall not terminate any obligation under the Environmental Indemnity Agreement, which shall be construed independently from this paragraph.

IN WITNESS WHEREOF, the Carveout Obligor has caused this Agreement to be duly executed as of the Effective Date.

AIMCO Properties, L.P., a Delaware limited partnership

By: AIMCO-GP, Inc., a Delaware corporation, its sole General Partner

By: /s/Patti K. Fielding

Name: Patti K. Fielding

Title: Executive Vice President and Treasurer